The oldest debate since the invention of the REALTOR® is whether you should sell your home on your own or with the help of an agent. Forget all that for now.
Something we never consider is the point of view of a buyer towards a For Sale by Owner (FSBO) home.
Here’s some interesting points to ponder.
1. Buyers Start with a REALTOR®
Most buyers, especially first time buyers, begin their search on MLS® System. To view these homes, they must contact a real estate agent. This usually results in the buyer developing a relationship with an agent to help with their search. It’s free for a buyer to work with a REALTOR®, so it’s a no brainer for buyers to start here.
What does this mean for those home owners trying to sell their home privately? As these buyers search for a home with their REALTOR®, they begin by viewing homes listed on MLS® System. If the buyer is unable to find a home they like, they widen their search to other markets including For Sale by Owner homes. As a FSBO seller, your home becomes an after thought. It’s viewed last, if at all. Not only are you competing will all the homes currently listed on MLS, but also all the new listings that come out before the buyer makes it down the list to your home.
2. They Want Your Money
A buyer knows that you aren’t paying a sales commission when your home is listed privately. They are also trying to save every penny they can during this process. If you have priced your home to match the MLS® listed property down the street, the buyer believes you are overpriced. They know that the amount that the MLS® seller will pocket will be sales price minus commissions. With your home, it will be the sales price. As you sell privately, expect lower offers from buyers. They want your money.
3. This Isn’t Serious
Often, buyers that shop For Sale by Owner believe this transaction is a little more casual with less rules than an MLS® listed home. Some buyers will hamper the process by ignoring deadlines and tying up your home with conditions they don’t take seriously. Some will even continue shopping up until they firm up the purchase of your home. Over the years, I’ve seen private sale buyers make offers before they’ve been pre-approved, make offers conditional on the sale of homes that aren’t ready to sell and even bounce deposit cheques. Having a REALTOR® on both sides helps you keep the transaction on track, educates the buyer and allows you to trust that everything is being done properly.
4. They Don’t Trust You (and neither does their bank)
Sometimes, private sellers are selling privately for a reason. They don’t want a professional helping the buyer as they view and purchase their home. Sometimes, these sellers are hiding defects with poor renovations or inflating facts of the home such as square footage and more. When viewing an MLS® listing property, a buyer knows that a REALTOR® has been through the home taking proper measurements, properly identifying the owners and disclosing known defects of the home. By the way, the majority of mortgage fraud and money laundering occurs during a private sale. It’s why many lenders are now refusing to lend on homes purchased privately. Even if you find a buyer, you may have difficulty firming up the deal. Given the difficulties with private sale transactions, most lawyers will also tell you they charge both the buyer and seller more to handle these transactions.
So after considering these points of view. Is selling privately the best way to reach a buyer for your home? Are you really saving as much as you thought you were?
This explains why it’s believed that at least 80% of FSBO homes are sold with the involvement of a REALTOR®. Many of these homes are eventually listed on the MLS® System or an agent represents the buyer in the transaction. If with a REALTOR® is likely where you’ll end up, maybe consider starting there. Buyers do.