We’ll start this week’s post by explaining that we’re well aware that this is a real estate topics blog and that the majority of our readership will be real estate professionals who’ll be well aware of what exactly ‘FSBO’ means. We’re going to take a quick moment though, to explain this wacky acronym to anyone who’s not so familiar with it.
FSBO (fizz-bo) stands for For Sale By Owner, and it’s a term used to describe a homeowner who’s made the decision to list and sell their home on their own, without the assistance of a realtor. Now we’re similarly aware that the same majority of you will obviously recommend against such a practice with vehemence, but let’s take a look at some of the pros and cons to being a FSBO. After all, being a well-informed realtor who can offer perspectives without bias or prejudice reflects very well upon you and it’s good to be able to appraise prospective clients of both sides of the coin, no matter how it may end up.
- Avoiding Commission
This one’s simple to understand from the seller’s perspective, as much as it’s in contradiction to your interests as a listing agent. On average, they’ll pay about 6% to sell their home—split evenly between you and the buyer’s agent. They should factor in the realtor’s commission when determining the asking price for their property. Their decided-upon sale price should be enough to pay off the remaining mortgage balance on the property, plus pay the commission. If that calculation leaves a little bit to be desired, this is one reason they might consider becoming a FSBO.
- There are Plenty of Selling Resources These Days
The days of creating your own yard sign and then putting an ad in the local newspaper’s classified section are long gone. Now there are an array of resources available to help you sell a home. These included locale-specific real estate purchase agreements that can be found online, and local title companies or a real estate attorney can help with the legalities and answer questions – often online as well if you can’t contact them in person or by another means. This is huge for folks in more rural areas. Perhaps more important though are the excellent resources available on the web for advertising your property. You can include photos of your house, as well as detailed information about the property, including the number of bedrooms, upgrades, square footage and other features. The Internet is pretty much the greatest thing to ever happen to FSBOs!
- Sense of Accomplishment
This one doesn’t need a whole lot of explanation. If you’re the type who likes doing all manner of things yourself, and saving money accordingly – you’d probably make a great and determined FSBO.
- Lack of Access to MLS (Multiple Listings Service)
This is definitely drawback numero uno when it comes to choosing to go FSBO as compared to working with a real estate agent. Working within a city or town’s MLS is restricted to participating (and paying) realtors exclusively, and having a home for sale featured in the MLS is of paramount effectiveness in putting the home in front of the largest number of buyers and the realtors they’re working with. It’s pretty much the bible in this regard, and selling your home without having it featured there puts you at an immediate disadvantage when it comes to exposure and finding the ‘right’ types of prospective buyers – no doubt about it.
- Lack of an Industry-Professionals Advice Regarding Pricing, Etc.
A qualified and experienced realtor is often invaluable with the way he or she understands the value of a home in the bigger context of the ever-changing housing market in any specific locale. You may think your home is worth X-amount – and you may have some very solid reference points in coming up with that number – but it may simply not be a realistic asking price given the conditions of the market and any of the other factors that can come into play. The majority of which are beyond the scope of understanding for anyone other than a professional realtor.
Pricing yourself realistically but fairly goes a long way in having you sell the home within the timeline you envision, and FSBOs often struggle right out of the gate this way.
- Being Overwhelmed / Intimidated with Requisite Paperwork
There’s a LOT of paperwork involved in selling or buying a home, and often more than the average person could ever imagine possible. Without having a realtor who’s gone through these documents many times previously on your side, you may well find yourself moving along at a snail’s pace, and becoming immensely frustrated accordingly.
- You Alone are the Open House Coordinator
This one’s also fairly self-explanatory. Prospective buyers will always want to tour homes they’re considering buying, and if you choose not to work with a realtor you’re very much on your own when it comes to scheduling, staging, promoting and so on and so forth. An agent can filter calls and inquiries from other real estate agents and coordinate open houses and showings for your property, so you can go about your everyday life and not have to concern yourself with it – and it always involves a LOT of concerns. And last but not least, a realtor can speak of your home and it’s attractive features and amenities in a smooth, convincing manner in a way you simply can’t. It’s a developed skill.
Here at Real Estate Leads, we provide realtors with qualified leads generated online and exclusive to them and their region in Canada. We also like to talk about trends in real estate, and if you’ve got anything to add to this post or any other we’d like to hear what you’ve got to say!