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For Sale By Owner: Pros and Cons
We have covered before two options a homeowner has when looking to sell their home; these were to list with a real estate agent or sell to a cash home buyer. In this post, we will focus on another option which is the for sale by owner (FSBO) option; that is, when the owner decides to sell on their own.
Let’s highlight some important aspects of the procedure:
Listing Price
– For Sale By Owner
Arguably the most important part when selling a home, deciding a price to advertise for your home. Now, as a homeowner you will have all the freedom in the world to decide on a price, but of course market forces have to be taken into account.
To take into account these factors, the homeowner will have to do a market analysis. This means the homeowner has to assess all the defects on their home as well as the selling price of other homes in the area.
Looking at what prices homes are selling for in the same neighborhood will give an idea of the “competition” being faced; and we say “competition” because a buyer can see that a home similar to yours is being sold for less than what you are advertising. This will incentivize the buyer to buy the other home instead of yours due to the lower price.
Furthermore, as this article explains, it is possible to find similar homes in the vicinity that have expired from the listing, or downright removed. Studying the reasons why this happened is essential to not commit the same mistakes.
It should also be noted that care has to be taken to not overprice, and of course not under price the home. It is easy for someone to overprice a home, especially if they cannot set aside the emotional connection they have to the property.
Needless to say, the entire process of pricing can be difficult and time-consuming, especially if the owner does not have experience doing this.
– Real Estate Agent
Performing a market analysis and suggesting an appropriate listing price is part of a real estate agent’s job. An experienced agent will also be well versed in the art of negotiating, which may guarantee top-dollar earnings for the owner.
As we have mentioned before, and as many people know, there’s a price to pay for these services.
An agent will typically charge a commission of around four to six percent of the home’s selling price. This is more than fair considering the amount of hard work the agent will do, but shedding this kind of money may not be in the homeowner’s goals.
– Cash Home Buyer
With a real estate investor, there is no need to worry about listing price.
A reputable cash home buyer will meet the home owner and take a look at the home. After this is done the investor will assess if putting money into the property will meet their investment criteria.
If the home meets the criteria, then a cash offer will be made.
Homeowners should be aware that many cash home buyers can be low-ballers looking to turn a nice profit. To keep the story short, these kinds of buyers aim to find desperate sellers and buy their houses at a price significantly below market value.
Always do your research to make sure you sell your home to a cash home buyer who pays the most cash.
For info on ‘we buy houses’ scams visit this previous blog post.
Market Exposure
– For Sale By Owner
In today’s day and age, a homeowner looking to go solo on the selling process can find it easy to market their home using social media.
Sites like Facebook allow an individual to market products to a specific audience in specific locations. Facebook also allows the use of budgeting to help accommodate the amount of money a person is willing to spend on ads. For more info on Facebook ads click here.
Another great social media platform to advertise on that is highly recommended is Instagram. In case you don’t know, Instagram is a platform that is geared more towards the sharing of photos. This means a person can take great pics of their home and share them with the audience they are targeting.
Other platforms to consider are Twitter, Pinterest, LinkedIn, and Snapchat.
– Real Estate Agent
As mentioned in the previous blog post, a real estate agent will use the multiple listing service (MLS) to provide exposure to a home.
And there’s really no beating that kind of exposure.
Willing and motivated buyers (with the aid of an agent) will find the type of home they are looking for with the aid of the MLS. If that happens to be your home, then voila! Your house has a buyer.
– Cash Home Buyer
A real estate investor does not advertise a home. If anything, they are the target audience when a homeowner is looking to sell their home.
So it is likely that if the homeowner does the ‘for sale by owner’ advertising right, a cash home buyer will easily find him/her.
Paperwork
– For Sale By Owner
There is a ton of paperwork needed when selling a home. Taking a look at this article from the website For Sale By Owner one can see the huge amount of paperwork involved when selling a house.
Many of the items in that list, such as utility bills and property tax bills, might be easy to gather. However, how many homeowners remember what the Homeowner’s Association covenants and agreements is for? Will they be able to understand everything in that document?
A person looking to go the FSBO route can get help from an attorney, but then again they will have to pay this person/company for their services. Assuming the person wanted to avoid too many expenses when selling their home, then this may not be the best option.
– Real Estate Agent
Much like the market analysis and listing price, a real estate agent can help a homeowner with all the paperwork.
An experienced real estate agent will more than likely know the ins and outs of the paperwork involved. He/She will know what documents are needed and who needs them.
But like mentioned above, a chunk of the money the house is sold for will go towards paying the agent.
– Cash Home Buyer
With a cash home buyer, there is really no paperwork to be worried about.
If the homeowner decides to go forward and sell their home, the title company will take care of everything.
Other things to consider
Showcasing the house to sell can also get difficult. A homeowner might be busy with work and family and as a result have a very limited time to show the house to potential buyers.
Showcasing the home is a real estate agent’s job. Of course, you might not be the only client he/she has, but the incentive for that commission can motivate them to do everything to sell your home.
With an investor, a homeowner can set a time that fits their schedule to showcase their home.
Last but not least, closing the sell of a home can also be difficult. Essentially it is all paperwork which an agent can be helpful with and something which you won’t need with an investor.
Final Thoughts On ‘For Sale By Owner’
For sale by owner will be difficult.
There’s a reason only about eleven percent of people sell without a real estate agent.
But with enough dedication, hard work and perseverance, a ‘for sale by owner’ will provide the homeowner with the most money for their home.