Do FSBO’s (For Sale By Owners) Realy Save Money?

I have heard for years from people, “I can sell it myself!” and the simple answer to that is – Yes you can!

The most common reason I hear for doing this is a savings of money, I understand that and I get it.

Earlier this year I had an experience with some potential clients who made it clear they wanted to do it themselves. I want to save money as well, however over the last few years I have realized that somethings are best left to professionals. I thought I could save money by cutting down a tree by myself…..turned out to be the most expensive cost savings venture I have ever encountered. I had to replace and repair the many things I broke after the tree was down. I only mention this because my effort to save $850.00 ended up costing about $2,000.00.

My potential clients came to me and said “we like to try doing things ourselves first to see if we can save some money”. Who was I to ague with that rational. I later found out that they had bought a house and subsequently were trying to sell their own home. They told me where they bought so I decided to look up their property and research some sales in and around the area. I was a bit surprised to see the purchase price, as it seemed a bit high – my research revealed that it might have been almost $30,000 higher than the average in the area. That research was confirmed later that year when the same model home  was listed around the corner with almost exact same improvements was on the market at lower price and never sold in what was very much a sellers market. because they chose to work on their own they had no representation as Buyers they decided to purchase the home with the agent that was hosting the open house. So based on the research and being generous I will say they may have overpaid by $15,000 – $20,000.

Now onto the sale of their home. They chose to employ the services of a local FSBO or For Sale By Owner company. The Home sat on the market for over 2 months with few showings and 2 failed deals, The failed deals were buyers that just decided to walk away and there was no recourse and no way to find the AWOL buyers. The Home did eventually sell but it sold for about $28,000 less than the asking price and still had to pay half of the commission rate because a realtor brought them the offer. So calculate in another $10,500.00. They felt obligated to accept the offer because schedules and deadlines were rapidly approaching and they had no representation to help address the issues they were stumbling over. I hate to see these scenarios play out because its not good. A great or best case scenario is always a win win and in this situation I only saw some one win and someone else loose.

This story is not the end of the world and I am probably certain these people love their new home. What really infuriated me was looking back at the For Sale By Owners website and reading all about how much money would be saved if you choose to sell it yourself. FSBO companies constantly promote only a savings but never once talk about service and or potential pitfalls. FSBO companies charge you a stepped or staggered rate based on the services they provide and then goes on to state how much sellers will save and how easy it will be. I didn’t see any savings for these people and nor was it easy for them. Fact is I calculated that the entire process using the low end of the spectrum and found out that the entire process probably cost them close to $22,000.00 – when you factor in the lower sale price of their own home and still having to pay a co-operating broker 2.5% on the sale (at a much lower price) and the higher purchase price on their new home because of a lack of research and knowledge about average prices and recent comparable sales in the area.

My one vary salient point to this story is, be very careful when considering selling your home and making a purchase of a new home. Realtors do bring a great deal of value to the process and can help you avoid costly mistakes, not to mention that they are also accountable, closely governed and follow a strict code or ethics. I don’t see the same model practiced by these For Sale By Owner Companies. Here is a thought about For Sale By Owner Companies – Why are they only focused on 1 side of the real estate transaction? why don’t they have a service to help buyers? I have yet to see to anyone simply sell a home and not buy another one to live in ! Realtors do help and can provide a tremendous level service to both Buyers and Sellers. When selecting a realtor make sure you do your research and compare. A good realtor will first understand what you need and what is important to you. Then they will bring conscience service, research, information and knowledge that will enable you and or your family to make a well informed decision. Make sure you get what you pay for!

SCOTT ROY

RE/MAX JAZZ Inc Brokerage

21 Drew Street, Oshawa, Ontario L1H 4Z7

(905) 728-1600 or (905) 435-7355 Direct

scott@lifeindurham.com

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