Some sellers have a misconception that they will put more money in their pocket by selling their home without using an agent and avoiding sales commissions. We affectionately call these types of sales, where the owner does not use an agent, a “FSBO,” which means “For Sale by Owner.” The National Association of Realtors (“NAR”) conducted a study in 2017 which concluded overwhelmingly, that 89% of all people selling their home were assisted by a licensed real estate agent. The study also concluded that 8% of sellers were not represented by a real estate agent. The other 3% of sales were not accounted for in the study. Homes where the owner did not use an agent sold for an average of $39,000 less than homes with agent representation. The same study concluded that 12% of FSBO sellers had trouble understanding and performing the required paperwork and 13% had trouble selling within their planned time frame.
Even more important than the sales price and commissions is the liability and risk exposure to sellers that do not use licensed real estate agents. Many sellers erroneously believe that the escrow officer will take care of all the legally required disclosures. Wrong, escrow typically will have an instruction that states just the opposite, that escrow is NOT responsible to provide the legally required disclosures relating to the transaction. What typically happens is that the escrow officer will provide instructions and the seller will erroneously think that the instructions provide all the legally required disclosures, when in fact they provide none. Under California law, failing to timely provide a buyer with the required disclosures, renders a seller highly exposed to potential liability and litigation. Remember the seller is responsible to provide all disclosures, not escrow and the law does not carve out exceptions for FSBOs.
In analyzing all the information relating to a FSBO transactions, I can say with complete confidence, that the net result typically is a lower sales price with a much higher risk exposure of a lawsuit than transactions where licensed agents are involved. Logically, using an experienced agent and placing your home on the multiple Listing Service (“MLS”), and allowing an agent to effectively market your home, will result in a higher sales price and far less risk than doing it on your own. Even transactions that appear easy at first can become complex very fast. Experienced agents can help work through any complex issues and are trained to timely provide the disclosures required by law.
Please feel free to contact Palisade Realty, Inc., for a free confidential consultation. Let us plan the successful sale of your home. Our goal is to maximize your profit and minimize the risk.