Here at ListingSpark, we work with A LOT of sellers who start out as a For Sale By Owner. For that reason, I put together a list of 5 tips every FSBO (For Sale By Owner) should know. This came about because I am always amazed at the misinformation that exists in the FSBO world.
1) Zillow DOES NOT care if you actually sell.
What most For Sale By Owner sellers don’t realize is that nothing in life is actually free. Zillow appears to be a great option to get your listing out there without having to hire a real estate agent, but the reality is that a multi billion dollar corporation would not be giving away anything for free if there wasn’t a catch. So what’s the catch?
- Zillow is monetized by agents purchasing placement on listings in certain zip codes. Agents pay thousands of dollars a month to be showcased on your listing every day. There are actually 3 of them on there right now on your listing, go ahead and look. For privacy reasons, I redacted the photos, names and contact info of the agents below. But trust me, they are much more likely to get clicked on with a nice headshot, reviews and recent sales data compared to the innocuous “property owner” at the very bottom. BTW, to get to your info, the buyer has to scroll down to the VERY bottom of the page, and past numerous opportunities to click on an agent.
- Zillow only makes money if those agents keep getting leads and continue to pay for placement on YOUR listing. Here is another example of how they do that. At the very top, when a buyer wants more info, they likely click the big blue button right? But wait, that says CONTACT AGENT. You are not an agent, so where does that lead go? You guessed it, not to you! Below is from a For Sale By Owner listing on Zillow, but Zillow wants the buyers to contact one of the agents paying to be on this listing instead of the seller.
- The longer your FREE listing sits on Zillow, the more they are able to funnel leads to the people actually paying them…… Agents.
2) Most buyers have an agent, so you are losing a HUGE segment of the market by not advertising your listing where agents do.
Buying a house is a massive commitment and often times the single largest investment one has made in their lifetime. It’s not shocking that most buyers want someone guiding them through the process. Based on NAR Statistics, 89% percent of home buyers purchase their home with the help of an agent. So what does that mean for you?
A buyer may find your listing on Zillow, but 9 out of 10 of them will turn around and call their agent to take the next steps. And guess what? Agents hate working with For Sale By Owner Sellers. Here’s why:
- Their commission is not guaranteed on a For Sale By Owner listing compared to a property listed by an agent in the MLS where it is.
- Buyer’s and agents both can get very uncomfortable working directly with a seller. They are trained to work agent to agent.
- Agents feel like they will do twice the work even if you agree to pay their commission. Since you are not a seasoned agent and you don’t have access to the same resources as agents, they feel like you will rely on them to handle both sides.
- They feel like you will try to find a way to cut them out of the deal, so they are motivated to keep their buyer far far away from you.
3) You are going to get SO MANY calls, texts, emails and junk mail from agents while you are a For Sale By Owner. It becomes impossible to know who is really interested in buying your home.
Agents are trained to generate leads wherever possible to pick up new listings. For Sale By Owner sellers are at the top of the list of targets. You are trying to sell a house and you don’t have an agent, that’s like chum in the water to a shark. If you are already a For Sale By Owner on Zillow, you know exactly what I’m talking about.
Some real estate agents are transparent and will tell you up front that they are only interested in your listing. Unfortunately, others are not and they will use some less than ethical tactics to get a foot in the door. For example, they will tell you they have an interested buyer and the agent wants to come “preview” the house for that buyer. But, they walk through the door and start pitching you on listing with them. Or they tell you they have numerous buyers in their pocket, but you will only be able to access them if you list with them. Long story short, it becomes very difficult and frustrating to ever tell who is serious and who’s just angling to get the listing. Here are a few tips to snuff out those agents just trying to go after your listing.
- If the agent says they have a buyer and want to come “preview” the house, tell them you are only interested in showing the house to agents with their buyers present who are pre-approved.
- If they tell you that they have lots of buyers but you need to list with them. Offer to pay them the buyers agent commission and let them show the house to these mysterious buyers. You will find out quickly they don’t exist.
- Don’t fall for the “area specialist”. They may tell you they sell tons of homes in your area. Ask for their stats to verify and make sure it’s THEIR stats. Often times an agent will try to leverage their entire company’s sales information in order to seem like they do higher volume. In reality, agents are independent contractors and the ONLY thing that matters is how many homes that agent sells.
- If they guarantee to get you a certain price for your home (typically at or above what you are currently offering) ask them if they will put that guarantee in writing with repercussions if they don’t get it. Often times agents will give you a high number that they will tell you your home is worth. This is to entice you into giving them the listing, once they have the listing they quickly follow this up with advice to drop your price.
4) “The Zestimates should not be your main argument to justify your price”
Zillow states that their zestimate’s accuracy is within a 10% range. 10%!!!!!!!!!!! On a $400,000 house, that’s $40,000 that it could be off. Here is a quick read outlining all the other ways the zestimate could be wrong.
The reality is that most buyers, realtors and appraisers will not even consider the Zestimate as an accurate resource. So if that is the backbone of your argument to justifying your price, you do have an uphill battle ahead of you.
Especially in Texas where we are a non-disclosure state. Zillow doesn’t have access to much of the sold data that realtors and appraisers do, so they have no chance of being truly accurate when it comes to valuing your property.
If you want to properly understand what your home is worth, you should be looking at like kind properties (within 10% on sq/ft, same # of stories, beds/baths and quality of construction and interior finishes) that have sold in your neighborhood in the last 6 months. Active and pending listings are fine to look at, but until you know what the home has actually SOLD for, you shouldn’t be factoring them into a market analysis. At ListingSpark, we have a complimentary Market Compare tool that gives you this data. Click here to try it out.
5) You have options to get into the MLS without having to pay the big listing commission.
Many For Sale By Owners see this as a zero sum game. You are either on your own or you have to pay an agent 3% to list your home and another 3% to the buyer’s agent. That’s not true anymore! There are lots of options out there to get your home on the MLS with great exposure and online presence without paying 3% to do it.
ListingSpark is one of them. We give you the same exposure that any traditional agent would at a fraction of the cost ($7 a day which comes out to about $200 a month). Homes are selling extremely fast throughout the major metros of Texas so our average client ends up paying us $400-$600 TOTAL on the listing side. Check out another article we wrote about How to get the most out of a flat fee listing MLS for even more tips.
Yes you will need to offer the buyer’s agent commission. But guess what?
- Homes in the MLS on average sell faster and for a higher price, so in many cases you can actually raise your price to compensate for the buyer’s agent commission.
- You have a larger pool of buyers so you have an increased chance of multiple offers driving up the price even more.
- Buyer’s tend to be more well qualified when they work with an agent guiding them through the process, so you increase your chances of getting to the closing table with the buyer you choose.
I know that was a lot of information, so let’s do a quick recap of what you need to know if you are considering trying out being a For Sale By Owner.
- Zillow is not motivated to help you sell your home.
- Most buyer’s have an agent, so your chances of finding one that’s not going to have an agent tied to them is slim (11% to be exact).
- Get ready to field A LOT of calls from realtors trying to get your listing business who don’t actually have a buyer.
- Don’t trust the Zestimate.
- Find an alternative and get in the MLS so you can maximize the speed and overall profitability of the home selling process. Wink Wink, look at ListingSpark.com.
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