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The #1 Reason You Can't Sell Your Own Home

"For Sale By Owner" sales typically do not work. Here is the main reason why.

 You may think that this topic does not apply to you, but most people will either try to sell their own home at some point, or have a friend who will, so I do think it touches most of us.

The #1 reason a For Sale By Owner (FSBO) will not succeed is NOT because of the MLS, and their lack of access to it.

The #1 reason a FSBO will likely fail is NOT a lack of advertising, although that certainly plays a role.

No, the #1 reason most FSBO's do not turn out well is because selling your home that way produces a lack of CONSUMER CONFIDENCE. That is right, the main reason your home will not sell FSBO is because consumers have no confidence in your product or how it is being sold.

They have no confidence that the paperwork was done right.

They have no confidence you have priced it right.

They have no confidence you will be easy to work with.

When a buyer is driving around a neighborhood and they see a RE/MAX sign or a Coldwell Banker sign in the front yard, they know the transaction is most likely being guided by a professional.

They can make a reasonable assumption that the property has been priced due to analysis and they know that paperwork and procedure has likely been followed. In other words, buying the home should be fairly easy.

When the same buyer, pulls in front of your home with that familiar red FSBO sign in the yard, they have learned nothing!

In fact, if there is a perception that is immediately generated, it is one of two things; first, that you, as the seller, are cheap and do not want to pay a commission. A cheap seller, means that negotiating with you will be extremely difficult. This is an obvious turn-off to the buyer.

Second, the buyer views this as an immediate discount in their future. You may think you are pricing your home accordingly after figuring in the money you saved by not paying a Realtor, but buyers look at it differently. Most buyers will see your price and immediately knock 6 or 7 percent right off the top, because in their minds you should be paying this fee anyway. It happens people, it is just a reality of how people think these things through.

Another HUGE aspect of why it is difficult to sell is the showing process. Buyers, in general, are not comfortable at all, with the seller showing them the home.

A buyer needs to feel free to go through their buying decision in a natural way, and that includes talking through objections. As an example a buyer will say something like "This room is really ugly, but I guess we could paint it" if I am on tour with them. This is an important step that buyers take to justify a purchase. They cannot do that with you present. They just don't feel comfortable putting your home down in your presence, so what happens is the buyers simply want the experience to end so they rush through and move on to another home.

Granted, there are some FSBO success stories, but about 7 out of 10 end up switching to an agent. Now you have some perspective on why this happens.

 

Mark Charter

Real Estate Center

P: 515-864-6444 (call or text)       

E: Mark@MarkCharter.com

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Mark Charter April 02, 2012 at 11:56 PM
@Kurt, you had an interesting comment and I can't help but wonder if it is a common sentiment. In a nutshell, you were saying that paying a 7% commission after your agent sells your home right away seems high, but after a longer period of time it seems justified. This seems backwards to me. In my opinion you WANT your home to sell right away, and an agent that marketed and priced your home appropriately with you from the start, deserves to walk away with the big commission. On the other hand, if your agent takes crappy photos, puts no flyers out front, writes a horrible marketing campaign and basically is a bad agent and your home does not sell for 5 months, that agent deserves more than the one who sold it in one week? I reread your comment and that seems to be the gist of it. I am just curious where you are coming from with that thought process. If it is a common one, that is another myth I will attempt to debunk.
Avril F April 03, 2012 at 03:41 AM
I've never done the FSBO thing, but I can totally understand why people would and i have to say I disagree with a lot of your assumptions about what people may or may not think about working with a FSBO vs. the traditional real estate machine. Having dealt with real estate "professionals" as a renter, as a buyer times two and also as a seller, their behavior leaves much to be desired. I can see why people would rather save the 7% commission and deal with the misery themselves. Oh wait....you still have to deal with it and pay(like misuse of the lockbox, incompetence of buyer's agent, etc.). I can also say that I thought our selling agent wanted the transaction to go through as quickly as possible, at the expense of perhaps giving us some advice, and not disclosing that the earnest money presented to us was not the customary amount.
B.A. Morelli April 03, 2012 at 03:42 AM
Mark. I've heard people suggest negotiating the realtor fee to get closer to the price you want. Are there times when negotiating the fee is appropriate for realtors?
Mark Charter April 03, 2012 at 03:49 AM
@Avril, I can never explain why some other agents do what they do. I can only speak for myself and my reputation speaks for itself. The testimonials I have on my site are real. I am the most recommended Realtor locally on Trulia.com. I was recently the runner up in the Cityview "Best Realtor" for 2012, and I give all of my clients a 1 in 10 chance at $5,000. Not sure who you have been working with, but if you want to work with someone who does it the right way, somebody who has the respect of his clients, call me next time.
Mark Charter April 03, 2012 at 03:55 AM
@B.A. as a general rule of thumb, be careful, because you get what you pay for. An agent who is always willing to discount, may not be the best agent for the job. The best are worth the most money. But, to address your question, that is done at times. There has been a number of times when a deal is close to being made but both sides are still apart. In that case, the two realtors may agree to split the difference to get the deal done, but they are under no obligation to do so. As a rule of thumb, when it comes to real estate agents remember this, they, just like you are working to support a family. Yes, it can seem like we make a lot at times, but most agents do not. The national average for realtors is in the $20,000 range. Also, if your boss asked you to do your job at a discount, would you want to? It is a strange industry where people expect us to work for less, but the same people would most likely be unwilling to work for less if they were asked to. Not saying we won't discount, I just want people to really be aware of what it is they are asking for.

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