Personally taking on a task at hand is nothing new for consumers, and it's a logical consideration and decision with so many aspects to life. For example, you wake up in the morning and enter the bathroom to get ready for the day. Who cleaned that bathroom? You, or did you hire it out to housekeeping? You then reach for your business clothing for the day. Who laundered or dry-cleaned those? In-house, or out-sourced. It's now time to prepare breakfast. Did you go shop for the groceries, or have them delivered? What about the car you're now getting into for your commute? Did you build that, handle the detailing, and do all the repairs on it, or do you hire that out? It's now lunchtime. Did you bring a lunch to work, or are you hiring that out by visiting a local restaurant? The point is that every day of nearly everyone's life includes some sort of decisions on what becomes DIY versus paying someone for performance.
Why do homeowners attempt to sell their home alone?
"Do It Yourself" or DIY in most any aspect of life usually comes down to two reasons:
- In hopes of saving money
- Lack of perceived value and benefit of hiring a professional
As described above, this is not at all unique to real estate. This is applied by consumers each and every day as they evaluate the decision on whether to hire someone for a specific task. This includes shopping, dining, construction, landscaping, car detailing, cosmetics, pet care, some aspects of health care, and nearly every facet of life to some degree. Nearly all services can have a DIY consideration to them. The decision of whether to hire a professional is often relative to the consumer's means to hire a professional. Some consumers are positioned such that they may be forced to take on certain tasks as DIY, while others can hire a professional, but have not yet seen the value and benefits, so in an attempt to save money, they actually lose time and money, or don't fully capitalize on the event.
How does DIY relate to selling a home?
The sale of one's home (and also purchasing one) is one of the largest financial endeavors that most people will participate in during their life, so the handling of such large amounts of money is unfamiliar territory to them. Likewise, the hiring process to handle such a substantial aspect of their life is also unfamiliar, and what do some people do when they're presented with unfamiliarity? They pull back, and don't proceed. Rather than push forward, research, learn, analyze, and evaluate, they pull back and steer clear, and the hopes of "saving" money becomes an enabler of that position. That sums up why many For Sale By Owners end up where they do. To them, the process of hiring a professional presents a lack of trust, and the sellers have not learned enough about how they will come out ahead by using a professional, so the conclusion is that it's expensive instead of beneficial. The result is that homeowners conclude "it can't be that difficult", so they go it alone. Some actually make it to closing, and many others eventually hire a professional after an exhausting trial run on their own. Those who do make to close may allow that to be perceived as a victory, and never realize the benefits and rewards they left on the table by choosing their path.
For Sale By Owner statistics
Let's take a look at some 2023 statistics from the National Association of Realtors and survey from Clever Real Estate. As a reminder, FSBO is For Sale By Owner.
- For Sale By Owner accounted for 7% of home sales in 2023
- Typical FSBO home sold for $310,000 compared to $405,000 for agent-assisted home sales.
- Sellers without an agent were twice as likely to say they weren't satisfied with the selling experience.
- Sellers admitted buyers distrusted them because they didn't have an agent (43%).
- 40% of sellers replied they struggled to understand the contract.
- 36% made legal mistakes without the use of an agent.
- Clever Real Estate's survey indicated sellers earned an average of $46,603 more when using an agent in both 2022 and 2023.
- About 1/2 of unrepresented sellers said they wish they had priced differently, and nearly half now believe their home would have sold for more with an agent.
- 50% of sellers without an agent admit to crying at some point in the process, and 52% felt overwhelmed by the entire process.
Is every seller using a real estate agent happy?
Do all those stats mean that every seller who uses an agent was/is absolutely thrilled and raving about the selling process? Over 4 million homes sold last year (nearly a 30 year low partially due to interest rates), but that's still a staggering number, so to think that everyone out of 4 million people was completely satisfied simply isn't realistic when it comes to human behavior, but the stats show much better of a result the process was when a professional was used.
Selling is hard. It's often very emotional. There is what seems like an endless list of decisions. And then there's the pressure of the money. Oh, the pressure. Money will wind people up so tight that sometimes you wonder if they're going to literally snap inside. All of this contributes to each homeowner's perception of the process. Stress can outright ruin an otherwise good process and experience.
Why do homeowners think they can successfully sell their home?
Keep in mind that "successfully" is a relative term. Making it to the closing table can be considered a success to some, but that is not synonymous with making the sale the most efficient and rewarding as it could have been. The reason people often tackle monumental tasks can be summed up by:
"You don't know what you don't know."
This one statement alone allows people to journey down a path of unknowns that can later become intense, extensive, and costly. In the case of selling one's home, most homeowners with limited exposure to the process will not be familiar with the entire document process, the legal language, contingencies, industry protocols, negotiating, and the expectations and reactions from buyers, so they unfortunately often end up relying on the representation of the buyer to help guide them. Remember though, it is the buyer's representative's job to get the best deal for the buyer. They are not hired to work in the best interest of the seller, but the seller often ends up in this situation because they are in very unfamiliar territory, so it becomes a situation of grabbing any life-lines available without admitting defeat or reversing course.
Why do homeowners get overwhelmed while selling by owner?
The answer to this is why most people get overwhelmed with anything. It usually comes down to knowledge, experience, and confidence. Should average homeowners have excessive levels in those areas when it comes to selling real estate? In most cases, no, not at all. The reason is that those characteristics come hand-in-hand with dedication to a subject or craft, so performing something once or even a few times will never approach or equate to the level of someone who has repeatedly dedicated him/herself to the task. That is what experience is, and why it is so important in any profession. The same applies to everything from sports to stock-trading to auto-repair. Regular performance builds experience and skill that cannot otherwise be attained. The lack of experience often leaves loopholes which invite failure, and the greater the stakes the more potential for substantial loss and/or damage. Repeatedly hitting the wall of "not knowing" after the perception that it would be easy is what increases stress, frustrates, and exhausts homeowners while trying to sell on their own.
What are homeowners unaware of while trying to FSBO?
This list is nearly endless and continues to evolve just as any industry does. It would be like trying to compress a decade or two of real estate experience and put it into a small punchlist of items. To provide some insight though, here are a few things that sellers probably do not adequately anticipate:
- Objectivity - It is nearly impossible for a homeowner to be objective about their home, its value, and the selling of the asset. This eventually causes them complications during marketing, negotiations, and offer acceptance.
- Time - Depending on the market conditions and marketing strategy, home sales can take hours or months to go under contract. Sellers often do not consider the latter and become frustrated with the time aspect not only for securing a buyer, but also for the entire timeline between contract to closing.
- Home Prep - For the optimum outcome and reward, selling isn't simply putting a sign up. An objective review of the home is performed against the current buyer preferences/demands in order to form a plan to put the home into a proper marketing condition. Unwillingness and lack of objectivity of one's home contribute to the avoidance or failure of this step.
- Negotiations - People may have negotiated some car sales, and have seen an episode or two of some real estate shows, but negotiating real estate includes much more. Predicting human behaviors in specific scenarios is a key element and that comes from experience of having conducted many transactions under different circumstances.
- Documents - A real estate transaction is never short on documents. Rarely will a homeowner understand them all without some consultation. Reluctancy to seek that can be costly. While real estate agents are not lawyers, they are able to assist clients with the legal document process.
- Marketing - Economics 101 says that demand helps drives price, so a proper marketing strategy increases the reward to the seller, but simply putting a sign up and a small social media post on a personal account underwhelms homeowners when they believe that's all it will take to get their desired outcome.
- People - This is probably one of the top factors of the entire process. It's the skill and talent of being able to manage people while also reading their actions and reactions during the real estate selling process. If someone is not a veteran in the industry, they simply will fall short in this area as they will not have the experience in this exact situation. Management includes calming people, sometimes nudging people, cooperating, and even sometimes being demanding... all while keeping agreements together and maximizing the reward.
The selling process has many moving parts, and nearly always includes a number of personalities which have to be balanced in order to make the most of a seller's "win".
Should homeowners sell on their own?
Just as we began this article, there is a trade-off for everyone on which services they wish to hire out versus going the DIY route. Most homeowners can eventually get their home sold on their own if they give it enough time and are willing to concede to the market's conditions, however, they will be missing out on the aspects that bring the most reward (and may never know what they missed). This includes the actual sales price and net take-home (money kept after the process) which is usually one of the most important aspects for homeowners/sellers. Additionally, going it alone will most assuredly cause more stress and dissatisfaction which is supported by the stats above from NAR and the survey. To help have a more rewarding experience in nearly every aspect, hiring a professional to handle what is usually the largest asset transaction in one's life is the more solid plan for selling real estate.
To discuss how we can make the difference with your sale of real estate, reach out by voice/text to 615-513-1577 or by email here, and we'll start sharing how your journey can be the most rewarding process for you.
