Pros and Cons of Selling Your Own Home
If you want to sell your home in Hawaii and walk away with the most money, should you go it alone?
“For Sale By Owner“ also known as a FSBO – is real estate lingo meaning For Sale By Owner. Its pronounced “Fizzbow” When the time comes, should you become a FSBO and try to sell your own home?
Changing Market Conditions
The Real Estate market in Hawaii is changing. Prices peaked in Hawaii real estate a few years ago and many observers see glimmers of hope on the horizon. Buyers want to take advantage of shockingly low interest rates. In theory, if you sell directly to a buyer, you might be able to net more and increase your bottom line. If so, why would you want to pay the high commissions and reduce your net proceeds? In fact, selling yourself can be a risky game for amateurs in today’s complicated world.
How Hard Could It Be?
It sounds simple. Buyers see your ad, contact you and take a look at your home. Someone will quickly fall in love with your place and make a great offer. They will get a mortgage and the deal closes no problem. Is this realistic? Yes and no. It can and occasionally does work like this, but that is not typical.
If you get past the initial negotiations over price and terms, that’s the first hurdle. But even after going into escrow nearly every sale has at least one “Issue”. It could be a problem with the title to the property or an easement. Maybe there is something inconsistent in the purchase contract, a home inspection issue, financing problem, or a difficult tenant.
Experienced REALTORS know how to avoid most problems in advance, and how to resolve them when they come up. How will your skills stack up to the professionals? If you are representing yourself, and the buyer has their own agent (as most do), will you be able to hold your own against an agent whose job is to get the most for the buyer?
Take the Challenge
Take the fun quiz below to find out if you have the skills to become a FSBO. Perhaps you will learn that you need to brush up a bit on your marketing, negotiating, and contract knowledge before getting into the trenches.
Now let’s see if you have what it takes to sell your own home:
The FSBO Challenge- True or False
___ 1. I have lots of time and am easy to reach. I have a flexible schedule to devote to the planning, preparation, and showing of my home whenever it is convenient to a buyer.
___ 2. I know how to screen prospects and I’m OK with letting strangers into my home for Open Houses and showings without sacrificing my security.
___ 3. I will stay out of their way when they view my home, and I won’t take it personally if they criticize it
___ 4. I know where and how to advertise for results. I have marketing experience to apply to my home sale through the MLS, Internet, newspaper, color flyers, professional quality photos, and more – and a budget to spend on these items.
___ 5. I can price my home competitively, not subjectively, and I have studied the current real estate trends and the home sales in my neighborhood.
___ 6. I understand that buyers typically have their own buyer’s agent representing them at no cost to them. I know that they may not feel comfortable negotiating directly with me as owner.
___ 7. I realize that “courtesy to buyer’s agent” doesn’t mean I smile and serve cookies. It means that I am expected to pay around 3% to the buyers agent for their work.
___ 8. I can comfortably negotiate with buyers on price and terms, without becoming emotionally involved or eroding my position. I know how to compromise to achieve my goal.
___ 9. I am an attorney or am willing to hire one to help me understand the Purchase Offer, which is frequently revised and can be 15 – 40 pages long. I am prepared to make counter offers, addenda, and amendments as needed, and I have the technology to create and send digital documents as needed.
_____10. I am comfortable going through the steps needed to qualify a buyer for the mortgage (if applicable), and how to verify the buyer’s cash funds
_____11. I know how to comply with the latest Federal and State requirements. This includes seller’s disclosures, toxic substances (asbestos, lead, mold, etc.), building permits, tenants rights, as well as condo and subdivision documents. I know what I can and can’t say and do regarding “Megan’s Law” and Federal and State Fair Housing laws.
_____12. I am prepared to arrange for inspections and appraisals, and I understand the role of the other professionals involved in the sale such as home inspectors, appraisers, escrow and title officers, contractors, flea treatment companies, and more.
_____13. After spending the time, trouble, and cash to market my home, I’m convinced that my “bottom line” will be greater than if I just paid a Realtor to handle the sale.
The number of TRUE answers will indicate your chance of being a successful For Sale By Owner
1-4 = Stick to lemonade stands. You couldn’t sell popcorn at the theater much less your own home!
5-7 = If you like gambling in Vegas, give it a try. Your odds are about the same.
8-10 = You have some of the skills needed. Keep your favorite Realtor’s number handy.
11-13 = Go For It, and Good Luck!
Flunked the Test?
The National Association of REALTORS says that nationwide, over 90% of sellers use an agent. In Hawaii thanks to complex laws, an abundance of hungry attorneys, and challenging forms, the percentage is probably higher.
Passed with flying colors?? I might be a little biased, but you might still want to hire an expert. This little quiz is just the tip of the iceberg of hazards that can arise even with careful planning and the best of intentions.
It costs you nothing to talk to a real estate professional about selling your home before you decide what path to take. Remember that even if you decide to list your home, your Realtor only gets paid if and when they close the deal for you. You risk nothing. And if you think that hiring a professional is too expensive, consider what is at stake with selling your most valuable possession.
If you are determined to go it alone after careful study and preparation, best of luck. I wish you smooth sailing and a fat check at closing.