Occasionally, one can see "For Sale By Owner" (FSBO) or “Principals Only” ads and signs. These owners believe that selling their own property will not only save them money, but will provide an advantage over the sellers who have their property listed by a reputable Realtor. Before deciding to take on this very important and legally complicated process, remember most Real Estate Lawyers do not recommend handling the transaction yourself. Here are a few of the reasons:
1. The exposure to potential buyers is limited – i.e. less than 10% of what a good real estate broker will generate. Which means your property or business will take much longer to sell.
2. The longer a property or business is on the market the lower the selling price. Why? Because most buyers think that if the property has not sold after a lengthy period, there must be something wrong with it.
3. The selling/buying process begins AFTER the buyer leaves your property or business. Most sellers think that all it takes is for someone to see their property, to imagine the potential earnings and that an offer will follow automatically. Remember that the buying process begins after the buyer leaves your property. If a real estate agent does not represent the buyer, the buyer usually leaves a property tour and begins to question the purchase. Realtors are trained on how to overcome buyers remorse, a very common occurrence.
4. Limited exposure often results in a lower selling price. In order to obtain the highest price possible for a property exposure is essential. Maximum exposure generates the highest price possible.
5. Most buyers find it extremely awkward to negotiate or to talk directly with sellers and therefore avoid FSBO properties.
6. Lack of negotiating experience and lack of pertinent information often results in a lower selling price, or worse, a bungled contract and possible lawsuits.
7. The majority of qualified buyers are working with experienced real estate professionals.
8. Many serious buyers will pass by a FSBO property merely because they recognize that it is not in the real estate mainstream. This can make them wary of making enquiries.
9. Since an increasing number of buyers retain an experienced real estate salesperson to represent them as their buyer-agent, you will probably be negotiating against an experienced professional.
10. Expected savings in broker's fees will be greatly reduced if you offer a commission to real estate agents as an incentive to bring potential buyers.
11. If you are planning to use a Lawyer to help you negotiate the offer, your lawyer’s fees will be considerably higher.
12. Real estate agents have broad access to the up-to-date market information. News reports cannot match the timeliness or the detail available to agents. Further, real estate agents are involved in property sales much more frequently than the average property owner. This specialization leads to expertise that provides an edge in negotiating and successful selling.
13. You only pay the commission to the real estate broker, if they successfully sell your property at the price you are happy with.
14. Accepting an offer is one thing, ensuring a safe and successful closing is quite another. Real estate transactions can have problems on closing. Expecting the buyer’s lawyer and seller’s lawyer to resolve the problems can mean the deal is lost. Lawyers are not paid to negotiate. This is when the involvement of an experienced real estate professional can be valuable since a realtor can act as a mediator, within the scope of the agency agreement.