A while back, we uncovered the truth about the accuracy of our beloved Zillow's "Zestimate."A recent article by the Washington Post made us wonder, are Zestimates totally invalid or do they still provide value to home buyers and home sellers seeking the hard facts behind the Madison, WI real estate market? Read on to draw your own conclusions and if you're a homeowner asking "But what can I do to improve my Zestimate?" - don't fret! The answers are just a click away! Read more >
You're about to list your home for sale, and you want to keep as much money in your pocket as possible once the transaction is done. Often, home sellers come to the conclusion that selling their homes themselves -- For Sale By Owner -- is the best way to go.
Sometimes, going the FSBO route can work out well. But for many home sellers, it's often fraught with some surprising challenges. We frequently work with home sellers who attempted FSBO and then decided to list their home with a Realtor when their homes didn't sell. And we've heard from others who sold their homes as FSBO but weren't completely happy with the end result.
Here are the lessons we've learned, about the pros and cons of going FSBO.
Selling your home as a FSBO might make sense for you when you have...
- a lot of time. Selling a home takes time -- from staging, to showings, to open houses, to answering follow-up questions from potential buyers and showing agents, etc.
- a thorough understanding of the real estate market. What does current market data suggest about the fair market value of your home? Choosing a reasonable listing price requires examining a whole host of data -- you need to know where to find it, how to interpret it, and how to use it when making the case with buyers that your home is worth that value.
- top-notch writing, photography, and marketing skills. You want your home's photos and description to shine -- these are the first things most buyers see, and it's essential that your marketing materials make a strong first impression!
- a wide network, and a willingness to use it. Selling a home requires more than posting an online ad and plopping a for-sale sign in the yard. You need to actively recruit potential buyers. Do you have the time, interest, and ability to network with your friends, neighbors and co-workers, to generate interested foot traffic?
- strong negotiation skills. Getting top dollar for your property requires knowing how to negotiate with buyers. And knowing what buyers will pay a premium for requires a depth of knowledge about the real estate market in your city and neighborhood!
If you read the list above and think, "check, check, check!", then congrats! Selling your home as a FSBO might be a good option. But for many people, going FSBO soon leaves them feeling like their in over their heads. If that describes you, here's why working with a Realtor might be a good idea.
Listing your home with a Realtor...
...saves you time. A lot of sellers are surprised by the amount of research, preparation, and constant communication involved in listing a home. An experienced Realtor can make it look simple, but the truth is, there are a lot of moving parts involved! If you don't have the time to manage them all, it might make sense to list your home with a professional.
...saves you peace of mind. Your Realtor handles the hassles -- the phone calls, the emails, the back and forth with other agents. And your Realtor handles the checklist of legal documents and deadlines that come along with selling a home -- so you never need to worry about missing paperwork, missed deadlines, or other slip-ups that can derail an otherwise solid sale.
...instantly widens your network. We're constantly in communication with other Realtors, networking our listings to see if they match the needs of other buyers. This is the kind of highly customized exposure that an online ad and yard sign will simply never be able to attract.
...makes you more money. The most common reason sellers choose FSBO is to save commission fees. But an examination of local real estate data shows that FSBO sellers often walk away with less money than their homes are worth -- sometimes up to 13% less money! That's significantly more than they would have paid a professional Realtor in the first place. It's shocking and sad to see how much money FSBO sellers can leave on the table simply because they don't know any better.
...gets the job done right. Why do Realtors make you more money? Because a good Realtor knows the market inside and out. She can use her knowledge and experience to suggest the best possible listing price for your home, to market your home successfully and aggressively -- and to negotiate at top dollar.
And finally, an important note about contracts and negotiations...
Most buyers and sellers aren't experts in the ever-changing world of lending and mortgages. Without the help of a professional, they don't always ask the right questions or require the proper documentation from the other party. One of the most common complaints we've heard from homeowners who've tried selling FSBO is that their deal fell apart because of buyer financing issues. Most of these scenarios could have been avoided with proper due diligence up front.
On a similar note, many sellers typically don't understand the implications of various loan programs, which can lead to deals falling apart far too often. Some loan programs simply do not match with some types of properties -- this is critical information for every buyer and seller to know.
So -- at the end of the day, is selling your home as a FSBO the right choice for you? It's smart to weigh the true pros and cons before making such a big decision. We'd be happy to answer any of your questions as you decide the best path for you, your family, and your home!
My husband and I had just tied the knot. My domestic urges must have been in overdrive, because within days of the wedding, I found a house on a Madison "for sale by owner" website that seemed so perfectly us.
I had been combing the Madison WI MLS as a matter of habit -- but I had gone to only a handful of open houses, and I really hadn’t moved from curious to serious. We loved the Schenk-Atwood neighborhood, where we were renting an apartment. However, we also wanted to keep our mortgage affordable and not sacrifice our lifestyle in order to pay our housing costs.
Unfortunately, everything in our ideal area that even came close to our comfortable price point needed an incredible amount of work! We’d seen The Money Pit -- and we had been warned of the ways a fixer-upper can take over your life (for better or worse), so we were focused on our first home being as move-in ready as possible.
In the end, this two-bedroom house a little further beyond our ideal area held all of the charm we were looking for -- plus a kitchen and bathroom that were both generously sized and updated. As seasoned apartment dwellers, we thought two bedrooms seemed like more than enough space, and we were willing to overlook the lack of garage for the large basement and walk-up attic. One fast month later, it was ours, and we were moving in! A happy ending!
Now, I'm armed with 6+ years of life experience and a real estate license. I can look back and offer the following kernels of wisdom to “first-time-homebuyer me” and others.
Lessons I've learned:
1. Know your priorities. We sacrificed on location to get the house we wanted for our price. Was this a good decision for us? Probably. We’ve been able to comfortably roll with life’s punches (several job changes, new babies, travel opportunities) thanks to a very affordable monthly payment. However, location is the one thing you can never change about your house, and this will absolutely top our criteria for our next purchase. We really miss being in a more walkable area, and have some new family-related neighborhood priorities. I also think my husband will insist on a garage next time around! There will always be trade-offs; it’s about weighing them and making the best choice for you and your lifestyle. Make a prioritized list of your wants and needs at the start of your search and use it to keep yourself honest.
2. Hire a "Wisconsin Registered" Home Inspector. We asked a family member who is a licensed professional home contractor to look at the house for us. He helped us go into the purchase with our eyes open about some of the home's potential issues. But, even if he had pointed out every defect that a home inspector would have found, we wouldn’t have been able to use his findings to negotiate with the sellers, per the state-approved Offer to Purchase contract. This basically meant we bought our home "as-is." When we go to sell our home, chances are the buyer will want a formal inspection, and we’ll be on the hook for issues that may have been present in the home when we purchased it. The money spent on a qualified home inspector pays off up front in negotiations and down the road in peace of mind. A professional home inspection and report is in the best interest of every buyer.
3. Work with a buyer’s agent. We bought the home on our own, from a seller who was selling it on their own. While I don’t have a horror story to accompany this scenario, I do wish we had used a professional buyer’s agent to guide us through the process and help us pay attention to the details we overlooked. Sellers pay the buyer’s agent commission 99% of the time, so it makes sense to employ a seasoned buyer’s agent who can advocate for you and manage the paperwork and other details of buying a home, which can otherwise be pretty stressful. While we felt like we purchased the home for a fair price, now I know how much information should be used when determining market value, and we didn’t consider all of the pieces in the puzzle. When we go to sell our home, we will be subject to the market conditions and recent comparable sales when choosing a listing price and negotiating with a buyer, so it pays off to work with someone who knows this data when you buy.
I’m looking forward to finding our next home in the coming year or two and applying what I’ve learned to advocate for my family in the process. Our home has treated us well over the years, so I also look forward to giving it new life with its next owners!
Want to learn more? I welcome your questions and would love to apply my experience and professional knowledge to help make your next home-buying experience a positive one!