The Top Pitfalls That Trip Up FSBO Sellers: Part Two
President and CEO of The Realty Alliance, an invitation-only network of the largest full-service real estate firms in North America.
In spite of so much property data being accessible to the general public, and countless television shows covering so many aspects of the real estate industry, home sellers who attempt to go it alone comprise only 8% of home sales. Why are real estate agents so crucial to the success for sellers? Here we’ll look at the last six of the top 10 reasons for-sale-by-owner (FSBO) attempts fail.
Professional staging and photography are an absolute must to get a property sold quickly at top dollar. DIY sellers often do not realize the art and science involved in both. It is not uncommon for professionals to capture more than 100 raw pictures, at various times of the day, to end up with the handful of images utilized in marketing each property. Property owners aren’t aware of professional tools and the proper formatting that are key to ensuring properties are ideally presented across desktops, tablets and phones.
Every day, properties go under contract while new competing listings pop up. Experienced brokers shift the order of pictures or amend the property remarks based on the changing competition, while most DIY sellers miss this market dynamic. Marketing is commonly viewed as the most valuable service listing brokers bring to home sellers. It certainly is the area where brokers can be so much more effective than the average property owner. Agents know where and how to promote properties to reach the best buyer prospects most efficiently. And brokers created the powerful multiple listing service (MLS) concept, which benefits consumers by helping properties sell more quickly and at appropriate prices. The MLS may be the most powerful marketing tool of all, and only real estate brokers can plug a property into this business-to-business platform.
After do-it-yourself home sellers begin marketing their property, another landmine presents itself as one or more inquiries come in. As the first call or e-mail — or even knock at the door — arrives, DIY sellers begin to realize key challenges with this phase of the process. An inquiry can arrive at any time, day or night, workday or weekend. The average person does not have a system for evaluating these inquiries and responding consistently. More importantly, John Q. Public lacks the qualifications to determine which potential buyers are serious, which are qualified financially — and which might be dangerous.
Things get more serious when it is time to allow potential buyers into the property. Even if, somehow, the FSBO seller has managed without stress or disaster so far, the showing stage of the sales process is daunting at best. Scheduling showings is a challenge, for sure. Decades of experience have shown that having sellers present while prospective buyers are visiting the property is a recipe for disaster. But the options are for the DIY seller to be there or to allow potential buyers to tour unsupervised. Neither choice is close to ideal.
This is an art, a craft honed by specific training and experience. It is not easy, even for professionals; but FSBO sellers usually are not prepared for this important step in the process and rarely do it optimally. Transfer of ownership involves contracts, and few are qualified to develop all the appropriate clauses to protect themselves and the sale. And, in this phase, amateurs can allow things to get personal. Misunderstandings can easily arise and what should be a straightforward transaction can get off the rails in no time.
You have an offer, now what? Sellers are required to make certain disclosures, not just about the property but also about factors that might impact the buyers’ enjoyment of the property. Is a new freeway or car dealership being built nearby? Do the neighbors have all of their motorcycle-riding friends over for loud parties? Sellers tend to want to dodge what are called “adverse material facts” or are often not aware of what a buyer may construe as an adverse material fact.
The buyer will want to do one or more home inspections. The findings and recommendations in inspection reports force decisions for both sides. These have implications on the timeline and the bottom line and add a new layer of complexity to the negotiation. Without a real estate professional involved to interpret and advise, this step is perhaps where most FSBO dreams end or the seller creates significant post-closing liability for themselves.
Professional real estate brokers are great at adding value in so many ways in the home selling process. They really shine in their marketing and negotiation expertise. But arguably their greatest contribution is their ability to pull everything together, overcome challenges and simply get the deal done. An agent does much more than just represent the seller’s interest and provide valuable advice along the way. They move mountains and handle details, any of which could cost the seller a sale. Their focus and availability to move things forward day and night, keeping things on track while sellers are working and living their lives is not just convenient, but most often, what keeps a sale alive.
Getting a home ready to advertise is full of hazards for those trying to go through the process without an expert agent. But after sellers announce their property is for sale, the potential landmines get more dangerous to their success. It is no wonder that those with the most experience with real estate and the highest incomes are the most likely to pay a professional to represent them and provide guidance in transactions. No matter one’s income level or familiarity with the process, going it alone invites frustration, wasted time and effort and financial loss. One’s slim odds of being that rare DIY seller to succeed are clear. If you are considering going it alone, think seriously about these 10 categories — and then select a listing broker to ensure your sale survives the process.