What are the pitfalls in selling your home yourself?
1. Bargain hunters know that the owner is not paying a sales commission. They will deduct that amount that the seller is saving from their purchase offer. And since an owner may be inexperienced in negotiating, or in the pricing of the home, the homeowner may be in for more trouble than the perceived savings are worth. The property may end up being tied-up in an escrow with a buyer that is not performing, or is trying to negotiate price and repairs all the way through the escrow process.
2. For-sale-by-owners end up letting complete strangers inside of their home. They don't have the opportunity to meet these potential buyers in advance. In addition, most buyers do not like to be followed around the by the owners of the homes that they are viewing. They want to open closets and cabinets, and talk amongst themselves. For sellers to follow them around would make them head straight for the front door. Real estate agents, on the other hand, know who they are showing homes to, and are, in fact, responsible for these people's actions.
3. Sellers don't even know if the people they are letting into their home are qualified to buy any home. That can be a lot of wasted time and effort. And since most home buyers are already working with an agent, or are searching on some source of the MLS (Multiple Listing Service), for-sale-by-owners are drastically limiting any potential buyers
4. There can be a great deal of emotion displayed by sellers who are selling their prize castle, and buyers who are making the largest purchase of their lifetime. Without a responsible professional who has the confidence and trust of both buyer and seller, negotiating a sale of this magnitude will be difficult.
5. Many sellers are emotionally attached to their home. They may rationalize that their home is worth much more than the similar home down the street that just sold. Buyers, however, will compare the home, and the asking price, to similar homes on the market, or those homes that have been recently sold. If the price is too high, buyers will reject it and move on to the next listing. The longer a home sits on the market, the less marketable it becomes. Buyers begin to wonder if something is wrong with the home. Many 'For Sale By Owner' properties are overpriced. They sit on the market for a long time before they finally list with a real estate agent. At the other extreme, many for-sale-by-owner homes are sold at an unfair, below-market price due to the inexperience of the seller. That can be a high price to pay for not having an agent assist and protect you. How many sellers are actually aware of all the state-required disclosures?
6. Real estate contracts and negotiations can be intimidating because they are complex. And, executed purchase agreements are binding on sellers, but not on buyers. Buyers can back out of a purchase contract, but it's not that easy for a seller to. Often times, sales are lost when the buyer is ready to buy, but no one gets a signed purchase agreement or an earnest money deposit.