We want to sell our home ourselves, to save money. Do many people purchase homes this way? If not, then why?
When deciding how to go about the process of selling a home it is important to consider all of the options available to you as a seller. Do you sell it yourself (FSBO - for sale by owner) or do you contract with a Real Estate brokerage or do you find a Real Estate consultant to guide you along. Each of these choices has costs and benefits associated with it that should be fully understood to ensure that you make the best possible choice for your situation.
For sale by owner or FSBO has definite advantages in certain situations. When you decide to fsbo a home you stand to save at least half of any sales commission paid on the sale of the home. This is frequently in the range of 3% of the total price of the home. If the deal is completed and uncontested without any problems then the savings can be substantial. In the case where a problem comes up, then you must earn your savings.
Remember, this is what you chose not to pay an agent for. The array of problems that can occur is as varied as the people that participate in the real estate market, some are reasonable and easy to fix and some are anything but. One of the most important things to know about selling your home is that in order to sell it you must get people in to see it, remember your home is competing with all other homes on the local market the biggest challenge to selling your home is getting people in the door. Doing that is largely a function of competitive pricing, timely price adjustments and advertising; if you do all these things correctly then they should come. If your home presents as well as or better than the others the buyers have seen then you have a fighting chance.
Now to the specific question "Do many people purchase homes this way, if not, why not?"
As stated above, once you get them in the door you have a shot, but what must you overcome? First, many people have a concern when buying a FSBO that there will be no professional involved in the transaction and that it is one of the largest purchases they will ever make, this can be unsettling for many people. In an effort to solve that problem, many buyers will ask their agent to help them in the transaction. This presents the question of who will pay the agent? In a typical market buyers are not accustomed to paying an agent, this is left to the seller, if the seller is trying to maximize his savings he may refuse to do so.
Next, many agents are hesitant to accept the responsibility to work with a FSBO because they feel that they will end up doing all the work for both sides to ensure that they can see the deal through and get paid. Also if any problems do come up that agent is by necessity going to work to resolve them to the advantage of the buyer. If he fails to do so he can be accused of not acting in the best interest of his client and run afoul of his professional associations. If the agent is competent he will make the deal so one sided that the sellers can find it unpalatable to go forward and that can prevent him making any money. These are a few of the reasons that agents prefer not to work FSBOs, another is that to do so encourages people to diminish the available work for him and his fellow agents. Not many professionals are in the practice of slowly killing off their industry.
After all concerns of dealing with or without an agent are resolved then you must consider things like who will know what papers are required for a sale, what laws, such as disclosures requirements need to be observed, how is a settlement agent contracted, what papers do they need, the list goes on and on. In truth many of these questions are not difficult, but fear of the unknown is what gives people pause.
A thinking buyer will often decide that the best way to avoid many of these problems is to work with an agent, and we have already discussed why many of them are hesitant to work a FSBO.
The bottom line is that in a hot sellers market FSBO is a popular way to try to sell a house, for sellers, and it sometimes works but is it worth the trouble?