10 Common FSBO Mistakes

1. Concealing the property’s address

Buyers often drive by dozens of homes before coming up with a list of those they want to visit. If they can’t find your home, it may never get onto their short list.

2. Having an empty flyer box

Flyers lure buyers into your home, and help them remember its best features. They also keep buyers’ agents honest. In a slow market, some agents may be tempted to steer buyers towards their own listings—even though doing so violates the Realtor® code of ethics and some state laws. For example, an agent might discourage buyers from looking at homes listed by owners or other agents by saying that these homes have “problems” or that they’re overpriced. It’s harder for agents to do this if their clients have easy access to flyers.

3. Not getting on the Multiple Listing Service (MLS)

For a flat fee of just a few hundred dollars (with no commission for the listing agent), you can get a six-month listing on the MLS, Realtor.com®, and local MLS websites. It’s hard to imagine a more cost-effective way to market your home—Realtor.com® alone gets over 6 million visitors per month. As an added bonus, getting on the MLS will likely stop the flood of phone calls from listing agents who want your business. There’s one catch, though: to get an MLS listing you have to agree to “cooperate with” (i.e., pay a commission to) any agent or broker who finds you a buyer. But you should do this anyway. If you don’t cooperate, you probably won’t pocket all or even most of the commission savings. Buyers who make offers without the services of a buyer’s agent usually expect a price discount.

4. Setting the cooperating broker’s commission too low

Unless your home is selling for at least $1 million, offer a 2.5 or 3% commission to buyers’ agents. Many agents are hard-pressed right now, so they’re paying close attention to commissions. As a result, homes offer higher commissions have a big edge over those that don’t.

5. Making it hard for buyers to contact you

Realtor® associations make it devilishly hard for buyers to find FSBOs and to get in touch with their owners. Realtor.com®, for example, won’t allow listings to be described as FSBOs, nor will it display a FSBO seller’s contact information on its public web pages. (Note: Though flat-fee MLS brokers are required to give their own contact information on Realtor.com® and other MLS websites, good ones will divert all buyer inquiries to sellers.)

All of this is frustrating for buyers who want to find FSBO homes on their own in order to capture the cooperating brokers’ commissions for themselves.

6. Letting a real estate agent host an open house

Allowing an agent to host your open house can entitle him or her to the cooperating agent’s commission if a visitor later makes an offer. For buyers hoping to capture the cooperating broker’s commission for themselves, having an agent at an open house can be a deal-breaker.

7. Setting the asking price too high

From 1991 to 1996, the median price of a home in California fell from $200,660 to $177,270—or by about 11.6%. Smart sellers were quick to lower their prices and many got out of the falling market early. A good rule of thumb in a slow market is to visit competing properties and price yours so that it’s one of the two or three best values in your area and price range.

8. Playing leapfrog with a desperate seller

Avoid getting lured into a price war if you’re competing with a desperate seller. If you win, you may get less for your house than it’s worth. If you lose, future buyers will likely learn of your rival’s sales price and use it when appraising your home. It’s sometimes better to let a desperate seller go first.

9. Taking your home off the market for the winter

If you wait until March to put your house on the market, you may find that prices have dropped over the winter and that your home gets lost in the surge of homes that come on the market in the spring.

10. Giving up and listing with a traditional agent

Listing agents normally charge 2.5-3% of the home’s sales price for their services. That comes to $15,000 to $18,000 for a $600,000 home. If you’re having trouble selling your home, you’ll likely get more bang for your buck if you use that money to either lower your price or boost the cooperating broker’s (buyer‘s agent’s) commission. In a slow market, buyers’ agents play a much larger role than listing agents in determining which houses sell.

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Retrieved 29 November 2012 from http://fsboprimer.com/2007/01/10-common-fsbo-mistakes.html
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