Real Estate For Sale By Owner’s Usually Fail

 

Why Most Real Estate For Sale By Owner’s Lack Success

Massachusetts For Sale By Owner The typical driving force behind most for sale by owner homes (FSBO) is to save a Real Estate commission. Even though I am  in the business of selling Real Estate I can clearly understand a home seller’s motivation to save the kind of money that is handed out in a typical sale.

There are not too many people I know who don’t like to save money where ever they can especially in a tough economy.  In a Real Estate sale saving a commission translates into a tremendous amount of money. It is hard to blame any home seller for their desire to save the type of dollars that are made when a Realtor sells a home or condo.

While commission rates are negotiable, in most parts of Massachusetts if you are selling a home you will more than likely be paying a Real Estate commission between 4%-6% on the sale price of your property.

On a $450,000 home a commission of 5% is $22,500. There is no doubt that is a lot of mullah! Selling a property for sale by owner however is not an a simple task and that is why most home owners end up hiring a Realtor. Nationally the success rate of a for sale by owner (FSBO) is very low. Over 80% of all FSBO’S end up hiring a Realtor to get the job done after unsuccessfully trying on their own. Why is going the route of selling without a Realtor such a difficult task? There are quite a few reasons why selling FSBO is a difficult task to pull off.

The Wrong Listing Price

Wrong Real Estate Price Most for sale by owner properties fail to sell because of an improper list price. I don’t care whether you have listed your home with a Realtor or have decided to go the for sale by owner route. If you don’t price your home correctly you stand a very slim chance of it selling in a challenging Real Estate market.

Pricing a home properly is the most critical element when selling any product but especially so when you are talking about a home sale. Over 75% of a homes marketing is about setting a realistic sale price. Homes that are listed with a Realtor and are overpriced have a very small chance of selling. Overpricing as a Massachusetts for sale by owner (FSBO) makes it almost impossible!

Numerous Massachusetts for sale by owners seem to either do their own market research and end up choosing the wrong price or have a Realtor help them determine the property value and ignore their advice.  If more for sale by owners priced their homes based on comparable market data there would be a much greater success rate. Doing more thorough research of what like homes in similar neighborhoods are selling at would go a long way!

Often times people want more money for their homes because they have done some kind of recent improvement. Unfortunately many projects for the home do not have a high return. For example if you replaced a roof, a septic system, or added a pool don’t expect to see much payback on the money you invested. Without question this is the #1 reason why Massachusetts for sale by owners fail at selling their homes!

Lack Of Online Real Estate Exposure

Quite a few for sale by owners do nothing more than put up a hand made for sale by owner sign in the front lawn and expect that will get the job done.

Then there are others that think that going in one of the for sale by owner sites like I sold my house.com, for sale by owner.com or buy owner.com is going to bring lots of home buyer’s. Sorry that’s not the case!

Online Real Estate Marketing These FOR SALE BY OWNER Real Estate sites bring an insignificant amount of buyer traffic in comparison to the sites some of the top web savvy Realtors use to promote their homes.

The for sale by owner websites say something like “we will give you world wide exposure and save you thousands of dollars!” This could not be further from the truth. Just go to Google or any other major search engine and type in a local search with Real Estate keywords a buyer would commonly do for an online search.

A search like your town, state and homes for sale or Real Estate. Using a local town in my area as an example would be Hopkinton MA Homes for sale. Do you think a for sale by owner Real Estate site is going to come up in the results? If you guessed yes try again! Go ahead and see what happens with your town or city.The results will be dominated by sites that show homes listed by Realtors or even a Real Estate agents individual website if they are really online savvy. These FSBO sites promise the world and deliver empty promises the most of the time.

A Realtor who has a strong grasp of online exposure can increase the traffic going through a home by leaps and bounds when compared to a FSBO site. Take a look at the Metrowest Massachusetts Real Estate marketing that is provided to all my seller clients. There is absolutely no comparison of what this kind of online exposure can do versus a for sale by owner website. The fact of the matter is that thousands of buyers will not even know a FSBO home is for sale. If you are a Massachusetts for sale by owner and are not having success a lack of marketing could be another reason for your lack of success.

Buyer’s Want Your Commission Savings

One of the things that most folks who try the for sale by owner route don’t realize is that the home buyers who view the home realize you are not paying a Real Estate agent to sell the home. Unfortunately the majority of these buyers feel they should share in your commission savings!  Many of the potential buyers who will view for sale by owner homes are bargain hunters. The line of reasoning is that since the seller is not paying a Real Estate commission they should be able to offer less for the home. Lots of sellers end up receiving low ball offers. Buyers will often take 5% right off the top regardless of whether the home is priced well or not. Many Massachusetts for sale by owner’s learn this the hard way.

Accessing The Home and Buyer Qualifications

Viewing Massachusetts FSBO Homes If you are selling your Massachusetts home as a for sale by owner property you may find getting people through the door can be difficult. Most for sale by owners forget that home buyer’s can come at all hours of the day to see a property. A home buyer who is in the market and really looking to find a home is not going to want to wait days to see it because a seller could not accommodate their schedule.

Often times when a FSBO is trying to sell a home they need to find the time to let a buyer gain access which is  not always easy, especially for those that work full time. It is very difficult to sell a home when buyers are not able to get in and see it!

A Realtor’s job makes this part of the home sale process go much smoother. The last factor a FSBO needs to be aware is their ability to make sure they know how to qualify potential buyers. There is no point in having unqualified buyers going through a home. A Realtor also takes on this task of making sure a buyer has the necessary ability to purchase. Most buyers that view homes today are pre-approved. As a FSBO you need to make sure this holds true when a buyer views your home.

Selling a home for sale by owner is a a great feeling I am sure if you can pull it off! It is certainly not impossible but know going in it is not going to be easy unless you sell it under it’s market value which would really defeat the purpose! Above all else remember properly pricing the home and market exposure are vital to your success.

If you are are Massachusetts for sale by owner and find you end up needing the help of a Realtor, I would welcome the chance to be interviewed.


About the author: The above Real Estate information on why real estate for sale by owner’s usually fail was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 27+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

 

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Comments

  1. Cherie Hansen says

    Well put Bill. This is so true. We are also finding many home owners in the Flathead Valley here in northwest Montana are going the for sale by owner route and finding it’s not all it’s cracked up to be. You make some great points regarding pricing and availability to show the home. With all of the great marketing avenues available to Realtors, sellers will find that the money they may be giving up at closing is well worth it if they consider the time value of money. Better to have 95% of something then 0% of nothing!

    • admin says

      Thanks for the compliments Cherie. You make a great point about having a sale and paying a commission is better than have no sale all. Many sellers figure this out at some point after they have tried it on their own unsuccessfully.

  2. Heath Coker says

    Great info, Bill. There is so much more to selling a home than showing it. I currently have 2 closings that have been in process for months. Both have required huge amounts of time and focus in helping lawyers, town inspectors, abutters, and the buyers and sellers.

    Of course there are “I sold my house myself,” stories. However they are like lottery winners – you hear the stories, but there are few people who are winners, and it is even hard to find someone who actually knows a winner first hand. The stories are most often third, or fourth hand at best.

    We have recently helped sellers understand things about their property that they didn’t even know. With all the foreclosures, hiring a real estate professional can be even more important to make sure the procedures in the foreclosure process were correct. (Ask Martha Coakley).

    I understand wanting to sell FSBO, but wanting and completing are two different things.

    Best wishes, Bill.

  3. says

    i think most people fail because they do need a bit of help from an agent. the problem is that these days many people do not have enough equity in their homes to pay a traditional 6% agent!

    At http://www.usrealty.com we let people sell for a commission that ranges from 0% to 3%.

    It actually works

  4. Allen Deaver says

    Great blog Bill. As a real estate professional in the Austin Texas area I see many people trying to sell their own home. Why? Many think they are saving money and some people do successful for sale by owners. But the odds are very slim and most FSBO’s end up being taken to the cleaners because they don’t have the knowledge or experience.

    I also see limited brokerage agents. They will in some cases for a flat fee will put a lock box on the door, sign in the yard and list the home on the MLS then disappear. Many people think they will be saving commissions by hiring a limited brokerage company. My first sale in real estate was with a discount brokerage. I charged the seller to do what his agent should have done. The seller an investor was upset I charged the fees. He said he wouldn’t be making any money on the deal. I informed him that it was not my problem.

    When my automobile breaks it goes to a mechanic who I gladly pay to repair it. I do not have the experience or knowledge to do auto repairs. The same if I am having medical problems I see a medical doctor. So why wouldn’t someone hire a reputable real estate agent/broker?

  5. says

    Bill first I want to tell you that your new site looks great.

    You certainly covered the major issues why FSBO fail to sell. Going it alone can be so stressful and the photo you used conveyed that. Based on your track record I would suggest Metrowest Ma FSBO give you a call.

    • admin says

      Thanks Jennifer my new Real Estate site is a work in progress but in no time it will be a dominant force:) Thanks for you compliment on why most for sale by owners fail.

  6. says

    Attempting to sell your home FSBO is a very difficult task, and gets even more difficult if the homeowner is under a time crunch. So many factors go into getting a home seen and sold, that is why using a good Realtor is a key component of selling a home in today’s real estate climate.

    • admin says

      Cheryl the ironic thing about many for sale by owners is that they will end up selling for 10% less just to save a 5% commission. Many often times miss the big picture.

  7. says

    Selling a home takes a lot of research on pricing the home properly. For sale by owner’s usually don’t have the tools that Realtors have and end up pricing the home wrong. Also, FSBO homes sell for less than homes sold by Realtors. That is a fact. It is always better to hire a Realtor to sell a home.

  8. Courtney Rumrill says

    Did you know that in 2011 the Founder of forsalebyowner.com, Colby Sambratto, tried to sell his New York Condo on his own. After 6 unsuccessful months he ended up hiring a Real Estate Agent who not only got the condo sold but was able to get it sold for $150,000 over the original asking price! True Story!

    • admin says

      Courney – I sure did know. I read that For sale by owner story of course with great interest. It is pretty amazing when these type of FSBO companies try to sell consumers on the fact there online exposure is just like a Realtors. What a bunch of crap!

  9. Don deManigold says

    Hey Bill, Yes it is true, A Realtor can sell the house sometimes faster then For Sale by Owner. Also its the location that matters. I experienced both. One I sold with a small sign in a matter of days in a high traffic area and the other in a very low traffic area it took 6 months It helps if your not deep in debt also.

  10. says

    Super smart article, Bill. You are right on. Most don’t realize that by trying to save money, they are actually reducing the price they get…and just spending a lot of time to do something that a professional can do much better. An agent will make things easier, faster and help you negotiate.

    also, I love your last line on here.

    • says

      Debbie there are time when a FSBO will be fortunate and sell their home but the majority of the time they end up listing with a Realtor. Like any other industry it makes sense to hire a pro!

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