For Sale by Owner - Thoughts?

Question

Hi everyone,

I wanted to make this post because my parents are planning on selling their home in Snohomish and are moving to Idaho. They are planning on selling the house by themselves but I think they should hire an agent because they are very out of tune with market and the whole process in general. My ultimate question here is: what are the reasons I should use to convince them to hire an agent? or maybe not...

A little background on the property:

The house is located in the community of Machias, between Snohomish and Lake Stevens. My farther built the house in 88', located on 2.5 acres and boarders an elementary school. Its a 3 bed 2.5 bath and there is 3 car garage outbuilding (not permitted). The house is structurally very sound, just outdated in some parts. My parents have no clue what buyers are looking for and have already painted portions of the house horrendous colors. Ultimately a buyer would probably put another 10-15k+ into it. Whoever the buyer is, they would be buying the house because of the property/land.

As we all know, the market is very hot and people are migrating to the suburbs. Does this make is easier to sell by owner when the market is a sellers market? And if they were to sell it by themselves, is there a good strategy when pricing?

Michael Haas · Answer

@Jeffrey Auckland from what you've told us about your parents a FSBO is definitely a bad idea. Especially if they're living in the property they should expect 5-15 or more phone calls a day from buyers agents between scheduling and questions that come up. Their house will also likely sell for less as a FSBO than as a Listing, so the 3% "savings" isn't even a real savings. As Adrian mentioned, a good listing agent can net your parents tens, or even hundreds of thousands over asking and save them from having to do a job that it doesn't seem like they will enjoy much.

There's a reason that the average days on market for a FSBO is way higher than average days on market for a listing, and that's because having a listing agent add significant value to a sale, even just for the exposure, marketing, and efficiency of running the sale through the channels that everyone is accustomed to.

Cheers and best of luck! I'd sell sooner rather than later if I was them, inventory is low and buyers are absolutely desperate.

Mason Hickman · Answer

@Jeffrey Auckland

The vast majority of serious buyers work with buyers agents and most buyers agents (although not all) don’t want to deal with homeowners directly. There is a lot of paperwork and procedure that needs to occur for a transaction to go smoothly and most agents don’t want to rely on an inexperienced seller to do their portion properly. The buyers agents believe they will inevitably end up doing both sides of the work.

For sale by owners also indicate to the market that they are not serious sellers. If they were serious sellers, they would list it where all the buyers shop, the MLS.

Also as a seller, it would be good to have a buffer between yourself and the agents and buyers that come to see a house as buyers. Sharing information directly could potentially put your parents at a disadvantage in the negotiation.

With the level of demand in the market, they are probably best off getting it listed on a Wednesday, hosting open houses on Saturday and Sunday to get everyone in and drive a bidding frenzy with final offers due by Monday night. In my opinion, demand will drive the price higher than having a stagnant FSBO listing.

Aaron Flake · Answer

I'm going to disagree with Rob here. If their house is listed near the median which is around 700k, a 1k bonus isn't going to do much to motivate a buyers agent. As an agent, I can tell you I would MUCH rather work with a licensed listing agent than the owner of the property. At 700k the listing agents commission will be around 20k. Through marketing, paying for a professional photographer, helping with staging if necessary, paperwork, communicating with buyers agents, etc. the 20k is a bargain and the agent will allow your parents to maximize their homes value.

Russell Brazil · Answer

Im a high producing agent, and as a matter of practice I dont deal with fsbos because they are a waste of time. The deal always ends up falling apart because the seller is a pain to deal with, doesn't negotiate in good faith, has unrealistic expectations about price, their house, the market and the process. Ive spent too much time on fsbo deals that never get to closing that I just had to cut them out to be more efficient with my time.

John Nachtigall · Answer

A few things I would mention, some which have already been said

1. If you are going to sell something would you sell it in the centralized marketplace (MLS) or some stall miles from everyone else with no traffic (FSBO). If you want maximum price -> Maximum buyers -> Maximum exposure -> central marketplace which for houses is the MLS

2. Selling a house is a regulated activity. Failure to follow those regulations can expose you to tens to hundreds of thousands of dollars in legal exposure, both civil and criminal. Do they know not to ask the buyers how many kids they have? While the occurrence is low the severity is very high. The risk benefit is not worth it.

3. I don't know your parents, but if they are not skilled negotiators they will not get the highest price. This is not a friendly transaction, this is business

4. They will still have to pay a 3% buyers agent commission or agents simply wont show the house to buyers.

So this is the simple math. They save the 3% sellers agent commission. In exchange they do all the marketing and paperwork for the sale, take all the liability, are responsible for negotiation, and have to price the house properly (market knowledge). And lets not forget financing and having a independent person willing to tell you how to stage the house. Oh and they will be constantly cold-called by agents and wholesalers looking to take advantage of them because it is FSBO.

Let a professional do all that cr*p and sit back and collect the money.

Jim Dreves · Answer

Have them get an agent - Redfin or another discount broker or negotiate a lower commission with the agent they chose. My experience is a number of agents won't show FSBO simply because it cuts their industry out of the transaction. I would think their showings & thus offers to be less as a FSBO.

I wouldn't expect they'd get the quantity of offers that Seattle or Everett due to location but certainly priced correctly it will generate offers over asking. Redfin has it low @ 605 and Zillow high @ 640. As tight as the market is here I'd think even being dated it'll sell quickly at top dollar. Being next to the elementary will be a bonus for some.

I am not sure I agree that the value is in the land. Current zoning is 5 & 2.5 acres in that area and your parents lot is consistent with that.

As a side note my neighbors recently sold their home and had crazy offers above asking. Their caveat was the buyer is on the hook if the appraisal is lower than the purchase price.

Good luck to them and their next journey.

Dave Skow · Answer

hire an agent so the potential buyers don't need to make your parent more grouchy

Rob Gillespie · Answer

Hi Jeffrey.

Welcome to BP! great place to ask that question.

Most owner occupied houses are sold on the MLS by an agent. With that said, I do not feel that the LISTING agent is needed. There are discount brokers that will pop that house on the MLS for 500 bucks and the BUYERS agent will be the one that shows the house to their clients.

Have them offer a 1k bonus for the buyers agent in the brokers comments. This will motivate them to push your property over other ones. ( yes I know the is not ethical for an agent to have their bonus in mind over their clients best interest, but people are people)

The listing agent will still be involved, but not there showing the house. This strategy will save them a few grand.

The good news in this market, it is gonna sell either way if it is priced half way right. They can interview a couple top agents and have them show comps and this will give them a better idea of how much to ask.

I am sure I will have some haters on this post, LOL.

good luck to your folks!

Jeffrey Auckland · Answer

@Rob Gillespie this is interesting, I will definitely pass this information along and keep it in mind for myself.

Luckily they are having an old friend that is an agent/appraiser give them his two sense on the value but I think they are going to want an agent because they are old and grouchy and probably do not want to deal with they general public haha.

David A Lisowski · Answer

@Jeffrey Auckland

How's the rental market in that area?

Could someone on BP add this to their portfolio?

I can understand, that as the seller, they want to save on commission by going FSBO.

I'd at least have an attorney to review documents. My parents ran into an issue on a property with the entire HOA's plumbing and sewer line having an easement right through the property. Both agents missed it, but the attorney pointed it out. They squashed that deal. Sure that's from a buyer perspective, but it was also beyond the scope of the seller and agents.

But it seems the consensus from buyers' agents is they don't like FSBO deals. Not that you can't do it. You could negotiate a lower commission with the agent.

For Sale by Owner - Thoughts?

For Sale by Owner - Thoughts?

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