Nobody knows a home like its owner, but that doesn't necessarily mean that they're the best person for the job when it comes time to sell it. Just as a car owner isn't necessarily to best person to perform repairs. Many homeowners are tempted to try For Sale by Owner transactions, often because they think it will be easy... especially when local real estate markets are in the throws of a sellers market. Still others take the route in an attempt to maximize their profit and avoid paying Realtor commissions.
Statistics show however, that homes sold with the assistance of a professional real estate agent will net sellers a greater profit, usually more than enough to cover the commission and pocket additional money. According the National Association of Realtor's Profile of Home Buyers and Sellers, For Sale by Owner (FSBO) transactions accounted for 8% of home sales. The typical FSBO home sold for $184,000 compared to $230,000 for agent-assisted home sales, a difference of $46,000 - or an addition $32,200 after agent commissions.For Sale By Owner Contract Package
There are a LOT of forms that could potentially be used in any given sales contract depending on the home itself, the location, the age and restrictions. The documents summarized below should cover the basics of MOST single family homes located in urban or suburban areas.
Download the complete package here: Contract Package.
- 1-4 Family Residential Contract - Used for a single home up to a four-plex
- Third Party Financing Agreement - Used when a loan is involved with the purchase
- HOA Addendum - Used when the property is subject to a Homeowners Association
- Water District Disclosure - Required by the State of Texas when property is located in a MUD
- Sellers Disclosure - Required by the State of Texas with VERY few exceptions
- T-47 Affidavit - Required when existing survey is provided by Seller
- Lead Based Paint Addendum - Required by the State of Texas when home was built prior to 1978
- Amendments - Used when making changes to contract after execution - typically after inspections
- Realtors have access to market data; recent sales in the neighborhood as well as your competition... comparable properties that are also on the market. Studies have shown time and again that homes that are priced correctly when first listed sell faster and for more money than those that linger on the market.
- Realtors can show your home when when you aren't available, can respond quickly to calls from potential buyers and their agents, and get honest feedback from showings - all of which are typically much harder for homeowners to do.
- Realtors tour homes daily and are most familiar with what the average homebuyer wants to see. They can look objectively at your home and suggest ways to improve its appeal, through minor repairs, cleaning and staging.
- Buyers are FAR more comfortable touring properties without the seller present. This allows them to relax, and explore rooms, and visualize themselves in the home without the pressure of a seller hovering over them. At a For Sale by Owner sale, the seller must be present for all showings.
- One of the primary duties listing agents are responsible for is screening visitors to your home, which provides a measure of safety that FSBO sellers simply don't have. Realtors also prequalify potential homebuyers, making sure that only those people who can afford to buy are able to see your home. There's no sense in showing your home to someone who can't afford it.
- Realtors have extensive marketing experience, relationships with other Realtors and buyer's agents, and in most cases, the backing up a brokerage that is capable of syndicating marketing materials for your home much broader than sellers can as individuals.
- Realtors are experienced negotiators, and can help ensure that you get an appropriate price for your home. They'll guide you through all the appropriate paperwork making sure you're compliant with all national, state and local regulations. And they'll ensure that all timelines are carefully met including inspections, appraisals, survey, lending deadlines, and closing.
Most homebuyers these days work with a buyers agent to protect their interests. For Sale By Owner sellers likely will be negotiating with a professional and depending on their own skills to finalize contracts. In addition to likely leaving money on the table, FSBO sellers could leave themselves open to legal problems without the benefit of an experience real estate attorney.
FSBO transactions can be successful; the National Association of Realtors tell us that 9% of FSBO sellers are. But those other 91% of homeowners prefer to work with a professional rather than risk an unsatisfactory selling experience. Then there's also the following risks to think about:
- Buyer agents often avoid placing offers on FSBO homes, effectively limiting your potential buyer pool.
- Most FSBO "success stories" involve buyers and sellers that previously knew each other.
- Homes sold by owner stay on the market on average 8 weeks longer.
- Buyers don’t typically pay commissions for a Realtor's service, advice and insurance protections for. They hesitate to buy without this protection unless they get a good deal. This defeats the FSBO's goal of getting more by saving on commissions.
- Thieves often prey on FSBO homes as they can pose as potential buyers to research potential targets.
- Contracts with unqualified buyers tie up homes for weeks, costing you the attention of other, qualified buyers.