To FSBO or not to FSBO?
By Nef Cortez
Each year many homeowners decide to maximize the profit on their home sales by
selling it ¡°For Sale By Owner¡±. At first glance, this is the most tempting
option to most homeowners especially in the current real estate market with its
rapid appreciation rate. Why pay substantial broker fees when they can pocket
several thousand dollars themselves? While this attitude is completely
understandable it doesn¡¯t realistically reflect the services a professional
realtor truly does offer.
Last year, according to the National Association of Realtors ¡°Profile of Home
Buyers and Sellers¡±, 13 percent of all home sellers chose the FSBO route. More
telling than these numbers, is the fact that one third of all FSBOs sold their
homes to someone they knew prior to the transaction which means that the actual
figure of FSBO transactions to strangers is realistically at eight percent.
This is a significant downward trend from 18 percent eight years ago.
Even more telling was that only half of last year¡¯s FSBOs, according to the
article, plan to go it alone again. Why? Many FSBOs are not aware of the
increasing complexities of the transaction process, especially in California,
with more complex disclosures and legal requirements required than ever before.
In addition, they were often unprepared for the required time to market and
show their property, the competitiveness of the real estate industry, and
awareness of the various fees required for outside consultants, inspectors,
appraisers, title companies, escrow and loan officers.
Of course, this does not mean that selling your home via FSBO is not a good
option for some home sellers, in some cases it may be. However what it does
mean is that you need a clear idea of what responsibilities you will be
assuming in contrast to hiring a professional realtor and calculating whether
the costs and time invested will be worth it to you.
Some questions to consider if you intend to FSBO:
1) Do I have the time, energy, skill-set and ability to devote in selling my
home? 2) Am I prepared to deal with an onslaught of buyers, including savvy
investors and realtors, who perceive FSBO¡¯s as targets for low balling? 3) Do
I know how to market my property properly? 4) Am I familiar with the trends in
the national real estate industry as well as my local real estate market? 5) Am
I prepared to offer financing options to the buyer? 6) Will I be dealing with
only pre-qualified buyers? 7) Am I prepared to answer questions about
financing? 8) Do I fully understand the disclosure process and legal
ramifications for my state? 9) Do I have the skill-set to successfully
negotiate the handling of legal contracts, agreements, and any disputes with
buyers before or after the offer is presented? 10) Am I familiar with competent
professionals that will be involved in the transaction such as title, home
inspectors, appraisers, escrow company and their fees? 11) Am I able to project
and account for all the hidden costs, time factored in, marketing costs, and
The above items are a few of the factors that the home seller should consider
before selling his home on his own. Also, one important item to keep in mind is
that very much like the title of Harvey Mackay¡¯s famous book, ¡°Swim With The
Sharks¡±, real estate is very competitive and the buyer is just as equally
motivated to get the lowest sales price, with the most concessions as the
seller is to get the highest sales price the market will bear.
Most importantly, the facts are, sellers make more money when they use a real
estate professional. According to the National Realtor¡¯s Association survey,
¡°Homes sold with the assistance of a real estate professional in 2005 sold on
average for 16 percent more than FSBO sales.¡± As in many other industries,
realtors vary in experience and skill level. Real estate is as populated with
mediocre realtors as well as with excellent ones. However, hiring a skilled,
full-time professional realtor, who is in the top twenty percent of his
industry, to handle your sales transaction will be worth every penny of his or
her¡¯s broker fee.
Nef Cortez has been a licensed real estate broker and has held various
positions in the real estate industry for over 25+ years. Visit his website at
Diamond Bar Homesfor information on foreclosures.
for more information visit http://www.nefcortez.com
About the Author
Nef Cortez has been a licensed real estate broker and has held various positions in the real estate industry for over 25+ years. Visit his website at Chino Hills CA Real Estate for information on foreclosures.
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