With so many red hot real estate markets across the country, DIY-minded sellers might get ahead of themselves and decide they can sell their own home.
It’ll practically sell itself, right? Not so fast.
When the buyers don’t come running after putting the house up for sale, for-sale-by-owners (FSBOs) are left scratching their heads, perplexed about what’s happening. After all, they don’t know what they don’t know. Here are six reasons that FSBOs typically find selling much harder than they imagined.
1. Bad pricing
Overpricing is a common mistake FSBOs make. They price according to what they want to get out of the home, not in line with market values. FSBOs don’t have a good grasp of how their home compares to others for sale, under contract or recently sold.
The features that FSBOs tend to place value on are not necessarily things that buyers are willing to pay for on an overpriced house. A FSBO tends to live in a vacuum when it comes to pricing. They aren’t as plugged into competing inventory as agents are, and they don’t understand why their home isn’t selling when others around them are.
2. Lack of marketing
A FSBO’s idea of marketing reach might only be Zillow and a sign in the yard. The way sellers present information, along with photos (or not), can significantly impact garnering interest and attention.
These sellers don’t understand the importance of preparation for sale, including staging and editing each space that will be photographed.
Amateur photos reflect a space that does not show well online. With 99.9 percent of buyers scouring the internet for for-sale homes today, the first showing happens online, and the second might or might not be in person (as a result of COVID-19) today.
A poorly positioned property that is not easy to find and not on the radar of thousands of agents and buyers risks getting overlooked.
FSBOs don’t know the right keywords to use to attract the right buyer pool for the property. Additionally, there could be vital information that is overlooked or not communicated, causing buyers to swipe right onto the next listing.
3. No access
It’s no surprise that most FSBOs sell on their schedule. Showings happen when convenient for them, which might mean they are not available to show the home when a buyer wants to see it.
Delays in responding to calls and inquiries mean the buyer will simply move on to the homes they can see, and the sellers or agents (for listed properties) who are happy to make a showing happen in a time-sensitive manner.
Furthermore, most FSBOs don’t have a showing system in place to allow and coordinate access. Trying to do this on their own usually means they don’t have a secure and trackable lockbox system on their front door.
It’s dangerous to ignore these safety concerns when allowing unvetted strangers into one’s home. Furthermore, we know that having the sellers home during a showing can be a disaster, but what choice do FSBOs have? As they show their home, the chances of buyers envisioning themselves living there dwindle.
FSBOs’ sense of urgency just isn’t at the same level as that of a potential buyer or buyer’s agent.
4. Inability to talk money
Looky-loo, prospect, real buyer — FSBOs don’t know how to vet inquiries and tell one from another. They aren’t sure what questions to ask, resulting in showings to potential buyers who have no intention of buying or aren’t qualified to purchase it.
It can be awkward to ask people you don’t know all sorts of questions to determine their seriousness, motivation and financial ability to move forward.
A FSBO may lose prospects altogether due to not knowing when and how to follow-up after an inquiry or showing, which might result in a lost sale. They don’t know how to respond to questions or objections that could end up clearing a hurdle or hesitation that a buyer could have about buying their home.
Should a buyer want to move forward with an offer, FSBOs don’t know how to negotiate a successful outcome, and they likely lack the insight on how to craft a winning offer.
They might be too focused on one thing to see the value in another, and they don’t know how to move through the critical points of a negotiation to create a successful outcome.
A low offer doesn’t necessarily mean that sellers can’t get the right price. A DIY seller isn’t sure how to determine what might be crucial to a buyer because, let’s be honest, negotiating on your behalf over the sale of your own home can be challenging.
A buyer and FSBO might not be able to be as direct as they need to be with each other on all issues involved in the transaction.
FSBOs could end up leaving valuable money on the table or not negotiating for terms they should have. They might not question specific requests the buyer wants or know how to move through those. If their property has particular challenges repair- or condition-wise, they typically lack the resources and know-how to push through those situations.
5. Unrealistic expectations
Because FSBOs think they know it all and can do it all, they might have unrealistic and unachievable expectations about the process. They might think the market should command a higher price than it is willing to bear or that their home is better than its competition, yet they don’t truly understand what that competition is.
They might not think they need to cooperate with agents who have a buyer and are willing to pay a selling commission because they will save a tremendous amount of money by doing so. When buyers aren’t beating down their door to see the home, they might be perplexed as to why.
6. Agent avoidance
Speaking of paying a commission, FSBOs willing to cooperate might think that’s all that’s needed to sell their home — let an agent bring the buyer and let him or her do all the work.
When agents showing up at their door are only interested in listing their home, they might wonder where all the agents with buyers are. In reality, agents don’t want to do twice the work for half the paycheck on top of taking on the additional liability of stepping into an unrepresented seller’s situation.
Agents know that these kinds of sellers don’t have a good grasp of the process. They might be unrealistic and not comply with contractual requirements to ensure that everything gets done within the required timelines.
Also, FSBOs might not understand that an agent representing a buyer doesn’t represent them (despite any disclosures provided) and continually rely on the agent for direction and advice, which puts them in a precarious professional position.
The sellers might downplay the condition of their home, deny they need to make certain repairs, or not handle those repairs as well as they would if a listing agent was managing the process.
When it comes time for closing, FSBOs might not understand that they have to be moved out entirely by the day of closing (unless otherwise negotiated) or that they have to leave the home spotless with no garbage left behind.
The reasons FSBOs crash and burn are predictable and avoidable. Unfortunately, DIY sellers often have to go through the sometimes painful motions described above to get a much-needed reality check. They’ll most likely realize that they need a skilled agent in their corner to get the highest sales price on their home.