Selling For Sale By Owner? Some Things To Consider

Way back in 2015 I was a first time home flipper, full of ambition with an “I know what I’m doing” attitude. I watched “Flip or Flop” a time or two… How hard could it be?? My business partner and I were putting the finishing touches on a house we had just got done remodeling. Our plan was to sell it For Sale By Owner to save money. We were in uncharted territory when it came to marketing a house. Frankly we didn’t have a clue what we were doing. We figured we would throw some pictures up on Zillow using our potato phone (camera phones sure have improved since then) and the offers would just come pouring in!!

They didn’t. We overpriced our listing, took awful photos, weren’t properly marketing the property and we were emotionally attached since this was our first flip. Who cares what the comparable sales say right? Fast forward about 2 months and we enlisted the help of a Realtor. The property ended up selling right at what the comps were showing, in relatively short order.

Fast forward to present day and I have since gotten a “Baptism by Fire” education on exactly what it takes to sell a home. Having been in the business since late 2016, I’ve been apart of the sale of well over 100 homes. I also see on a daily basis other for sale by owners making the exact same mistakes I was making back in 2015.

Buckle Up! We’re going to school

Now I don’t want to say it’s impossible to sell a home without the assistance of a Realtor. But the odds are stacked against you and it’s likely gonna for sell for less… At least that’s what the data shows.

According to the National Association of Realtors 2021 analysis of all FSBO vs Realtor sales, there is a stark contrast between what a for sale by owner listing vs a Realtor listing will sell for. The average sales price for all FSBO sales is 260k. The average sales price for a Realtor assisted sale is 318k. I will concede that for sale by owner on average did sell faster. For that kind of a bargain I can see why. To add some context, for sale by owner listings made up 7% of all real estate sales in 2021, down from their high of 15% back in the early 1980s.

Now I think there are a lot of reasons for this. Some I can back up with stats, and some anecdotal evidence that I’ve seen though out the years. Lets get into it shall we?

FSBO’s Get Less Exposure

This is probably THE most important factor when it comes to selling a home. Realtors have a pretty big leg up against FSBO’s on this one. Whenever we list a property on our Multiple Listing Service (MLS for short) our listing automatically gets input onto literally thousands of websites. If it’s a website where you look at real estate, you will find it there. A FSBO would have to manually input all those listings into each website individually to match the exposure we offer.

On top of that, a good realtor is going to take the time to put together a comprehensive marketing strategy. Some examples of this include:

Professional Photography (this is beyond important)
Videography
Staging
Direct mail marketing campaign
Social media marketing campaign
Agent, Office and Client open houses
Word of mouth (we’re in the business and probably know a buyer or 2 for your place)

And honestly so much more than that. Marketing a listing deserves it’s own blog post! I guess I know what one of my future articles is going to look like…

You’re typically priced wrong

I keep a pretty close eye on the For Sale by Owner market for 2 reasons. The first is for my buyers. This is a pool of inventory that a lot of agents don’t utilize. This is a good thing for my clients and I’d be doing them a disservice if I wasn’t. Some of my first time buyers are having a hard time competing with the agent listed properties and the multiple offers they typically receive. Just last week we were able to get one of my buyers under contract on a FSBO listing under 150k while getting money back at closing at a price under it’s market value. Ask any Realtor worth their salt and they’d probably tell you that’s not happening on a correctly priced and marketed agent listed property in this market.

The 2nd reason I keep a close eye on the for sale by owner market is for future business. Full transparency, I’m trying to help you and usually you’re making the same mistakes I was making back during my first flip. You’re usually over priced and I completely understand why as well. “It’s my house it has to be worth more.” Typically the FSBO listings that sit on the market longest are the properties that are over priced. Nine times out of ten these properties are listed with agents in about a month to 6 weeks. I’m not the only one calling you. The underpriced homes will typically sell in short order. Kind of gives credence to the FSBO stats I listed above. Be sure not to trust online home value calculators. They can definitely lead you astray. For more info on that, read my article here.

Some Realtors won’t show your listing

I’m going to say the quiet part out loud. Most Realtors don’t like working with FSBO’s. The problem is they’re unsure if you as a FSBO is willing to pay them to bring you a buyer. If you’re still on the fence about using a Realtor, you probably think this is a good thing. I understand why you would. Why pay a pesky Realtor when you can save money on the commission. “I can find my own buyer”. Here’s something you probably haven’t considered…

As a whole, the Real Estate sales industry has done a very good job of educating the general public that working with a Realtor to buy a home costs a buyer very little, and under certain circumstance, nothing at all. It’s an easy sales proposition. Work with a Realtor and they will watch your back when buying a home. It costs very little. This is especially true for first time home buyers. Having never been through the sales process they’re usually going to want someone to cross all the T’s and dot all the I’s so to speak. As a buyers agent we get paid from the commission that’s pre-negotiated from the Listing agent’s commission structure.

At the very least, if you insist on selling “For Sale by Owner” include some language in your listing description stating that you cooperate with buyer’s agents. Some of the bolder agents will approach you. Something to think about though. You will be paying an agent (likely a skilled one) to negotiate against you. If you’re willing to go that far, you may as well pay an agent to represent your best interest. Statistically speaking it’s very likely you’ll end up netting more in the long run.

Story time

A few years back I was helping a client that was previously trying to sell their home for sale by owner. They were in the process of building a new home and needed the proceeds from the sale of their current home to close on the new one. They hadn’t received an offer and had little traffic on their place. I took over the listing utilizing the marketing strategies I mentioned above and started to get traffic into the home. (Actual house pictured below.)

My client had a ring door bell and this was before they had mass adoption in our market. My client sent me the video of what the buyers agent had discussed with their buyer. I’m paraphrasing a bit but it went something like this: Agent “Did you like the home”? Client “I sure did, it’s a perfect fit for what we need.” Agent “Excellent! I’m glad you like it. I actually saw this when it was a for sale by owner but I wasn’t sure if they cooperated with agents. I’m glad it got listed because when I saw it I knew this was the perfect place for you!”

Later that evening we received a great offer from that agent and went under contract. My client was very upset knowing that at least one agent saw this and refused to show it when it was a FSBO. He got over it once he moved into his new house though…

You’re waiting for an unrepresented buyer

Despite our industries attempts at educating the buyer pool, there are still a small percentage of buyers that work without a Realtor. These are usually savvy investor types in my experience. There is a very specific reason they don’t work with Realtors. They’re looking for a deal. Most Realtors work in retail priced real estate. They’re entire niche is finding homes that aren’t properly marketed and lingering for sale. Then they will come in with a low ball offer in an attempt to scoop up a deal.

If you’re holding out hope for that one perfect buyer that’s unrepresented willing to pay full asking price, you might be waiting for a while. I’m not saying it can’t be done, it’s just a lot less likely. Particularly if you’re selling in the 300k and under price point in our market. The current market we’re in is all about speed. The longer your listing sits, the less likely it will sell for market value based solely on buyers perception. “Why has this been sitting for so long? Is something wrong with it?”

We handle it all from “Keys in our hands” to “Check in your hands”

There are a LOT of things that need to go right in order for a home to sell at it’s maximum value. If all those things don’t line up perfectly, it will typically result in a lower sale price, or no sale at all. We’re trained specifically to facilitate a sale, recognize any potential pitfalls along the way and mitigate those pitfalls. Some of those we’ve learned from our colleagues in the business and others we’ve learned through the school of hard knocks. Unless you are a sophisticated investor with dozens of sales under your belt, it’s likely you won’t have the same experience that we have as Realtors working in the business every day.

In summary – Yes, you can sell your house on your own, but it’s highly likely we will end up netting you more money in the long run. Unless your last name is Bezos or Musk, it’s likely that the extra money will help make a difference in your life. I know you were just trying to save money, but you will make more with us.

-Cody & Jos-