Do-it-yourself is a familiar concept to frugal consumers. If you’re handy, doing home repairs yourself can save a bundle, for example.
But do-it-yourself doesn’t always pay. One prime example is selling Austin real estate by yourself.
Figuring out how to sell your house in Austin without using a real estate agent is tempting because, if successful, you could save thousands of dollars in sales commissions. Saving that money might be even more appealing if you had to slash the asking price because of a sluggish Austin real estate market, which is where most home sellers find themselves today. It could also be enticing if you had an exotic mortgage that added borrowing to your principal, and you owe more than your home is worth. You also may simply want complete control over the selling process.
But the disadvantages of for sale by owner homes in Austin (known as FSBO) efforts are potentially just as large as the savings. That’s especially true in a buyer’s housing market, where drumming up interested sellers is much more difficult than a few years ago.
Cutting out the real estate agent could end up being a decision that’s penny-wise but dollar-foolish.
The basic formula is this: Will a successful FSBO save you enough in real estate commissions to make up for the market knowledge, potentially higher selling price, marketing efforts, deal negotiations and paperwork preparation that Forte Properties offers? Studies show that one in eight homes is sold by owner. Nearly half of successful FSBO sellers knew the buyer before the sale and didn’t try to sell the home on the open market, according to data from the National Association of Realtors. Fewer than half of FSBO sellers said they would sell another house by themselves.
The topic of Austin FSBO transactions is wide-ranging and controversial, but here are a few considerations:
Some FSBO home sellers might be under the impression they can save the entire 5 percent or 6 percent commission for selling a house. That’s not necessarily true. Unless your buyer doesn’t have an agent, you’ll have to pay 2.5 percent to 3 percent to the buyer’s agent. So commission savings on a $250,000 home sale would be $6,250 to $7,500.
That’s a lot of money. But then you must deduct do-it-yourself marketing expenses. That might include advertising and hundreds of dollars to be on the Multiple Listing Service, the primary database for home listings. You might also spend money hiring a lawyer to draw up a sales contract and incur myriad smaller costs.
You also must put a price tag on the time required to sell a house yourself. If an FSBO transaction is slower than one with an agent, you might end up making an extra mortgage payment or two. For example, if you already bought a new home, a quicker sale on the old home means you carry two mortgages for less time. That all goes into the calculations when running the numbers on whether paying a commission is worthwhile.
This is a hotly debated topic. Will an agent secure you a higher selling price? The National Association of Realtors claims homes sold by its realty agents bring 16 percent higher prices on average. In the end, the tussle over a higher selling price might be the wrong focus. Your concern should be attracting the most buyers. If enough buyers know about your home, multiple bids would ultimately set the appropriate price, regardless of your method of selling. So the question becomes: Can you, as a FSBO, market the house as well as Forte Properties? (Compare your marketing strategies with ours!)
To be successful, Austin FSBO sellers must be as objective about the house and its shortcomings as an agent would be.
Objectivity also will help set the initial asking price. Setting a price too high is a common mistake by FSBO sellers. You end up having to discount it below what it would have sold for if it was priced right as a fresh listing. A house that sits on the market can become stigmatized and buyers assume there must be something wrong with it.
When it comes to selling your home in Austin, spending smart involves not only what you spend but what you get for your money.