Here is a National Association of REALTORS® statistic:
FSBOs accounted for 9% of home sales in 2016. The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales or about 23% higher sale price for homes sold with an agent as opposed to homes sold by owner.*
Here is the truth (and yes, I am a member of the National Association of REALTORS® but it doesn’t mean I always agree with their policies or statistics) :
Hiring a real estate agent doesn’t make you money, it saves you a lot of work and worry. According to Economist and real estate broker, John Wake in his article dated April 22, 2015; “FSBOs vs. Real Estate Agents. Do agents really sell homes for 13% more?” “FSBO sales are more likely than agent-assisted sales to be a mobile or manufactured home. Nine percent of all FSBO sales are mobile homes compared to only three percent of agent-assisted sales.” Unnecessarily including mobile and manufactured homes into the mix really skews the NAR results against FSBOs.
Wake found a study done in Wisconsin** that states there is a 0% difference when eliminating the mobile home aspect of the NAR research. However, Wake goes on to say “I’d characterize NAR’s response to the Madison, Wisconsin study as “What happens in Madison, stays in Madison,” meaning the Madison, Wisconsin real estate market is unique and the facts on the ground there don’t reflect reality in other cities or in the United States as a whole.” And also states, “In fact, I personally believe that hiring a real estate agent to sell your house is still the best option for a large majority of people.”
Why? It’s related to the statement above: Hiring a real estate agent doesn’t make you money, it saves you a lot of work and worry.
What does Wake mean in his statement that using an agent is still the best option? Wake is referring to the list of issue FSBO’s stated they encountered when trying to sell themselves:
Most difficult tasks for FSBO sellers:
Getting the right price: 18%
Preparing/fixing up home for sale: 13%
Understanding and performing paperwork: 12%
Selling within the planned length of time: 3%
Having enough time to devote to all aspects of the sale: 3%
In fact, most FSBO sales do not close on the first contract, it take an average of 3 contracts before actually selling the home. That means wasted time, effort and money. Why doe sit take 3 contracts to sell your home yourself?
Most common reasons FSBO’s don’t sell***:
1. You’re overconfident
Being in a seller’s market might mean that your home will get snapped up for premium price, no matter its condition. But that isn’t always the best strategy to count on. “Sometimes homeowners and agents get overconfident in a seller’s market.
2. The house is priced too high
Classic supply and demand conditions come into play in a seller’s market: There’s high demand, yet low supply. Therefore, you can usually expect to get more money for your home. But that doesn’t mean the sky’s the limit when it comes to your listing price.
3. The home needs some work
It can be a bitter pill to swallow to pay for home repairs after the Buyer’s home inspection lists a litany of things wrong with your home.
4. There’s a problem with the title (deed)
It’s the document that shows ownership. A house won’t sell if there is a problem with the title to the house that spooks buyers. Many times, homeowners trying to sell their home don’t even know there is a problem with the title.
5. The marketing is subpar
It’s said that you have seven seconds to make a first impression — and the same goes for your house: 90% of buyers start their search online and make a decision about whether to come see your house based on a quick skim of your listing photos. If there are few or no photos, or if the photos look bad because they weren’t professionally taken or because the house is cluttered (which shows in the photos), many buyers will move on to the next listing.
7. The house smells bad
There’s a saying in real estate: “If I can smell it, I can’t sell it,”. If you’re immune to the smell of your home, get a friend’s honest opinion.
8. Your appliances are old
Stainless steel is in, and old, yellowing-white refrigerators are out. Although potential buyers realize they can replace a refrigerator, if your appliances look as if they belong on That ’70s Show, buyers might wonder what else might need replacing. As for HVAC, heaters, and boilers, those are less noticed by prospective buyers during initial walk-through but are almost never overlooked at inspection (see #3)
Finally and most importantly – Financing!
The times they are a-changin! The mortgages of today are not like yesterday.
Picture this…you’ve sold the house, the moving truck is loaded, the kids are in the car and you’re supposed to be in your new town to close on your new home in two days. You just need to finish the closing on your home in your current town. The contract is done, the appraisal came in at value, the buyer has a loan approval, the tile is clean, the buyers love the house and now all you have to do is sign papers at the closing company.
You sit at the conference table and spend an hour or so signing documents (mostly it’s the buyer signing), you get all done and then the closing agent says “Ok now I just need to go fax these papers over to XYZ Bank and get an approval number, then I can issue funds to the seller”. You’re happy, congratulating each other, you’re chatting with the buyers, handing out keys, giving them your best advice about the house, the neighborhood, the supermarket and then it happens….
The closing agent comes back and says to you, “I’m terribly, terribly, terribly sorry but there is a problem. I can’t give you your money today“. What? Whaaa? What happened is the buyer, unbeknownst to anyone including the bank, went and bought a new truck for his new business just two days be the closing on the house and his wife purchased new furniture for them about a week before. What just happened? Why would that change anything?
What happened is the bank just did a QA check. A Quality Assurance check of the loan and the buyer and ran another credit report which showed these new purchases. The banker runs some quick numbers and realizes the buyer no longer qualifies for the loan because their debt to income ratio just went over the 44% threshold. The banker right then and there denies the loan. No closing, no sale, no money to you.
Think this is far-fetched? Think again, it’s actually very common.
Most of the time, the loan denial will come much sooner but you still will have lost weeks or even months waiting for a buyer to close that can’t buy. Most For Sale by Owners (FSBO’s) do not know how to qualify a buyer to avoid these types of issues. More often then not, they will lose an average of three contracts before just giving up and hiring a professional real estate agent to help them.
Therein lies the real reason about 80% of For Sale by Owners end up listing their home with an agent.
If other agents are giving you a different story then they don’t know real estate.
Call someone who does! For more than 25 years! Use the form below or contact us for more details.