Spokane Real Estate For Sale By Owner
The 10 Pitfalls of For Sale By Owner
Chances are, you’ve noticed a “for sale by owner” sign planted firmly in front of a house or two. It’s not entirely uncommon even here in Spokane where we have so many excellent real estate agents. You might believe this is a good approach to selling your Spokane home and keeping as much of the profit as possible. Unfortunately, in Spokane real estate “for sale by owner” rarely has the desired outcome.
There are a number of problems associated with the FSBO (For Sale By Owner) approach. Some of these problems are fairly obvious if you give the situation serious consideration. Others have made themselves known after years of failed deals and disappointed sellers.
Every homeowner deserves to receive a fair market value for their property. But this doesn’t mean you should rely on the FSBO approach. Even if you entirely eliminate the real estate agent’s commission, you’ll most likely still earn a smaller profit than you would have with professional assistance.
Still not convinced? Let’s look at 10 reasons why traditional real estate listings are still the best way to go.
1. Undervalued Property
The average real estate agent will charge a commission of 4 percent of the closing price. That means if you sell a home for $300,000 you would lose $12,000 to commission fees and walk away with $288,000. Now, $12,000 may seem like a lot to pay, but let’s consider an alternative that happens far too often:
Your home is worth $300,000 because of the current market. A real estate agent is able to deduce this and market the home at that value. Without the expert input of the agent, you might only value the house at $200,000. The house gets offers quickly, and you might even be happy at first.
Take a moment to compare the bottom line. You would lose roughly $88,000 in that scenario. And that is only one example. Homeowners very rarely value their homes correctly at first. They also very rarely adjust their home’s value over time if it does not sell quickly.
Does selling a home as an owner mean that you can avoid commission fees? Absolutely. But, you’ll most likely miss out on a large portion of the potential value as well. In many of these cases, the more the home is worth the greater the discrepancy between the owner’s perceived value and the current market value. If you truly want to get the most for your house, then you need to follow through with a traditional real estate sale aided by professionals.
2. You Become A Target For Scam Artists
A real estate agent may not be a knight in shining armor, but they do actually protect homeowners from certain unscrupulous acts. Scams are becoming exceedingly common in the Spokane real estate market. Those scam artists are not targeting professional real estate agents who know what to look for. They are targeting FSBO listings, and they are getting away with a lot.
FSBO scams come in a variety of forms on both sides of the market. They often even include fake documents, receipts, and appraisals. Some scam artists have even gone as far as to hire fake lawyers or appraisers to make their tactics seem more legitimate.
If you’re lucky, you’ll be able to spot the scam before you lose money or your property. But even in these “best case” scenarios the scam artist often gets away with a lot of personal information that they can sell or make use of. All of these potential problems are essentially eliminated when you choose to work with a professional real estate agent.
3. You Also Become A Target For Bargain Shoppers
Scammers aren’t the only people who actively search for FSBO homes. They are also a common target for bargain shoppers. The idea is that if you’re not selling through a real estate agent, then you’re going to list your home for less than average. As a buyer, you don’t want this to be true, but it often is as we discussed in the first point.
Chances are, you’ll get quite a few interested parties if you take the FSBO route, but the majority of them are going to expect an exceptional bargain. If the deal proceeds and they realize the savings aren’t as great as they imagined, then they are going to shop elsewhere. At the end of the day, it’s safer and more reliable to buy from an agent. If there is no monetary incentive, then there is no real incentive at all.
Between bargain shoppers and scam artists, you’ll have a lot of people trying to buy your home that you simply don’t want to sell to. You’ll either wind up making a deal with the wrong person or you’ll spend countless hours weeding out at the bad eggs. All of that wasted time spent is yet another one of the disadvantages that we want to discuss.
4. You’ll Waste A Lot Of Time
Selling a home is never a fast and easy process. Even with a professional agent, a house can sit on the market for months before someone is interested. Also, there is a lot of work that needs to be done from the time you decide to sell until a buyer makes that final transaction. There are inspections, listings, open houses, maintenance, and necessary repairs.
A lot of this work can be handled by third-party services. Oftentimes, the real estate agent in charge of the listing will help you arrange deals with contractors and inspectors. They will help stage the house and spend all of the necessary time dealing with interested buyers. That’s dozens of man-hours that you don’t have to waste.
You can easily think of selling a house as a job. The time you spend working at the job and the amount you earn are the most important factors to consider. With an agent, the amount you earn is increased and the amount of hours you work is decreased. Isn’t that what we all want from our jobs?
5. Time Spent Efficiently
While on the subject of time, consider what you can accomplish in an hour versus what a trained and experienced agent can accomplish in an hour. There is likely a tremendous difference. This is by no fault of your own, but simply because agents have experience buying and selling homes on a daily basis. Real estate agents know who to call, where to list homes, and what to do at exactly the right time.
You may end up spending hours preparing and marketing your home only to realize you’ve taken the wrong approach. You’ve hired the wrong people or you’ve scheduled an open house on a bad day. There is a steep learning curve involved with selling properties. Efficiency can only be learned with time and experience. An agent who already has years of experience selling homes is going to have a significant advantage over the average homeowner when it comes to time management.
6. No Access To The MLS
Most homeowners have a very limited list of contacts to work with. Even distinguished professionals with an impressive career network won’t likely have the type of contacts necessary to promote a home. Those homeowners are at a significant disadvantage because they have fewer people to attract as investors in the property. And with fewer potential buyers, they are guaranteed to have lower offers on average.
By contrast, experienced Spokane real estate agents will have a long and diverse list of relevant contacts. A great example of this is the Multiple Listing Service(MLS). The MLS is not something that your average homeowner can access. As a matter of fact, it is reserved specifically for licensed real estate agents.
The MLS is one of the first places that a potential real estate investor or buyer is going to look when they are interested in a home. Shopping through the MLS comes with a sense of security and reliability that other listing websites cannot offer. Even websites dedicated to FSBO listings pale in comparison to the variety and depth available from the MLS.
7. Fewer Magazines Will List The Property
Aside from the MLS, there are still other services useful for listing a property. Unfortunately, many of these services will not include FSBO properties. This is because of the inherent risk of buying a home without an agent involved. There are too many scams on the market and too many ways for a buyer to lose their money. As a result, most well-known real estate magazines only include listings with reputable agents.
The combined listing options of the MLS and the top real estate magazines are substantial. It simply does not make sense to lose out on all of that potential. Most buyers never need to look further than these two key sources. If you want your property to be visible to most buyers, then you need to work with an agent.
8. Buyer Qualification Process
What happens if you take the Spokane real estate for sale by owner route and you finally find an interested buyer after waiting months? One of the next steps is to qualify the buyer. You need to be certain the buyer is legitimate and their lender has qualified the loan for the purchase. It may seem as though it’s as simple as receiving a mortgage letter, but that is only one small part of the pre-qualification process.
In reality, homeowners don’t have access to the tools and the network needed to fully pre-qualify a buyer. That means every deal is going to have a substantial amount of risk.
9. Laws And Regulations Are Complex
Every state, city, and even neighborhood has its own laws and regulations regarding real estate transactions. If you’ve ever tried reading building regulations, then you already know how confusing they can be. And even if you think that you understand what is required, a simple error in phrasing could lead to a legal disaster.
Trained real estate agents spend years working in a specific location. Part of their job requires that they stay up to date on state laws and regulations that relate to their work. It’s an incredibly time-consuming process that must be constantly maintained.
10. Emotional Attachments Hurt Deals
We mentioned earlier that many homeowners undervalue their property when taking the FSBO route. However, an equally large portion of buyers actually overvalue their homes. This is bad news as well because it means the home sits on the market costing money without ever being sold. Why are they overpricing their property? Because they have a strong emotional attachment to the home.
Selling a house, even with an agent, can be an emotional ordeal. Especially if you or your family grew up in that home. But at least with an agent, you can rest assured that the home is properly valued and listed without any emotional influence. It’s the only way to guarantee that the house is on the market for the correct value at all possible times.
Spokane Real Estate For Sale By Owner Is A Bad Idea
There are a lot of things that can go wrong when you choose to sell your home without a real estate agent. You could be targeted by scam artists, overlook important state laws, or list the incorrect value for any number of reasons. You can easily avoid all of these problems by working with an agent instead. It may require a commission fee, but it’s a small price to pay to overcome these 10 serious disadvantages.