Did you ever look at an activity and say to yourself, “That doesn’t look so hard. I think I could do that.” Take the example of playing golf. What’s the big deal? Swing at a white ball approximately 70 times during a typical four hour round and pick the spherical object out of a gopher hole 18 times and WALLAH! – – – you’re ready to tee it up at the US Open. That is until you actually get out there and try to do it.
What looks like a relatively simple task becomes your worst nightmare. Casually observing the sport on TV and watching true professionals play the game is a little different than doing it yourself. So too with trying to sell your home yourself without professional help.
I remember about fifteen years ago when the internet was just starting to have an impact on the real estate business. Many REALTORS® bemoaned how it would make the homeselling process simpler for the average homeowner and put my profession on the endangered species list. After all, promotion of a home would be easier and cheaper on the world wide web and more people would bypass our services. Well – – – fast forward to the present and let’s look at the facts.
For the past three years, 88 percent of sellers have sold with the assistance of an agent and only nine percent of sales have been FSBO sales. In 2003 that number was 14 percent. Of the homes that did sell FSBO, 44 percent knew the buyer before even putting it on the market. If you crunch the numbers that means that only five percent of FSBO sales took place where the seller didn’t know the buyer.¹ That’s a small number. So why has selling FSBO been on the decline?
Let’s take a look at how the homeselling process has evolved in just a short period of time:
The Pennsylvania Association of REALTORS® standard agreement of sale for real estate used to be 1½ pages when I started in the business. It’s now 13. By the way, that doesn’t even begin to cover the various addendum that are attached to the agreement. For the average person to understand what all the clauses mean and how they affect the party’s positions in the transaction is a daunting task.
In the state of Pennsylvania, it is required that sellers of residential property (with some exceptions), fill out a seller’s disclosure and present it to the buyer for review prior to signing an agreement of sale. This seller’s disclosure recommended by the Pennsylvania Association of REALTORS® is 9 pages long and asks hundreds of questions regarding the condition of the property. If a seller’s house was built prior to 1978, a lead-based paint disclosure is also required.
After signing an agreement of sale, now the fun begins – – inspections. Various inspectors look at the home through a microscopic lens. These inspections could include a whole house inspection, radon test, water analysis, septic inspection, and pest inspection to name a few. Very few homes ever go through this process unscathed and most buyers will want items fixed or conditions remedied prior to settlement.
Most sellers think this part of the process is strictly for the buyer, however, the seller needs to pay attention. If the agreement of sale is contingent on the buyer’s obtaining financing, are they qualified? Does the seller’s home fall under the physical and location guidelines for the type of mortgage being sought by the buyer? An appraisal of the property is always part of the mortgage process. If the house does not appraise for the price listed in the agreement of sale, what are the options?
Between time of signing the agreement of sale to settlement date, there are at least a dozen deadlines for buyers and sellers to meet in the standard agreement of sale endorsed by the Pennsylvania Association of REALTORS®. In today’s frantic-paced world, buyers and sellers find that trying to keep track of contingency deadlines while attending their kid’s school activities can be a real challenge. Miss a deadline and the agreement of sale could go down in flames.
Assorted Other Stuff
If the above tasks aren’t enough to make you think twice about going down the FSBO road, consider the fact that you’ll need to post your home on all the most popular real estate websites, take photos and or a video of your home, install a ‘For Sale’ sign in the front yard and inform the entire world of your personal cell phone number, take inquiry calls at all hours of the day and night, take off work to show your home during the day and/or night, give up a couple of free Sundays to conduct open houses – – – do you want me to continue?
Still think selling your own home is easy? Let’s set up a tee time at your local golf club so we can review this again.
¹ National Association of REALTORS® Research Division. 2014 Profile of Home Buyers and Sellers. Rep. 2014 ed. Print.