I recently came across a statistic which states that 90% of all For-Sale-By-Owner listings fail. After reviewing FSBO listings and sales in our area, we are not that far off from the national average.
Here are the top five reasons why FSBO’s fail.
The New AgentTypically when a new home is listed, an experienced agent will reach out to all active buyers within their database. Their clients will be active, qualified and in some cases they may have just lost out on a bidding war, so they may be eager and ready to go. The experienced agent will know which client is “just right” for your new listing and will often give everyone a heads up prior to the listing going live.
If you list your home as a FSBO, this very lucrative database that agents rely on simply doesn’t exist. You are acting as a new agent without a database of clients to rely on. These experienced agents keep in constant contact with hundreds of buyers so they stay engaged and motivated.
FSBO property owners often post their home on Zillow and hope for the best. Using this method alone will rarely produce desirable results for the seller.
There are far more effective methods that will get your home directly into the hands of every prospective buyer. Geo-targeting buyers by their GPS location, filming a walk thru video of your home and using social media to deliver your message to all active buyers will produce a profound increase on showings and offers. Simply placing six photos of your home on Zillow hoping that it will sell just doesn’t cut it in todays aggressive market.
Almost every FSBO that remains unsold is overpriced between five to ten percent. When setting the asking price for your home, there is quantifiable analysis that we do which sets your asking price in line with the expected mortgage valuation. Almost every FSBO sale that fails will do so when the mortgage appraisal comes in significantly lower than expected. The buyer must now either ask you for a reduction in price, liquidate other assets to secure the purchase or withdraw from the offer. Simply looking at what just sold in your neighborhood over the past few months may not be enough. Did successful sales have the same amount of bedrooms, square footage, did they go through a bidding war, was the appraisal waived? All of these are significant considerations when setting a price. Without this background information, the chances that you are setting an inaccurate asking price can be significant.
Doing the Open House Yourself
An experienced agent knows what to say and more importantly what not to say while doing the open house. A buyer wants to experience the house as if it were their own and will look for some alone time to discuss how they would make this house their home. Hovering over the buyers, over-selling renovations, not being available for mid day appointments are just a few of the many reasons why FSBO’s fail to find a buyer.
The name of the game in real estate is “motivation”. If you are a landlord who is looking for this highest ROI on your rental unit and are not constrained by a sale date, listing your investment as a FSBO may be a solid way to go. However, if your goal is sell in the near term, having an over-priced condo listed on the MLS for months at a time without a solid offer will cause more harm than you may realize. Condos that sit on the market will give the perception that your listing is either subpar, overpriced or both. This often brings a buyer who is looking for a “deal” and presenting nothing but lowball offers.
If you have any questions or want to discuss strategies, do not hesitate to reach out to me.
Rich Cronin – firstname.lastname@example.org (201) 566-6049