Selling a home FSBO in New York is a mistake (2017)
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Did you know you can legally sell your home WITHOUT a broker and list it yourself on the MLS and consumer websites on StreetEasy, Facebook, or Zillow? Selling a home FSBO for a flat fee in New York can be tricky. So why not do it and save 1.5-3% in closing costs and potential commissions? It doesn’t seem that hard. Post beautiful pictures with your iPhone online, and buyers will come running with offers. This trend is called FSBO (“For Sale By Owner”). While some people have the time and experience to sell their homes without an agent, most FSBO (For Sale By Owner) home sales fail. The sales process is not an easy job that one can improvise.
Unsurprisingly, the percentage of U.S. homes sold by the owner has steadily declined. According to the most recent National Association of Realtors (NAR) data, FSBO homes sold accounted for 9% of total home sales. FSBO sales have steadily declined over the past decade from a 2004 peak of just 14%. Here are the reasons why selling FSBO is a mistake:
1. Think you save money on commission? Think again: selling FSBO is a mistake
On average, in 2015, in the U.S., homes sold by brokers traded at $249k compared to $210k for FSBO. If the FSBO seller sold to someone they knew, the median dropped to $151,900.
Because your brother-in-law is doing you a favor, he expects a deal. Homeowners selling their own properties often lack the time to devote to the process, are unfamiliar with market value, struggle to understand market reports, and may not know how to market their property effectively.
When you find the right broker, they will price your property to maximize the sale price by thousands of dollars in the shortest time, a combination that can result in 10-30% more. It would help if you assumed that when considering saving 1.5-3% on a listing commission.
Hiring a professional agent will avoid a nightmare in the future. To start, the agent will get the listing professionally photographed.
2. It takes a lot of time to sell a home FSBO in New York
When you sell a home FSBO, be prepared to spend a lot of time. Consider staging, taking photos, and getting the marketing right.
You’ll also spend time showing the apartment, entertaining potential buyers, and discussing the property with the buyer’s agent. Additionally, when people want to buy a home, they expect someone to respond to their inquiries and show them the house at their convenience.
But many FSBO sellers show their homes only when it’s convenient. If you can’t communicate with buyers or show your residence promptly, expect the buyers to move on, as you’ll be competing with “another house on the market.”
3. Owners get emotionally involved
When selling a home, using logic rather than emotion is a good approach. Otherwise, you might not take a firm offer for fear of making a bad deal. Your connection with the home can also get in the way. Sellers think of their property as their home, not just as another house on the market.
They have an emotional attachment to it; when they try to sell, the facts get lost, and feelings arise. Sellers might know every part of the home, but that doesn’t mean they know how to show a house to prospective buyers.
Many potential buyers are uncomfortable sharing their thoughts and concerns with a homeowner, which creates a communication barrier and prevents the homeowner from receiving valuable feedback.
Lastly, potential buyers like to project themselves into the house and do not want to see the current owners (such as photos) or do not want to meet the owner.
4. Pricing
Pricing too high means fewer people see it, resulting in more occasional offers (or the listing becoming stale).
More days on the market will signal to buyers that something is wrong. Price it too low, and you’re conveying that something is wrong with the property or that you are desperate to sell.
5. Low Ballers or scams: Selling a home FSBO is a mistake in New York
Owners often struggle to identify suitable buyers. FSBO homes for sale attract investors and lowballers who see your inexperience and ignorance.
Additionally, FSBO homes are more likely to attract scammers. Common scams include fraudulent papers (such as appraisals and loan documentation), foreign buyer deposits (where a scammer sends too much in a bad check and then requests a refund), and purchases made through a third party (such as a fake attorney).
6. You pay the upfront marketing costs
When you sell a home FSBO, you may think you’re saving money, but you often spend a lot of money upfront without guaranteeing any return.
Listing agents spend a calculated amount of money upfront to ensure a real estate listing sells, ultimately paying them and you a portion of the proceeds. Remember, listing agents do not charge anything up front to sell your home.
If they spend thousands and can’t trade it for the sale price you want, they are out those thousands, not you.
7. The negative perception from buyers and buyers’ agents
FSBO sellers often perceive that they are not serious about selling and are merely testing the market. They are usually not taken seriously in the real estate community because they don’t see the value in the agent or broker’s representation.
8. Insufficient Exposure to Buyers
In the U.S., 42% of FSBO sellers rely on a yard sign, 32% rely on friends and family, and about 15% use social media. You might post your home on Facebook and Craigslist a few times because you are more intelligent, but don’t have access to the MLS.
Licensed real estate agents can access the Multiple Listing Service, which is the primary way to get your home listed on sites like Realtor.com, Zillow, and Trulia.
Most home buyers begin their search on websites like these. Unsurprisingly, the number of homes sold via FSBO has steadily declined as online real estate has become the norm.
9. Liability
Everyone makes mistakes. A seller (or buyer) who doesn’t represent a licensed agent bears the responsibility for those mistakes. Attorneys can close a real estate transaction, but they don’t carry errors and omissions (E&O) insurance. Agents have this Insurance, which protects them when contract mistakes occur.
When you sell on your own, others can exploit every little mistake you make, and you become a target for lawsuits.
10. Agent Boycott: Selling a home FSBO in New York is a mistake
When you decide to sell your home yourself, you tell other agents that you don’t understand their value in a multi-billion-dollar industry. Agents often view FSBO sellers as more willing to negotiate against them because they have the upper hand. They don’t need to worry about mistreating you because the chance of dealing with you again is slim to none. More often than not, they will ignore your listing altogether to avoid the hassle.
Have you ever tried to sell your house “for sale by owner”? Let NestApple know your tips and experiences at info@nestapple.com.
