For Sale By Owners Can Be Successful!
Breaking Down The Process For You
You have the right to represent and to sell your own home in today’s market
There is a stigma in existence which suggests that in order to sell your home you need to use a real estate agent. This just isn’t true.
The fact is, you’re permitted not only to list your home for sale, but you’re permitted to negotiate its terms, demand the highest offer price possible, and to get the best terms possible for yourself and/or your family.
At no point do you NEED a real estate agent even though the vast majority of home buyers have a real estate agent representing them on their side of the transaction, which is an important thing for you to note, you’re not going to be negotiating with a “buyer,” you’re going to be negotiating with a buyer’s agent. A big difference that we will discuss later in this blog.
Let's Get The Ugly Out Of The Way
The majority of For Sale By Owners believe THIS about Buyer’s Agents
The road of real estate is a winding and twisting road, one which looks like a straight line from start to finish, but that is far from reality. Why? One major factor is the role of a real estate agent when interacting with a For Sale By Owner. Enter the misconception.
Real estate agents, specifically those who bring a buyer are most likely, if not definitely representing that buyer, and therefore, has the responsibility to look out for the best interests and terms for their buyers. Here in New York, a buyer’s agent does have to legally disclose this via the Agency Disclosure form to a For Sale By Owner upon first substantive contact, so at least you will know right away that agent’s position.
But even with this disclosure in place (and, sadly, during the times when a bad agent fails to disclose this), homeowners tend to believe that the buyer’s agent will handle everything and take the deal to the closing, if just so that the agent will earn a commission, but this is not necessarily the case.
For Sale By Owners will put their trust in an agent who represents and protects the buyers specifically. This is a terrible position for the For Sale By Owner, a position of which a For Sale By Owner should never find themselves in, which will make buyers very, very happy.
It is your responsibility as a For Sale By Owner to be prepared to follow the next steps of each part of a real estate transaction without having to refer to a real estate agent. This is the path you chose and you have to be able to walk it.
You may request the guidance of an attorney. This attorney will charge for their work but may or may not have the answers or advice that you’re looking for. The main purpose of an attorney is to protect you legally, they are not oftentimes utilized to negotiate terms or even pricing for you, especially since they will likely be communicating with the buyer’s attorney. Their conversations will generally be legal conversations.
Marketing Your Home To Buyers
Despite everything, you have a job to do, and you’re going to do it
So now you’ve taken a major step in your life in deciding to list your home for sale! Very few people decide to do this on their own for a number of reasons, but you’re going to go against the grain and get the job done, By Owner!
One of the greatest advantages of having a real estate agent is their marketing expertise and their ability to broadcast your property not only to the greatest number of buyers in the area, but to all of the real estate agents who have buyers in the area.
Since you don’t have the luxury of having that capability, it’s now up to you to provide your own marketing and advertising of your home.
Here are some best practices to sell your home:
- Pay for professional pictures of your home
(Do not use your cell phone, that can be detrimental) - Create professional flyers for your home
(Give these to prospective buyers) - Create a professional website for your home
(This will give people on social info on your property) - Create a compelling description of your home
(AI can help with this, but this is important) - Make sure your home is completely decluttered
(Clutter can literally make or break an offer) - Make sure your home’s curb appeal is maximized
(It’s the first impression people will get of your home) - Post your advertisements on Social Media
(Keep an eye, there are lots of “nay-sayers” on there) - Post your home on Zillow’s website
(Limited to “For Sale By Owner” section only) - Have a schedule when you can show your home
(Make this as open as possible, not everyone is 9-5) - Prepare your home for Open Houses
(2 hours is sufficient, anything longer is not good) - Have a way to be contacted
(Your main cell phone isn’t recommended)
These are just a few of the responsibilities you’ll be taking on when advertising your home for sale but if you factor in how much money you can save by doing this yourself, it may all be worth it in the end.
The Position Of The Buyer's Agent
The buyer’s agent will be protecting their clients, not you
Buyer’s agents have an obligation to their buyers and will show them houses despite whether or not agents list them or are promising any type of commissions.
For starters, even after showing your home, the buyer’s agent will still continue to show other homes to their buyers. One potential reason for this is that real estate agents often feel that For Sale By Owners is unstable to deal with for two major reasons:
- By Owners have no professional guidance throughout the process.
- Commissions can be at risk or less than what the agent has negotiated.
When it comes to “professional guidance,” unfortunately it’s a fact. For Sale By Owners forego the guidance of a real estate agent and this may create slowdowns throughout the process, or even pauses throughout the process creating frustration on both sides.
Commissions are a conversation that is had between the agent and their buyers before the home search begins. In many cases agents who list homes for sale may offer commissions to buyer’s agents as part of bringing a buyer to the property, and those commissions are often protected by the ethics and standards that REALTORS® stand by.
It is relatively rare to hear a For Sale By Owner ever offering commission to a buyer’s agent. Buyers are prepared to work with their agent in these scenarios, however, when a buyer has to choose between “working with their agent regarding commission” and “not having to worry about commission” you can already sense which way buyers are going to lean.
On the other hand, even if a For Sale By Owner were to promise any type of commission, in the eyes of real estate agents, there really is no concrete promise of it, and it can result in a conversation between the buyers and their agent about commissions in the event that commissions become a problem, a difficult conversation to have when there are agent-represented homes for sale which there is no need to worry.
The "Unrepresented" Buyer
Not all buyers have real estate agents working for them
This could be a “best case scenario” for a For Sale By Owner; No worries about paying commissions, hopefully, the buyers are cooperative and you all can act like you’re long lost friends, maybe even exchange phone numbers!
But if ever you’ve wanted to see what it’s like to test your patience and determine how frustrated you can become before you explode, then the unrepresented buyer is your ticket to that very education.
Why?
Here are several reasons:
- Lack of Pre-approval letter
- Pre-approval letter not intended for your home
- Pre-approval letter is expired
- Never got a Pre-approval letter
- Has a “pre-qualification” instead of Pre-approval
- Has no professional guidance and may very well “ghost” you
- No way to determine if they’re serious about buying
- Can have unfortunate motives (i.e. theft, etc)
- Low-ball offers, always complaining about the market
- Moves at their own pace regardless of what’s told to them
- Learning on the go, creating uncertain responses/actions
- Are unpredictable and may have unrealistic expectations
The list goes on and on. When selling your own home, two of the most important elements are trust and trust. If neither side is going to have any representation and are left to their own decisions, then things can happen, both sudden and strange.
Don’t be surprised if a home inspection “goes wrong” and the buyers suddenly want to renegotiate everything, or worse yet, they want absolutely everything fixed regardless of the “findings” truly being an issue or not.
Keep an eye out for sneaky additions to the contract of sale. Since their attorney will be handling this and not an agent, this could mean extra days going by before a contract is signed because of unexpected requests or demands.
Is your house “up to snuff?” Missing C.O.’s and permits otherwise that are discovered may become a bigger deal than thought of.
Remember, one of the main drivers, if not the main driver for a For Sale By Owner is to avoid paying a commission, and this would be the scenario where that is the reality…but this is one steep cost to risk in doing so.
How Much Money You're Saving
At the end of the day, it comes down to how much money you’ve saved
This is really the main point, right? What other reason is there to try and sell your own property without an agent aside from how much money you’re going to save as a result?
Let’s break it down by the numbers:
Real estate agent commissions are negotiable so any numbers that you read from this point onward are just examples and are subject to change.
Let’s say you list your home for $700,000. Let’s say the commission you thought you would pay for using an agent is 5%.
–FOR SALE BY OWNER SCENARIO–
In a For Sale By Owner scenario, you don’t owe the 5% to anyone, so you remain at $700,000.
As a For Sale By Owner, you’re going to be put in a situation where you’re going to negotiate that asking price of $700,000 since the mindset is that “nobody pays a For Sale By Owner what they’re asking” since there’s no agent involved for them. So expect negotiation. Let’s assume that you’re willing to accept $685,000 and ultimately settle on a $685,000 offer since there do not appear to be many buyers, and even fewer who appear serious and able to purchase.
RESULT: $685,000 – 0% Agent Commission = $685,000 to you. Not bad!
–USING A REAL ESTATE AGENT SCENARIO–
Using the same $700,000 asking price, this time you’re using the services of a real estate agent and you both concluded a 5% commission to be fair and have agreed to that (again, the percentage is negotiable and is only an example and illustration) amount for the agent services.
Real estate agent broadcasts your property in today’s market to today’s buyers. Your home is viewed by the largest number of buyers and agents in the area. There are many requests to view the property. Your agent is smart enough to have the buyers and their agents view the property simultaneously creating a bidding war for your home.
You receive multiple offers for your home for well above asking price which is very common when you have the right agent promoting your property. You ultimately settle on a $755,000 offer. This offer also includes no home inspection necessary, which is an option that buyer’s can elect not to do.
RESULT: $755,000 – 5% Agent Commission = $717,250 to you. Excellent!
FINAL RESULTS:
Without An Agent: $685,000 To Owner
With A YourHomeYourTerms.com Team Agent: $717,250 To Owner
Winner – Agent Represented Homeowner
–CONCLUSION–
You are more than welcome to sell your own property and you have the right to do so. If your doing so is to avoid paying a real estate agent, then perhaps you may want to reconsider that notion. Remember, yes, you can sell your own property, however, property owners lack the marketing, advertising, and property broadcasting that an agent like a YourHomeYourTerms.com team agent can, and this can cost you tens of thousands of dollars, even when you factor agent commissions.
