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Granted, some people are able to sell their own homes without the services of a real estate agent. Some of these successful do-it-yourselfers are very experienced home sellers, some are lawyers, some are highly experienced investors. Others are transferring ownership of their home to a child, a co-worker or a tenant who's already living in the home. These circumstances are the exception, not the norm, however. For most people, a for sale by owner (FSBO) transaction simply isn't a smart move.
Here is information for you to consider about FSBOs.
1. FSBOs cannot list their home in the multiple listing service (MLS). FSBOs are nott permitted to put their home in the multiple listing service (MLS) because these industry membership organizations are open only to licensed real estate brokers and agents. FSBOs are also excluded from many home search engines and websites, including this site. A determined FSBO can put a for sale sign in his or her front yard and run ads in local newspapers, but be advised that the home will not receive nearly as much exposure as it would through the MLS.
2. Many agents will not show FSBO homes. In a typical home sale, the buyer's agent receives a percentage of the commission that the seller pays the listing agent. Without a listing agreement, there is no guarantee that the buyer's agent will be compensated for his or her services, unless the buyer has signed a buyer's brokerage agreement that specifically provides for such compensation. Even if a FSBO offers to pay the buyer's side of the commission, most agents won't want to go through a transaction with an unsophisticated self-represented seller across the table. That means the pool of potential buyers for FSBO homes is limited primarily to un-represented and probably unqualified prospects.
3. FSBOs usually overprice their home. Most FSBOs honestly believe their own home is worth more than comparable homes in the same neighborhood. Usually, they're wrong. A real estate agent can provide an update on market conditions, an assessment of the likely selling price of the home and tips for improving the home's buyer appeal. Overpricing a for sale home is a sure way to deter potential buyers.
4. Buyers will feel intimidated. Potential buyers will spend less time in a for-sale home if the owner is present during the showing, and they'll be shy about discussing its pluses and minuses with their own agent if the owner is within earshot. Buyers will also be less inclined to make an offer if they know they'll be negotiating directly with the seller. Having an agent on each side creates an effective emotional buffer between the seller and buyer.
5. FSBOs are likely to stumble into legal trouble. Real estate transactions are fraught with potential liability for unwary sellers, particularly in states that have extensive disclosure requirements (e.g., California). The required forms are extensive, and constantly being updated. A FSBO who overlooks even one required form or legally mandated disclosure could face a protracted and expensive buyer lawsuit after the transaction closes.
6. Buying and/or Selling a home is probably the single most expensive purchase or sale that a person makes in his or her lifetime. Use a real estate agent does this for a living, day after day, full-time. Unless you want another full-time job, that of selling your home by yourself, then leave it to a professional. Trust that they have the time, energy, resources and assets to sell your property within a reasonable amount of time, for the market value.
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