Top Ten FSBO Fails
Today's challenging real estate market can be a minefield of hazards both to getting and keeping a buyer at full market value while avoiding legal complications. These top ten pitfalls are commonly the cause of failure to sell by owner and as often as not result in catastrophic consequences that can negatively affect homeownership for decades.
1. Over ambitious pricing
An owner's home is unique and special to him or her. They chose this home above all others, made it their own, lovingly maintained and updated it tirelessly. It's only natural that they above all others overvalue the property as a competitive product on the real estate market. A quick tour of Zillow.com For Sale by Owner listings highlights this issue where the vast majority of owners price their listing significantly above the Zillow Zestimate. While the Zestimate is not the last word in market analysis it tends to be very close. In addition, the data used for a Zestimate reflects homes sold by Realtors since they sell the majority of homes in the US. These sales are typically 10% to 18% higher than homes sold by owner.
2. Failure to update
Often a home's décor is picture-perfect for the present owner--even if it was last done years before. Unfortunately, buyers usually expect up-to-date décor, appliances, mechanicals, and exterior. Otherwise, they devalue the home by the amount they estimate it would cost to bring the home up to today's appearance and efficiencies. This amount tends to be larger than the update would actually cost so it makes sense to do the work before the home is marketed. If this is not possible, the cost should be factored into the asking price. 'For the price we're asking they should take it as it is.' thinking doesn't fly--they won't.
3. Failure to market
A sign on the lawn and a Craigslist listing are not enough in today's highly competitive market. Marketing is successful if a buyer would have to be living under a rock to be unaware of the listing. Presentation is equally important. A home must look wonderfully appealing to compete with professionally staged and photographed listings typical of today's Realtor presentations. A great way to do this is with a flat fee MLS listing. Find out more linked at the bottom of this article.
4. The imaginary buyer
A home's salability can be determined by the size of the buyers' pool present for a particular home in a given location for a price range--how many buyers are looking for a home like this. Sellers often imagine a buyer who would be interested in their listing at the price they want. It's likely this phantom buyer does not exist or if they do would probably buy something more competitively priced.
Every situation is different. What appears to be the best course to the sale is often thwarted or unsuccessful. When this happens failure to reevaluate and redirect often dead-ends the process. The real estate environment changes slowly and often not in the desired direction.
6. Creative financing
Owners typically receive "creative" offers from prospective buyers that have an unfortunate tendency to either fall through or cause serious financial harm to the seller. These prospects have often been refused by owners represented by Realtors who know better than to engage in suspect deals with unsubstantiated buyers.
7. Failure to Qualify
Owners often accept contracts from buyers who are not credit-worthy. The result is typically a fall through--back to square one--or litigation. A buyer should be qualified before they even see the home.
Owners should be available 24/7 by phone or email to answer questions about the home and to schedule showings at qualified buyers' convenience. If they have to wait they will usually see something else.
Lack of negotiation skills costs sellers millions of dollars every year in the US. Owners attract buyers ready, willing, and able to argue them down. These same prospects would have little luck low-balling sellers represented by Realtor who are highly trained and experienced in negotiations and can spot a wheeler-dealer a mile away.
10. Not consulting a Pro
Even if there is some pressing reason not to use a Realtor to handle the sale professionally, not having one on tap to avoid devastating situations that can often destroy an otherwise viable sale. The next best person to consult is a real estate attorney--no transaction should be without either; there's too much riding on the outcome.