With real estate prices still sinking like the Titanic, many are looking for ways to maximize possible profits on the sale of their homes. Many choose to go "for sale by owner," or FSBO (pronounced "Fizbo"), in an attempt to avoid paying real estate fees. However, although selling Fizbo means not coughing up the standard 5 to 6% real estate commission, it does not mean that Fizboans will not need to lay out considerable time and money.
It is simply not enough to stick a For Sale sign on the front lawn and hope someone will see it. Fizbo sellers bear the considerable cost and burden of marketing their property and will, at the very least, need to print color flyers and place advertisements in local newspapers and real estate guides.
Additional expenses will be incurred if a Fizbo seller wants to expose their property to the maximum number of potential buyers. One way to do this is to utilize the services of a company such as Sale By Owner Realty, which charges $399 to over $650 to post Fizbo properties on the MLS.
A Fizbo seller serious about selling should never discourage any potential buyer, even if they are brought to the property by a real estate professional who will likely demand a 2.5 to 3% commission for a successful sale. Fizbo sellers unwilling to pay that fee run the risk of real estate professionals not showing the property to their pool of potential buyers.
Selling property is fraught with legal issues, liabilities and stacks of disclosure forms and sales contracts. Fizbo sellers must understand all of these in order to complete a successful transaction. Many proponents of Fizbo transactions recommend Fizboans hire a fee-for-service broker, a title company and/or a real estate attorney to help navigate the choppy seas of disclosure agreements and sales contracts. At the very least, a third party should be present at the closing.
Seldom does a real estate transaction occur without tension or conflict between buyer and seller. Real estate agents get paid, in part, to run emotional interference between buyer and seller and to keep all parties at the table and headed towards the same goal, which is the transfer of property. Many potential buyers feel uncomfortable negotiating and dealing directly with a homeowner. Fizbo sellers must also be prepared to hear negative things about their homes.
Like many homeowners, Fizbo sellers often think their property is worth more than it actually is. Arbitrary and unrealistic pricing is the death knell of Fizbo sellers, particularly since many Fizbo buyers are bargain hunters and bottom feeders looking to purchase property for less than market value. Real estate professionals have the expertise and access to information that help determine value, but user-friendly real estate websites such as Redfin and Trulia now make it easier for homeowners to determine an accurate market value for their home.
Unless a Fizbo seller has a flexible schedule, managing showings and open houses can be problematic. Sellers need to be able to accommodate the scheduling needs of a potential buyer, lest they risk the buyer moving on to another property with a more convenient showing schedule.
Many Fizbo sellers do indeed successfully sell their properties and save a few bucks in the process. But, according to the National Association of Realtors, those who use a real estate professional make an average of 16% more on the sale of their home than Fizbo sellers, an amount well in excess of standard real estate commissions.
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