Are you considering selling your house as a For Sale By Owner (FSBO) in New Jersey? YES, it might be a good decision and YES, there are ways to do it in a very successful way. And YES, you indeed can save a lot of money by not paying commissions. But there are also potential risks to consider. Keep in mind, risks do not always comes in the form the big bad wolf but often comes disguised as the friendly helper along the road.
In this week’s blog we’ll dive deeper into the FSBO pros and cons, the impact of alternatives to consider and want to leave you with some ideas how you can approach the For Sale By Owner process. At Ritsel Homes we encourage sellers to educate themselves before making a decision so why not joining us as we unpack the various component in this week’s update.
For Sale By Owner (FSBO) is an increasingly popular option for home sellers who want to cut out the middleman. It offers a range of benefits and drawbacks that should be taken into consideration before making the decision to list their property on their own. To help prospective FSBO sellers understand this alternative, we’ve compiled a brief overview of the pros and cons of selling your house as a For Sale By Owner.
Let’s start with some of the benefits:
Pro #1: No Commission or Realtor Fees
This is number one reason why people choose to sell their home themselves! When selling through an agent, the homeowner / seller pay a commission typically between four to six percent of the sale price. While it’s negotiated during the listing process, any commission is usually split between agents allowing for both the seller’s agent but also the agent that brings the buyer to get compensated.
Overall not necessarily an unfair process but it all comes at the cost of the homeowner trying to get the best price. On the other hand, as an FSBO, the seller have no obligation to pay any commission as they will be handling the entire process but could offer to pay a lower percentage (around 2% to 2.5%) to a buyer’s agent. In both cases, no commission or half the commission, it could save them thousands of dollars that would otherwise have gone towards an agent’s services.
Pro #2: Control Over Sale Process
Selling a home can be a stressful, time-consuming process. As such, many homeowners opt for the convenience of an agent-led sale. However, there are some key benefits to selling a house as a For Sale By Owner (FSBO). One of the primary pros is that it gives the seller much more control over the entire sales process.
When selling through an agent, the homeowner has to rely on them to manage paperwork and negotiations with potential buyers. While this might sound convenient at first, it’s important to remember that the wrong agents can have only their own interests in mind – they will want to complete sales quickly and maximize their commission fees.
With FSBO sales, however, sellers can take their time deciding which offer is best suited for them and handle all paperwork themselves without giving away any excess profits or paying out additional fees.
Con #1: Difficult to Price Properly
One major con when considering a FSBO sale is that it can be difficult to price your home properly. Sellers may not have access to reliable data on market trends in their area and may overestimate or underestimate the value of their property. You also have to deal with the emotional aspect of looking at a house from a an outsider’s perspective.
Personally, my “castle” is the best in the street if not the town. You just need to know how many good memories we have from the past couple years. But is that how someone else with no past experience looks at it? Keep in mind, pricing mistakes could cost a seller time and money as they struggle with finding buyers who are willing to pay what they asked for.
Con #2: Limited Exposure
Selling a house without the assistance of an agent or broker means there will be fewer people aware that your property is for sale. Without exposure in the Multiple Listing Service (MLS), already establish social media connections and groups, print media, or other platforms typically used by agents, it can be hard for potential buyers to find out about FSBOs.
You may need to depend on word-of-mouth or your own social media marketing in order to spread the word about your house being for sale.
Consider this; what do you think the impact on the final sales price could be if you have limited exposure and end up with two or three potential buyers vs if you reach many active buyers and end up with twenty to thirty people interested in buying. It simply creates competition and often by far outweigh the potential savings associated with an FSBO.
Take for example the below research which show agent assisted sales on average sells for up to 35% higher than homes sold as FSBO. That far outweighs the 6% commission and other fees.
Con #3: Complexities of Paperwork
Paperwork is often the most underestimated part of selling a house as For Sale By Owner (FSBO). The complexities of paperwork can be difficult for inexperienced homeowners to navigate, and even experienced FSBO sellers can find it daunting. Selling your home as an FSBO requires you to fill out and file numerous documents with local title companies, lenders and government agencies.
This includes filling out IRS forms such as capital gains tax forms, filing transfer documents with the county clerk, creating contracts that comply with local laws and regulations and obtaining any necessary permits or licenses. Furthermore, you will likely need to hire a real estate attorney or accountant who specializes in residential real estate transactions to properly guide you through this complex process.
Now that we’ve looked at the FSBO side, what are the alternatives and how can it benefit you?
Selling with a real estate agent
Although the FSBO route may appear more desirable due to the lack of commissions, fees and other things, hiring a real estate professional can offer significant benefits. One of the primary advantages is that an experienced agent understands local real estate markets and can provide knowledgeable advice throughout the entire home-selling process.
With this expertise, an agent will be able to accurately price your property and is equipped with marketing tools such as video tours, social media campaigns and importantly a network build up over time that will help to promote your listing quickly. Furthermore, they’re adept at negotiating offers with potential buyers and managing paperwork efficiently so you don’t have to worry about any legal hassles.
More and more homeowners are opting to work with cash home buyers because of the advantages they offer. From a simple and straightforward process to quick and easy closings, working with a cash home buyer provides numerous benefits that make it an attractive option for any seller. In this blog we discussed 7 Benefits of Selling Your House to a Cash Home Buyer.
Other creative solutions
In most cases, sellers opt for the FSBO option because what’s in front of them is just a handful of options that does not fit their circumstances or priorities. We at Ritsel Homes understand and agree that one size does not fit one. One strategy, for example a traditional listing, is not necessarily the right answer. Instead, we build our business on the vision to create Real Estate Solutions that Impact Neighborhoods and Lives, One Home at a Time.
To do this we work with FSBO sellers in a way that respect their choice to sell their home themselves but just use our network to amplify their marketing efforts. Or sometimes, an alternative solution, as outlined on the Ritsel Homes website, might actually offer a better solution. Let’s connect and explore alternative ways on how we can help you achieve your goals!
In conclusion, selling your house as a For Sale By Owner can be worthwhile if you have the time and resources. It can be a great way to save money on commission fees, but it is important to weigh the pros and cons before making any decisions. FSBO offers the potential for more control over pricing, listing, and staging, however, it requires a lot of hard work, research, and know-how.