I’ve seen so many Real Estate sales sites post lame reasons why someone should NEVER sell their own home (it’s too hard…it might take longer, etc.). While I certainly have some motivation to NOT want you to sell your home yourself (I mean come on… I want your business!), I’m also an adamant DIYer and try to be frugal and save money where I can. If you feel comfortable selling your home yourself and feel that your overall net proceeds will be better if you sell yourself, then by all means do some research and see if it’s for you! But before you jump in, I just want to make sure you understand some of the actual pitfalls you will encounter. Don’t say I didn’t warn you!
We all make mistakes sometimes. Unfortunately, if you make a mistake on a real estate transaction you are liable for rectifying that mistake. By hiring a licensed agent, much of the liability falls on their shoulders. Licensed agents in Colorado are required to hold Error’s and Omission’s (E&O) Insurance in order to cover them should they make an honest mistake. Private sellers and attorney’s are not.
Quick example: Tom sells his home FSBO in the listing states that the newer roof is in perfect shape (and he honestly thinks it is). Buyers move in to discover there is actually massive hail damage from a storm that occurred when Tom was on vacation. Tom is now liable to rectify an expensive problem – something the agent should have caught or would have known not to claim in a listing.
2. Security and Weirdos
Showing homes can be dangerous. You are inviting people into your home you do not know, and you are trusting them not to steal from you, break your stuff, hurt you, etc. If you stay in your home during the showing, most people are reluctant to really allow themselves to snoop around with the owner breathing down their back. If you leave during the showing, you are trusting strangers not to steal, break your things, let their kids jump on your bed, or do who knows what (my imagination is reeling!) unsupervised. You are also inviting unvetted people into your home who are wasting your time (looky-loos and neighbors who may just want to snoop).
When you hire an agent, every time someone enters your home for a showing they are accompanied by another agent. People tend not to be jerks when they are being watched, and most agents are just fine with telling people to stop if they are being inappropriate. Plus, your agent can call the other agent to get specific feedback on what the buyers did or did not like about the house.
The point is, is it worth it to you to risk your security?
3. No Money Up-Front
There are lots of costs associated with listing a home that your agent will pay on your behalf. It’s just a cost of doing business for us! If we don’t sell your home, the agent typically absorbs all these costs.
Listing the home yourself means paying for professional listing photos, paying for yard signs and marketing materials, paying to list your home on FSBO websites, MLS listing fees, attorney’s fees, contracts, and the list goes on. These are costs you will incur whether your home actually sells or not.
This ties in with the costs listed above, but there more to it than that. An experienced REALTOR has access to all kinds of marketing software to make sure the marketing on your home looks professional and neat. First impressions are everything, and buyers are more likely to fall in love with a professional photograph of your kitchen versus an iPhone photo with shoddy lighting.
Getting your home out there on as many platforms as possible is another thing agents can do very effectively. Not all agents are created equal in terms of the marketing they are willing to do for you, so always make sure you ask.
Let’s say I’m a buyer, and I’m looking at your FSBO online. What will I be thinking in terms of how smoothly this transaction will go, how much I can negotiate, and what level of expertise you have in selling your home. Chances are I’m either going to sic my agent on you to try and wheedle the price down, I’m going to expect some drama the seller’s part since the professional third-party agent is not in the picture, and I’m going to wonder if everything was done correctly. Was title recorded right? Is there something in the contract that’s going to come back and bite me in the butt? For all these reasons, some buyers won’t even bother.
6. Pricing Incorrectly
Zillow is a lovely website, but Zillow has never been inside of your home! Zestimates are not accurate because while automation is neat in theory, in practice it doesn’t really work when it comes to real estate. Zillow doesn’t know about that recently sold home and how it was plastered in granite and Carrera marble, or on the flip side that it was absolutely dated, the roof was rotted out, and the grass was dead. The condition of your home is going to swing its value by tens of thousands of dollars.
A licensed agent can go through your house, do a Comparative Market Analysis verifying comps and their upgrades, and give you an accurate valuation of your home.
You may save yourself from paying a Seller’s Agent by going FSBO, but you may also underprice your home by a lot more than the agent would have cost you.
7. You’ll Probably End Up Paying the Buyer’s Agent Commission Anyways
A lot of FSBO’ers go in thinking they won’t be paying ANY agent commissions. Not necessarily.
Most buyers know that in any transaction, the seller typically pays the agent fees for all parties. They get into contracts with a buyer’s agent that specify how much the agent will make in commission as well as who will be expected to pay the commission (buyer, seller, or a split of both). In the case where a buyer with an agent makes an offer on your home, the offer will likely include you paying for the buyer’s agent’s commission. If you are somehow able to negotiate that the buyer will pay the agent’s fees, you’ll often see a drop in the sales price to make up for this difference. It’s not guaranteed, but it’s highly likely that when you sell your home you will end up paying the Buyer’s agent fees anyways.
Knowing that you are not a seasoned professional with negotiation experience, both independent buyers and those with agents will absolutely attempt to throw lowball offers your way. Expect it.
Scams happen to both seller AND buyers of FSBO properties all the time. Some examples include fraudulent loan docs, fake appraisals or inspections, check and wiring fraud, purchases through a third-party with a fake attorney, or just scammers asking for personal information so they can steal your identity or open credit accounts in your name. Again, this scares buyers away.
10. Mountains of Paperwork and Deadlines
Colorado Real Estate contracts include deadlines for things like Inspections, Inspection Objections and Resolutions, Appraisals, Record and Off-Record Title Objections, Due Diligence Docs, and the list goes on. Missing a deadline could mean you are stuck in a contract because you missed your opportunity to object to something you didn’t agree with.
Remember when you bought your house? Remember the enormous stack of paperwork you received at closing in the giant envelope? Yeah. Knowing what paperwork needs to be filed with whom, by what deadline is something a REALTOR can do for you. We live by our calendar!
11. Commissions are Negotiable
I’ll probably get some flack for telling this well guarded, best-kept secret of real estate agents….our commissions are negotiable! If you are not comfortable with the commission rate the agent charges, you can ask for a lower rate. Your agent may laugh at you and say no, but if the alternative is to not get your business at all they may just accept a reduced rate. Especially if you use the same agent to buy your next home as well! Works on me every time.
*Legal Disclaimer: this is a subjective list of items, borne of experience in the process of buying and selling homes in the State of Colorado. Always consult a professional in your area to ensure your rights are protected!