10 reasons Why For Sale by Owners Fail
Homeowners trying to sell their homes on their own, also known as for-sale-by-owners (FSBOs) – are driven by several reasons. Although most of them want to save money that they would have otherwise spent on real estate commissions, a few others take the FSBO route because they feel they don’t need a professional to sell their home.
Whatever the reason for attempting to sell solo might be, data from a recent National Association of Realtors survey shows that less than 10 percent of FSBOs actually sell.
There are a lot of reasons why FSBOs fail and do not sell. Some of the top among these are:
1. Too many people to negotiate with
Those deciding to take the FSBO route often have to negotiate with many people. Some of them are likely to be:
• The buyer, seeking the best possible deal.
• The buyer’s agent, who represents the buyer’s best interest.
• The buyer’s lawyer.
• Home inspection companies, working for the buyer, which are likely to find a problem or two with the property.
• Your bank, in case it’s a short sale.
• The appraiser, if the home’s value needs to be assessed.
Without the help of experienced real estate agents, dealing with so many different parties alone is often a tough task for homeowners.
2. Homeowners do not know how to prepare the home for sale.
A majority of homeowners don’t know about the pre listing tasks that FSBOs should do before they list their home for sale. These usually include:
• Getting necessary repairs done.
• Getting the floors and carpets cleaned by professionals.
• Ensuring curb appeal of the home.
• Replacing outdated light fixtures.
Homes for sale whether by owners or listed with an agent, just have one chance to impress potential buyers. Neglecting these home sale preparation tips often reduces the homeowners’ chances of selling the house.
3. Owners do not know how to screen potential buyers
FSBOs often have no idea about the difference between pre qualification and pre approval, and they don’t know that buyers should ideally be pre approved or at least pre qualified.
No wonder they let unqualified buyers inspect the house and waste their precious time. Not knowing if a buyer has the ability to purchase the home acts as a big deterrent for homes for sale by owners.
4. Owners fail to solve buyer’s queries
Handling inquiries from buyers on their listings and coordinating showings for their homes are pre requisites for making a sale. However, many homeowners either aren’t able to handle such inquiries on their homes or don’t have the time for them.
Even organizing showings might become an uphill task at times. Because these days potential buyers and their agents want quick responses to their inquiries, they don’t think twice before moving on to the next potential property if their inquiries and requests are unanswered.
5. Owners don’t understand the concept of golden time
According to this concept, homeowners get the most money for their
homes in the first week of putting the property on the market. The longer homes stay on the market, the less money people will be willing to offer for them.
If a buyer tries FSBO first and then hires an agent, the buyer would have already lost the “golden time” window. This will eliminate the buyers who have already viewed the home, might have offered unrealistically low prices and have already moved on.
6. Owners fail to understand the contract procedures
The contract to buy a home involves much more than just the price offered by the buyer. Also, real estate contracts have lots of time lines and clauses and involve several common contract contingencies, such as inspections and mortgages.
Many FSBOs don’t have a firm understanding of such contracts and might not know what they are agreeing to or how to negotiate particular parts of the contract.
7. FSBOs don’t know how to handle the home inspection findings
Home inspections almost always find some issues with houses even when they are relatively newer built. In such cases, the buyer requests problems be fixed or corrected before moving forward with the transaction.
However, many FSBOs believe that there is nothing wrong with their home, which is why they refuse to address the issues brought forward by home inspections. As a result, the sale falls through.
8. FSBOs incorrectly price their homes
FSBOs often price their homes incorrectly due to lack of experience. They set the price too high, which hinders their chances of closing the deal.
9. FSBO homes lack exposure
Homes for sale by owners are sometimes listed on only one website. Thus, FSBOs are unable to give their homes adequate exposure in the market.
However, when buyers hire a real estate agent, the professional can give a property online exposure as well as exposure in the local real estate segment of the newspaper. The agent even has tools to extend the exposure further, which FSBOs don’t have.
10. FSBOs fail in the closing process
Even after an offer is accepted, many things still need to be done prior to the closing. For instance:
• Get the inspections completed within the allotted time.
• Ensure the lawyers approve contracts.
• Check if the buyer has obtained written mortgage commitment.
• Changing the title with land titles
With so many things acting against FSB0s, it’s natural to find many of these properties being sold by real estate agents.