You know the pros of choosing the FSBO process and how to sell your property without an agent. But there are some cons to selling your home without an agent to consider as well.
There are a lot of legal considerations since you’re transferring ownership of your property to another person. In addition, there are quite a few financial considerations, too, involving mortgage lenders on the buyer’s side and the bank on your side.
And if you’ve never sold a house before, you may not know the ins and outs of the process and could be at risk of missing or forgetting something if you don’t have the proper guidance. You could potentially put yourself at risk for legal disputes if something goes wrong. If you’re not thorough, you may accept an offer from someone who doesn’t really have the funds to purchase the property and could end up wasting your time or losing money.
Another con is that the process of selling a home is labor-intensive for an FSBO sale. You have to have the time to conduct research, advertise the property, field questions and offers as well as show the property.
Not to mention that there are upfront costs you have to pay to advertise online, make brochures and flyers and get an inspection and/or appraisal. Depending on the agent you work with, some of these costs may actually be lumped into the commission fee and closing costs, so it wouldn’t be as large of an upfront investment.
It’s also important to note that, in an FSBO sale, you typically still have to pay the buying agent’s commission, if there is an agent representing the buyer. This commission could be upwards of 3% of the sale. That means, if you sell your home for $200,000, you would have to pay the buyer’s agent $6,000 for representation that you didn’t benefit from.
Unless you have experience in real estate, it’s not likely that you fully understand market values and accurately price a home. An agent has the knowledge and resources to help them guide you in setting the best price. That means you are more likely to overprice or underprice your property as an FSBO seller. While there are resources you can use to better estimate a realistic price, you may be over-or underestimating, which could impact how long the property is on the market and/or your final sale price.
In addition, selling trends suggest that FSBO listings actually sell for less than homes sold by realtors. According to the National Association of REALTORs, the median sale price of an FSBO home in 2019 was $200,000. The median price of agent-sold homes was $280,000. That means, even after commission fees, the seller still makes $65,000 to $73,000 more than FSBO sellers.
While inaccurate pricing by FSBO sellers could be one reason for this vast difference in sales results, another reason could be a lack of effective negotiation skills. Agents are trained to negotiate between buyers and sellers, but an FSBO seller is more likely to focus on determining which kinds of contingent offers are safe to accept. But one way you could combat this is to have the appraisal at your disposal so you know exactly what your property is worth.