“For Sale By Owner” Efforts Prove Disappointing
By CJ Holmes
Almost everyone who plans to sell their home wants the transaction to be as profitable as possible. That’s why there is often serious consideration about whether or not to use the For Sale By Owner (FSBO) approach. After all, the thinking goes, why pay a broker fee when you can sell the house yourself? It’s a simple way to keep as much of the profit as possible. Right?
Wrong. A high percentage of FSBO are not profitable transactions. To be specific, more than 95% of FSBO fail to deliver a successful outcome for the sellers. What this means is that FSBO do not reap the rewards that sellers believed were possible. Experts say that’s because the results of every real estate transaction depend upon a variety of factors that most sellers are not experienced with. These include knowledge about the buyer’s market, pricing strategies, loan qualifications, negotiations and much more.
At CJ Holmes & Company we encourage clients who are considering the FSBO ‘do-it-yourself’ route to ask themselves the following questions before they make a decision. Because our goal is to make their transactions as profitable as possible we also offer them insights. These perspectives are based upon our years of real estate experience in working with hundreds of clients to help them make the best choices possible for themselves.
- Do you understand your home’s target buyer market?
Most owners do not really know which buyers to target or how to target them. As a consequence, they waste time, effort, and money marketing incorrectly with poor results.
- Are you aware of your property’s down-side to potential buyers?
Many owners are not aware of what may cause buyers to walk away. Uninterested buyers will not tell the truth, and interested buyers will be angling for price concessions.
- Do you understand pricing strategies?
Selling a home for maximum profits requires an intimate understanding of the current real estate market. Priced too high, the property will be ignored. If the price is too low the owners will leave money on the table; most likely more than the real estate agent commissions they were trying to save.
- Do you fully appreciate the effort and risks in dealing directly with the public?
The schedule for showing a property is random. It is often precipitated by an unexpected phone call or drop-in at the buyer’s convenience. And showings do not happen unless the owners are available.
With these random showings to random buyers comes concern about the legitimacy. Anyone can claim to be a would-be buyer in order to gain entry to the home; their intentions can range from criminal to merely satisfying their curiosity about the way the home is decorated or what possessions the owner has.
- Can you qualify a potential buyer?
The real estate transaction can languish weeks in escrow with property taken off the market before the owners discover that buyers, for a variety of reasons, were not able to fulfill their end of the deal.
- Are you prepared to handle the purchase negotiations?
Often FSBO’s are targets of “low-ballers” who are seeking price concessions. It is human nature for buyers to be suspicious if the owners begin to praise their own property, or anxiously try to sell it. Buyers may conclude there is something wrong with the property, the neighborhood, or attempt to find things wrong in order to secure the property at a lower price. The owners must then struggle to overcome buyer objections and keep their intended profit.
- Are you prepared to handle the all the legal paperwork, disclosures, and liability of not doing it correctly?
Most owners are totally unprepared for the massive amount of legal paperwork required by California State Law. Contrary to popular belief, escrow companies do not formulate real estate contracts nor take liability for required disclosures. In fact, in California, the seller, not the escrow company, is liable. Escrow companies only take directions regarding their deal from the parties involved. Owners who are not familiar with contracts, disclosures and financing instruments may find themselves unable to properly take care of this phase of the transaction.
CJ Holmes & Company knows what it takes to successfully and, as profitably as possible, complete each and every real estate transaction with which we are involved. We handle all of the details in a manner that is cost-effective for our sellers.
We know that FSBOs are filled with risks and inconveniences that could cost sellers far more than they are prepared to pay. In fact, this is what makes most FSBOs a disappointing experience.
CJ Holmes, owner/broker, has been investing in real property since 1977. Starting with a fixer home, she and her husband have built a portfolio of income-producing property. Licensed in 1998 to facilitate the constant search for investment property, CJ began Agent Representation for Buyers and Sellers in 2003. In March 2005, she earned her Broker’s License and now brings her real estate investment expertise, experience, and energy to every client.