For Sale By Owner Services
Ok, so you have decided you want to sell your home on your own. As I will clearly state, I highly recommend against doing so because of the dangers, and likeliness of an unsatisfactory experience. However, I can offer some help for those that are committed to doing so. I will not say it is always a mistake to do so. For some, it is a good choice, and you can save money doing so. Often those that sell on their own, have a lot of real estate experience, and deal in real estate on a regular basis. More often than not, they have a relationship with an agent that helps, or were an agent themselves at one point. They have been in many real estate transactions and are very familiar with the process. Usually these people are not likely on the internet looking for tips. For everyone else that is considering doing so to save money, keep in mind the dangers are wasting your time, wasting your money, and in extreme cases, ending up in legal trouble. That being said, I can offer some advice and words of caution.
One of the dangers with a FSBO sale is that you do not know what your home is worth. Everyone thinks they know because "Bobs" house down the road sold for "THIS MUCH" and my house is just like his but nicer! Or I looked at other houses for sale in the neighborhood and I am planning to ask for less. Or maybe you looked up some information on the internet. The internet is awesome, and I do not know how we lived life without it before. But, as helpful as it is, it can sometimes give people a false sense of knowledge about a subject. I hear this all the time when discussing home values with people. “Well I did some research on the internet, and……” The problem with that is that only a real estate agent has access to real data of actual sold homes and can do a proper assessment of value. Yes, you can find what homes have sold for on Zillow, Trulia and many other sites. The value of a real estate agent is in the details. More often than not, there are what are known as “concessions” involved. What is a “concession”?For example, let’s say you are buying a home. When your home inspector checks it out for you, he finds some problems. Maybe it needs a new roof. You decide you still want the home, and will buy it with the defects, but you sure do not want to pay the same price, right? Often, what will happen, is a “concession” is negotiated. The seller and buyer, through their agents agree that the seller will give give money back at closing. Let’s say the house was being sold for $100,000 but it turns out it needs a roof. The sellers allow a $8,000 concession. So the house sold for $100,000 and that is what appears on the internet as the “sold” price. Now let’s say Bob who lives in the neighborhood has a house just like it and is thinking of selling his also. He sees that house, and thinks his should be worth $100,000 also. He puts a sign in front of his house, and sells it in a few days. Good huh? Here is where the problems for FSBO sellers happen. So Bob thinks his house is worth $100,000 because the other house sold for that price. A real estate agent could have told Bob that maybe his house is actually worth more because Bobs house doesn’t need a roof. Bob does not have access to that information without an agent. Concessions are involved in most real estate transactions in one way or another. That also works in reverse sometimes.
Other times, you can put yourself in for a big let down because you over price your house. Let’s say you have a really, really nice house. Everyone you know loves it, and raves about it when they see it. You decide to go the FSBO route when the time comes to sell it, because it is so nice, you should not need help selling it. Based on what everyone thinks about your home, you look at what other homes have sold for in the neighborhood, and price it 50k higher. And then, just like you knew it would, you get a buyer the first week. You actually have a buyer, and another one that wants to buy it, if the first one falls through. Nice, right? Not so easy. Most homes are financed. And every lender wants to make sure that they are not lending more on a property than it is worth. So the lender is going to send in an independent real estate appraiser to do a proper appraisal of the home. This might happen two weeks into the 30 day financing period. Unless you are lucky enough to get a buyer who is paying cash, AND doesn’t care about resale value, there might be a serious problem. You often hear the saying “something is worth what someone is willing to pay for it”. Well, not in real estate. A more correct statement is, “a home is worth what a bank is willing to lend on it”. You can have five people lined up wanting a chance to buy your home for 250k but if the bank is only willing to lend 200k on it, “aint gonna happen”, unless you are lucky enough to find one of those mystical, rare, cash buyers, who do not care about resale value. Not only do you have to find a cash buyer, you have to find one that doesn’t care that the resale value will be less than what he or she paid for it. I can tell you from my experience, no one loves a house THAT much, no matter how nice it is.
Other Problems, and Final Thoughts
So I described a couple of the problems a FSBO seller can have in selling their property. Keep in mind, those are probably the two most common issues people have with selling on their own. There are still many, many other problems you may experience. I am not even going into legal problems that might arise, if things are not handled in the right manner. Louisiana real estate law is as unique as Louisiana. Paperwork involved in a real estate sale is pretty complicated. The purchase agreement between the parties is 9 pages long. Nine pages filed with all kinds of spooky sounding legal words. And that is just the purchase agreement. Most home purchase agreements include other associated documents that must be included. Apart from the paperwork and legal issues, there are things that are less likely to cause you legal problems, but you might not like just as much. People selling homes as a FSBO are often taken advantage of. Ironically, they are often taken advantage by other FSBO people. You think well, “I am safe because it is just two people doing business and neither of us are using agents”. Sometimes other people are not just people without an agent. Sometimes they are experienced home investors, or ex real estate agents that are pretty savvy. If someone knows the business well, and they want to take advantage of you, they can easily do it. There are way too many possibilities for someone to be taken advantage of, if they are not familiar with real estate. Sometimes you realize it when it happens, but too late to stop it. Other times, you do not realize it until months after the sale.
Why am I sharing this information with you? A couple of reasons. First of all. I hate to see anyone taken advantage of, or end up in legal trouble because they didn’t know the law. I am a God fearing person and am guided by that in everything I do. The other reason is that I want to offer you help in other ways. If you are thinking of selling your home on your own, but aren’t sure, allow me to evaluate your home, and give you a fair idea of what its resale value might be in today’s real estate market. I would love a chance to help you, and maybe earn your trust enough to allow me to sell your home for you. Either way, having me evaluate your home, does not cost you anything, and I will not continue to pester you to allow me to sell your house. I may follow up with you at some point down the road a time or two down the road, just to see how it went, but I am not one of those agents that keeps calling until you tell them to stop. I prefer to work with people that want me to help. I hope some of this helps you if you decide to sell on your own. I also hope this helps if you decide which agent to use if you decide you want to use a real estate agent.