Selling Your Home On Your Own Could Cost You!
Selling Your Home On Your Own Could Cost You. In this extremely hot real estate market, some homeowners might consider selling house by owner. This is known as a For Sale by Owner (FSBO).
FSBO's rationalize that they don’t need a real estate agent and believe that they can save the commission for the services a real estate agent offers.
Selling a house in Bergen County NJ is a full time job which requires a full time Realtor. When a home owner assumes the position of a Realtor when selling home by owner is asking for trouble.
As your Bergen County Real Estate Expert, I offer free comparative market analysis. Home owners don't have access to this critical information when selling home by owner. The goal is to protect your equity.
There are several tasks a home owner has to undertake when selling home by owner. Having a real estate education, finding a homebuyer who's pre approved for mortgage is a small part of the process. Scheduling showings when you sell your own home and opening your doors to homebuyers can potentially lead to theft.
Please review the article entitled, "How To Protect Your Home When Showing It To Potential Buyers," by Lee Nelson.
Once a buyer is willing, ready and able to purchase a home from a FSBO, a contract must be executed. The contract Realtors use is The Statewide New Jersey Realtors Standard Form Of Real Estate Sales Contract.
Collecting the earnest money deposit and placing it in the sellers attorney's escrow account is next.
We move on to attorney review which can extend itself well beyond the three day attorney review period. A buyer can back out at anytime during the attorney review period and the home inspection clause.
If the home buyer can't secure a mortgage loan the deal will fall apart. Let's say the home buyer obtains a mortgage commitment the next process is to confirm they secured home insurance.
Hiring a title insurance company to clear title, getting the Certificate of Occupancy and collecting deposits will lead to closing.
A for sale by owner will go through great lengths to save on the real estate commission. Some home sellers wonder how they can list house on MLS (Multiple Listing Service). Listing with MLS has to be done with a licensed Realtor.
After some research online they encounter Realtors who offer a MLS flat fee listing to advertise their home. Some Realtors will charge a for sale by owner as little as $99.00. Imagine the diluted service a for sale by owner will receive when they subscribe to that. I recall the old adage, "you get what you pay for." A flat fee MLS listing may cost the for sale by owner thousands of dollars.
Contracting a Bergen County Real Estate Expert like myself, gives a FSBO a chance to actually sell their home.
A study by Collateral Analytics reveals that FSBOs don’t actually save anything. In some cases they may be costing themselves more by not listing with an agent.
In the study, they analyzed home sales in a variety of markets. The data showed that:
“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)
Selling Your Home On Your Own Could Cost You
Why would FSBOs net less money than if they had used an agent?
The study makes several suggestions:
- “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
- “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
- “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.
Conclusions from the study:
- FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
- The data suggests the average price was near 6% lower for FSBO sales of similar properties.
As Dave Ramsey, America’s trusted voice on money, explains:
“Research has shown that, between mistakes, lack of negotiating skills, pricing errors and general exposure on the market, you’ll cost yourself more than the real estate commission…You’ll come out slightly better and with a lot less hassle if you use a top-shelf agent.”
Looking for a Teaneck real estate agent, contact Steven Batista at 201-207-5217. Start the home selling process Today.