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Pitfalls of Selling via “For Sale By Owner”
Posted By Jim On 09/21/2005 @ 2:45 pm In The Home | 1 Comment
I’ve never sold a house so I don’t entirely understand their side of the process (so take this article with a grain of salt), but I do know what I looked for as a buyer. I do know that not a lot (percentage-wise) of buyers go online and search for homes on the For Sale By Owner websites so as a seller your potential market is already smaller. I also know that a buyer agent, which most buyers will have, has little or no incentive to show their clients an FSBO… that’s another factor decreasing your potential market. Finally, even if you do find a buyer, they will have to bring “buyer agent-like expertise” to the closing table (if they even make it that far) which is something a total novice probably won’t be able to do, let alone feel comfortable doing. But ignoring the final point expertise point, which was the main thrust of the previous article , you’re still betting that an educated buyer (or buyers preferably) in search of a FSBO will find your house and put in a competitive offer. I think that is a dangerous bet to be making.
So, when you choose FSBO you are reducing all your preparation when you first bought the house. Your only benefit is in not paying a large commission. When you consider that commissions are so high (you don’t even need to add the other little fees to make this point hit home) on property sales (7% standard, so $35,000 on a $500,000 sale), perhaps it’s a worthy tradeoff.
The secondary pitfall behind chopping your market to a fraction of what it normally would’ve been is that you force yourself into dealing with a savvier customer or a total dope. One on hand, the savvy buyer will be on top of his or her stuff and can get you to closing without a hitch. You won’t be able to make as much money as from a total dope. The risk with a total dope is that a mistake in the contract, in the research, in something; could hold off the closing sale – which may have negative downstream effects. You’d prefer a total dope with expert representation.
Lastly, a smaller pitfall that probably wouldn’t concern most FSBO sellers, is that you need to be on top of your game. One of those savvy buyers could pull one over on you if you’re not careful!
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