For Sale By Owner Homes (FSBO)
In a hot real estate market, a home basically sells itself. This blog post goes in to detail on the for sale by owner (FSBO) home, and what “FSBO’s” should think about before selling your home without a realtor. Make sure you read all the way through to the end, the last point is the most important and is a true story!
1.Be Prepared to Take on the Costs
At a minimum, you’re going to want to list the property on the MLS, owned and operated by realtors. The MLS is where most homes get listed for sale. It’s where the listings on www.realtor.ca come from, and it’s the primary tool that real estate agents and buyers use to search for a home. Some brokerages will allow you list your home on the MLS for as little as $1,000. Additional marketing costs depend on what you decide to do – flyers, postcards, feature sheets, website advertising, social media advertising, etc. We usually spend $720-$1,500 per listing on marketing.
Professional photography is very important when it comes to selling your home, as most buyer’s find your home online first and that will be your first impression. Costs are about $150-250.
Staging costs on average about $3000, but can go to upwards of $5000.
d. Virtual Tours:
Virtual tours are often an extra $100-$200, and are extremely important when it comes to marketing your home. This is especially the case for buyer’s that want to view your home more than once or out-of-town buyers.
e. Open House Signs:
You can buy open house signs at your local store, but professional ones for about 20 cost about $500. Your cost for this will range from $50 to $500 depending on how many signs you want up.
f. Legal Fees:
No matter whether or not you use a realtor or not, you’ll still need a lawyer or notary to represent you. For a sale of your home, you’re looking at anywhere between $700-1000, and the purchase is typically between $1000-1300. Expect to pay significantly more for your sale if you need them to review your contracts and advise you on terms, subjects, etc.
g. Floor Plans:
Floor Plans are the second most appealing thing to a buyer next to photos. They’ll want to know that the home is measured and the measurements are correct. This costs anywhere from $150-$400.
You’ll need to make sure your home is cleaned to a professional standard, and that all junk is removed. If you’re able to do it yourself then awesome, if not then between professional cleaners, carpet cleaners, junk removal and repairs you’re looking at upwards of $500.
Time is money! If you don’t have the time to take on showing the home at all times, setting up a marketing campaign, calling your entire network or the neighbourhood generating buyers, holding an open house, facilitating inspections closing and more, then selling your home without a realtor probably won’t be the best bet for you.
I know that a lot of sellers feel like all the realtor did was put the home on the MLS and then magically came back with 5 offers to present. However, recognize that most of the listing agent’s job is done before the house even hits the market, and realtors need to be available within a moment’s notice to show your home. If you do decide to sell your home yourself, be prepared to spend a lot of time before, during, and after the sale.
2. Here are just a FEW things that go in to selling your home:
- Preparing the house for sale & booking prep appointments
- Marketing campaigns
- Organizing showings for the home
- Showing the home
- Following up for feedback from showings/buyers
- Reaching out to your network
- Cold calling and door knocking the neighbours
- Offers and preparation of a legal document
- Organize legal documents, and co-ordinate with the lawyer
3. Are you really saving on commission?
You’ll likely still need to pay the buyer’s agent commission. Don’t forget that 95% of buyers are working with a buyer’s agent. Even if you’re not prepared to pay a listing agent a commission, expect the buyer’s agent to come at you with a fee agreement and tell you to pay a full buyer’s agent commission.
If you do get lucky and end up finding the buyer yourself, they’ll be smart enough to know that you’re saving out on the commission. They’ll want to get a part of those ‘savings’ for not having been represented by a realtor too. Whether it’s from the purchase price or you just give them a commission, expect to pay something. Most FSBOs that “save” on commission, LOSE on purchase price
Even worse, some homeowners that sell a property without a realtor do not possess the contract knowledge & skills to put together a safe contract and pay additional money in legal issues and fees.
4. How much is your home really worth?
It’s hard to be objective when it comes to selling your own home. Regardless of the state of a home, most sellers will rate their home an 8/10 or higher. If you’re selling your home by yourself, you’ll need look at the facts rather than just what you want. What is currently active in the area? What has sold in the area? How long are things typically staying on the market for? How does your home sum up to other comparables?
Keep in mind that the public sites don’t show you all of the information that you need to be able to make this decision. For condos, you can’t always see the restrictions (i.e. pets, rentals), often times they don’t show you how long something has been on the market for, and the public sites don’t release what homes in the past have sold for.
Pricing strategy is another factor that comes in to play when optimizing your homes sales price. Without the experience and knowledge of the current market & target market it is difficult for a non-realtor to determine the best pricing strategy for their home. This is why the majority of for sale by owner homes sell for less than a home marketed with a realtor and on the MLS.
5. Do you have the skills?
a. Contract knowledge:
It’s important to make sure that you’re protected, and that you’re familiar with what terms to include in the contract to ensure that you’re safe when it comes to your sale. Contract knowledge and negotiation are also related, as you’ll be dealing with counter offers and trying to find a balance between what you think your home is worth vs. what the buyer does.
Do you have the network? There is more to selling home than just putting it on the MLS, and a lot of it comes down to who you know. Is someone in your family or friends group planning on buying it? Do you know a co-worker that might be interested? Reach out to as many people as possible letting them know that you’re selling your home – the more you expose it, the better off you’ll be.
Do you have experience in marketing a home? Do you know the sites to advertise on and who to call for professional photography? The only guaranteed way of getting top dollar for your home is to expose it to as many people as possible – and that’s where marketing comes in. Make no mistake about it: there’s a lot more to marketing a home than putting it on the MLS!
6. If you do hire a realtor, is cheaper always better?
Top producing realtors won’t negotiate their commission – you can take it or leave it. If you’re thinking why, well, don’t you want a realtor that can stand firm on their price? Because if they’re not going to do it for themselves and their own family, then they’re certainly not going to stand firm and negotiate like a shark when it comes to the purchase price of your home.
As bad as it seems, I’ve worked with all qualities of realtors. The ones that don’t get paid as much money seem to never be available and can be difficult to get ahold of when $$$ hits the fan. I’ve literally had discount brokers on the other end of the line say to me: “Well if I got paid more than $2,000 on this sale, maybe I’d try to help, but I just can’t afford to put any more time into this deal.” It sucks for all parties, whether you’re a seller, buyer, or a realtor, to face the reality that some agent’s quality and effort of work is tied to how much money they make. Regardless, it is the reality for some agents.