I know we all think we’re real estate experts after watching endless hours of HGTV, but HGTV is about as real as the orange cheese on Cheetos – and equally addicting. Stop expecting that you should know what you’re doing and leave it to the experts. If you pick the right ones, you can relax, enjoy the process, make more money, stop beating yourself up and have more time for re-runs of Property Brothers. We’ll explore what you should and shouldn’t do when you’re buying or selling a property in this 2 Part Series – Top 5 Ways to Lose Your Money & Your Hair in Real Estate. Hold on to what’s left of your hair and join us for the ride!
Top 5 Ways to Lose Your Money & Your Hair in Real Estate
Part 1 – Be a FSBO Queen and Sell It Yourself!
Did you know that many of the best real estate agents use an agent to sell their home? Even though they have the expertise, market penetration and motivation to sell their own property, they will often choose to hire someone else for this important task. The reasons for this vary, but most often, these agents recognize that they are too emotionally invested in their own property, they won’t be a heavy hitting negotiator on their own behalf, they may appear too anxious to sell, or they say too much about the home during showings. If an experienced agent won’t sell her own property, why would someone with no experience try to do so? Typically the answer is that they want to save money.
FSBO’s (For Sale By Owner) can save money, but they frequently lose money. A typical FSBO is priced wrong, gets poor market exposure, sells for less than it otherwise would, sits on the market longer and exposes the seller to liability. Sellers don’t know what they don’t know which is dangerous:
- They can accidentally misrepresent square footage, speculate about the condition of items at the property, accidentally misrepresent things about the property, any of which can lead to later lawsuits.
- Sellers can forget important documents or parts of documents, or draft the documents improperly. Again this can lead to confusion, liability, closing delays, lender issues or potential lawsuits.
- They can miscalculate the market and overprice their home in a declining market which leads to a huge price cut later when they really need to sell.
- Sellers can underprice their home but think they did everything just right when it sells right away. Lack of market exposure in that instance might lead to one offer but not the multiple offers that good market exposure could have brought.
- Sellers can appear too anxious to sell or may highlight specifics of their sale, such as a divorce, that should not be disclosed. Either of these mistakes translates to a lower offer.
- Sellers may get nervous and take the first low offer they receive or, conversely, refuse a good offer and mistakenly wait for a better one that never comes.
- Sellers may be pleasers who want the buyer to like them and allow their emotions to get in the way of tough negotiating.
- FSBO Sellers will have to endure the criticism of their home from prospective buyers who are either insensitive or trying to get the price down.
- Sellers may not be readily available to show the property to prospective buyers which leads to fewer showings to qualified buyers and more time on the market.
- FSBO Sellers frequently skip the professional photography that sells homes. Bad photos lead to lack of interest which translates to more time on the market and lower offers.
Typically when a FSBO doesn’t sell, the owner throws in the towel and calls an agent. At that point the Seller has wasted a lot of time and effort, the home has been on the market longer than it needed to be and the Seller may have set an expectation of pricing in the marketplace that is inconsistent with what the market will support. Instead of selling your property yourself and putting your biggest asset at risk, take the time you would have spent on the FSBO process and use it to find an experienced, professional, local, full-time realtor that you respect. You’ll be glad you did.