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FOR SALE BY OWNER:
PITFALLS YOU SHOULD KNOW!




YOUR ONLINE FSBO LISTING

Most buyers who call for sale by owner listings are either habitual lookers or just starting their search.


Ask anyone who contacts you through your listing how long they’ve been looking. When you hear 1-year, 2-years or we just started, you can bet big that they’re not buyers for your house! Serious buyers end out represented by an agent when they’re ready to buy.


Almost all buyers start searching for real estate on their own, even if they know that they’re going to eventually work through an agent. Buyers start their search to get an idea of what’s out there. Their search can start months or years before they’re ready to buy.


At first, it’s fun. For some people, the fun never ends. They’ll look at online listings for years. Literally for years. Many people find it entertaining. The cycle for some home buyers can be years, months or weeks, but either way, at some point, the not-quite-ready-to-buy lookers need to take the next step and go visit some properties.


HOW FOR-SALE-BY-OWNER FITS INTO A BUYER’S SEARCH CYCLE

Most people who call For Sale by Owner listings are not quite ready to buy. That’s where you, as a for sale by owner fit in. You are the perfect contact for lookers because they don’t have to commit to the process or have a more detailed conversation as they would with an agent. Whether they realize it or not, these early or habitual lookers are just entertaining themselves at your expense.


YOUR SECONDARY FUNCTION AS A FSBO

Essentially, your function as a for-sale-by-owner also serves to help beginning lookers get started. When they get serious, they'll call an agent. It's just how it works.

An important exceptions about the calls you may receive: if an agent calls you because he has a buyer who asked him about your house, that agent is likely representing a real buyer.

VIDEO: FOR SALE BY OWNER DRAWBACKS AND PITFALLS:

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WHAT A FUTURE BUYER GETS FROM A FSBO

Lookers will visit your house getting ideas, forming future opinions for when they’re serious, and just getting their looking skills sharpened. Most lookers don’t even realize that this is what they’re doing, but the proof is in what happens when a buyer gets serious about buying a house, which is that they call a broker.

PEOPLE ARE SAVING MY LISTING - (PROBABLY NOT!)

Online saves can be a bit misleading. Many people save listings through online sites for many different reasons. Most saves are not buyers, and if they are buyers, they’re not buying your house. How do we know? Buyers who want to buy your house are coming to see it and are going to put in an offer.

Answer this: How many people set an appointment to see your property compared to the number of saves your listing has?


Ready buyers are not delaying buying a house to see if you lower your price. Any Save older than 20-Days is a curiosity Save. They just want to know the outcome. Of the saves, you can eliminate 90% of them instantly. Only count the remaining 10% and then illuminate those after 20-Days.

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SERIOUS HOME BUYERS

In the beginning, it was fun looking for a house to buy. When a looker turns serious, the searching can still be fun, but it becomes more tedious and time consuming. It turns into a job to make numerous calls to schedule appointments. That gets tiring real fast.


EASIER FOR BUYERS

It is so much easier to let an agent set up appointments to see several homes that a buyer is interested in viewing than it is to for a buyer to make all the calls necessary to gain access. A serious buyer wants to see several homes in a day. Who wants to spend an hour or 2 on the phone every time you want to see properties?


FSBOs AREN'T IN PRIMETIME SEARCH RESULTS

As a FSBO, you're missing almost all of the ready buyers at the point that you want them visiting your property the most. When someone gets serious about buying, they'll end out working with a broker. Your house is not coming up in the broker's search results.

The fact is, if a broker was to starts looking at FSBO listings, they're running out of options for their buyer which is close to impossible. In most areas of Florida, even in a seller's markets (homes turn over faster, more demand less supply of houses), 93 to 97% are broker listed homes. If you're in the mix, nothing else was a fit for the buyer. Actually, at that point, the buyer might not be as serious as originally believed and likely won't be buying your house either.

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MY NEW ON THE MARKET E-MAILS ARE WAY MORE ACCURATE!

I guarantee you that if I setup a buyer to receive an auto e-mail notifying them when a new listing appears in the MLS, it will be a more accurate match from the criteria I can choose from than what other online notification system allow.


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WHY 95% OF BUYERS AND SELLERS NEED AN AGENT

Although not initially realized, more important than making the search more manageable, most serious buyers want someone who will look out for their best interest in a transaction. That doesn’t mean taking a superior position to a seller in a transaction. Looking out for a buyer’s interest includes making sure that the buyer is paying a fair price for a property, making sure that the numerous steps involved from making an offer -through- closing, are handled correctly and that the breakdown of who pays what charges are correct. As a seller, you should have this representation as well.

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ARE YOUR LOOKERS PRE-APPROVED?

Any agent that's been around for a while knows to verify if they potential buyer is pre-approved. I have spoken with many people who think they are qualified to purchase at the price point of the property they're searching. I always asked if they're pre-approved for a mortgage. Many people assume that they qualify. If they are not already pre-approved (a sign that they're ready to purchase), we will put them in touch with a mortgate broker who will verify that they qualify in their assumed price range. Often, they are not qualified at the search price and some are not qualified at all.

Before you let someone tour the interior of your house, make sure they are already approved! We request to see a copy of a buyer's pre-approval or pre-qualification letter before we put the required hours of work into helping buyers locate a property.

See pre-approval article link at the bottom of this page.

CLOSING ERRORS ARE COMMON

When I review a Closing Disclosure, I almost always find an error. Sometimes it’s in our clients favor and sometimes it’s not. Usually, negotiated items are not appearing correctly or a buyer or seller’s cost is applied to the wrong party. Either way, a buyer and seller should have someone that knows what they’re doing make sure that all steps, timelines, and documents are handled correctly. (P.S. For us, it doesn't matter whose favor the error is in, we always notify the closing agent.)

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WHY AGENTS DON'T BRING BUYERS TO FSBOs

A large number of agents avoid working with FSBOs because of the greater potential of time lost. A FSBO already loses the lion share of potential buyers, and when you add the fact that agents avoid them for valid reasons, a FSBOs exposure opportunities to potential buyers is exceedingly limited.

FSBOs tend to misunderstand much about the home buying / selling process which in turn, greatly increases the potential that a sale that SHOULD CLOSE falls through.


As a broker, you can be a few weeks into diligently working toward a successful close only to find that the FSBO seller will not make lender required repairs, fix or adjust price for property defects uncovered from inspections, or any number of other normal good faith expectations.

If I’m working on the buy side dealing with another broker, I know that they understand what is considered normal. Their client typically has some level of trust in them. When the broker discusses an issue that might arise, their client is more likely to discuss the situation in good faith. Many for sale by owners view everyone working with a buyer as an adversary and tend to think everything is a game designed for the seller to lower their price, which is not accurate.

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WHY MOST FSBOs END OUT LISTING WITH A BROKER

It’s nothing that you’ve done wrong. It’s just how the system works. As a FSBO, your buyer pool is a fraction of what the exposure is for a broker listing. Most buyers don’t even want to work directly with a seller and will never visit your property. Other buyers have no issue with you being a FSBO, but they still want a broker’s help so that they don’t miss something important. It’s actually smarter for a buyer and the seller to have a broker involved.


HOW MANY HOMES ARE SOLD AS FSBO

According to the National Association of Realtors, less than 7% of homes were sold as “for sale by owner”. It’s a tricky figure. Of the 7%, more than half (57% of the fsbo sold homes were family transfers, sales to friends (different type of sale than selling a house on the open market), or other types of transfers. The number of true FSBO sales are very small.


Put another way, 93% of buyers purchased their home through a real estate agent or broker (87% through agents and 6% from a builder or builder’s agent.)

The percentage of homes sold as for sale by owner changes year to year but the percentages sold to family and friends is fairly constant.

Source


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MY BUYER WANTS TO SEE YOUR FSBO HOUSE

If I’m working with a buyer who requests to see a house they found, and if it's your FSBO listing, I’m going to evaluate your property to make sure that your house is priced right. I want anyone I represent to fully understand the price range of a property they’re interested in. On the flip side, if a FSBO contacts me to sell thier property, I'm going to discuss how you arrived at your price so that I can consider your reasoning, and I'm going to evaluate your price based on real data and other factors so that you're priced for the market.

If a property is not priced right but the buyer still wants to see your house, when it’s time to put in an offer, I’m going to go over the price with the buyer again to make sure they understand my opinion of their offer price.

Most FSBO listings are priced wrong. If I was communicating with another broker, I can discuss price strictly from a logical basis and if the agent agrees with my opinion we can hopefully negotiate. But an overpriced FSBO will usually be more entrenched. They may think that because they spent $20K in preperation to sell, their house is worth $50K more when in fact, the restoration or improvement only has the effect of making their house match similar homes that are on the market for less.

The number of times that a buyer asks to see a FSBO property are extremely low.


If you have questions about selling your property (home, lots, land or commercial), call Scott -
Phone: 941-882-5494 Ext 701

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If you have questions about selling your property (home, lots, land or commercial), call Scott - Phone: 941-882-5494 Ext 701