The Pros and Cons of FSBO
As A Home Seller in Silicon Valley,
Should You Try to Sell your Home on Your Own?
When inventory is lower than usual and home prices are high as it is currently the case in Silicon Valley, it is understandable that some homeowners would consider selling their real estate property on their own. Before you decide to do so, here are a few pros and cons about “FSBO” from the seller’s standpoint.
1. No commission fee. A 5% to 6% commission represents a substantial saving, nobody will contest that.
2. You’re in control. You get to pick the price, the appointment times and when/how you negotiate with potential buyers.
3. You know your home better than any agent so you can point out all the great things about it in a blink of an eye.
4. Nowadays, homeowners have access to many marketing tools, both on- and offline, to advertise the sale of their property. You do not need a realtor to put up a sign on your lawn, create attractive flyers, put an ad on Craigslist or in local papers and on plenty of FSBO websites.
1. Not pricing your home properly will increase the risk of selling your home for a lot less than it is worth. Statistics have shown that the average FSBO home sells for about 15% less than homes sold through a realtor. Here is the main reason: FSBO sellers do not always keep in mind that the right asking price should be based on the appraised value of the home in its current market based on comparable properties that sold in the last 3 to 6 months and not on its tax assessment or hypothetical value as estimated by many real estate websites which use algorithms that are incomplete.
2. Your home will have less visibility. While there many avenues to promote your home, only realtors can list homes on the Multiple Listing Service, which is one of the biggest online tools real estate agents use. In general, Realtors have a lot more experience and professional access to online and offline promotion tools not available to individuals.
3. There are plenty of service providers to negotiate with if you decide to sell on your own including home inspection companies which work for the buyer and will most likely always find issues with the house; termite inspection company, appraisers, title companies, etc.
4. Preparing all of the legal forms, disclosures is your responsibility; If you are re unfamiliar with legal guidelines and requirements, you are taking the risk of financial and legal liability. The title company will not review these forms for you.
5. When time comes to pick the buyers, it might be harder to weed out unqualified buyers without prior experience. For instance, every decent realtor knows that the highest offer is not always the best offer. Also, what will happen if the people you chose are not able to get the proper financing? What if the property does not appraise?
Overall, selling your house on your own can be very challenging if you are dealing with a non cash buyer who is not a real estate professional (such as builders or contractors). Everybody can sell a home and you may overcome some of the process issues described above. However, the truth is that only an experienced realtor who will help you negotiate every step of the way and anticipate potential pitfalls will be able to maximize your profit on the sale of your home.