Waterloo Real Estate For Sale By Owners Part 2
In Part 2 of the risks of buying Waterloo Real Estate For Sale By Owner (FSBO) without the professional help of a realtor we will look at Net Proceeds: how to ensure you are not padding the pockets of the seller but ensure each deal is a WIN-WIN.
As discussed in Part 1 I find many FSBO’s list their home above market or at the same price as homes listed on MLS system that are paying full commissions. Buyers of FSBO homes know the sellers are not paying commissions and therefore they tend to bring lower offers. I find many people who search FSBO properties are bargain hunters and looking to find great deals.
Lets look at an example of how we can get a WIN-WIN scenario while the buyer can still have the added security of being represented by a professional realtor.
If Waterloo Real Estate is selling for around $300,000 through MLS (realtors) then those Sellers are netting around $285,000 based on 5% commission. So if Joe FSBO lists his house at $300,000 (which in most cases I find they list even more) and I approach him with my buyer and we make an offer of only $295,000 with 2.5% commission being paid to me by Joe.
Joe FSBO is happy because he is still netting more than all his neighbors $295,000-2.5%=$287,625 and My buyer is happy because he or she has paid less than all the other homes in the area, which he can see with the sales statistics a realtor provided to him/her.
Realtors have access to this type of information so you can make an educated decision about the purchase.
So you may ask, “Why wouldn’t all sellers do this?” But it really comes down to a matter of circumstance. A big variable is time. Do you have the time to;
show the house
hold open houses on weekends
answer phone calls
arrange for other agents to show the property
book home inspections, professional photographers, home stagers etc.
do you know how to properly fill out all the paperwork?
For most people in today’s busy society these are time consuming activities that they just can’t afford to do with other responsibilities of work, recreation time and small kids.
Another big variable is exposure. Most FSBO’s think they are saving money by listing themselves but if they have a desirable home in a great neighbourhood they could be leaving money on the table. Listing through a realtor gives you the most exposure and the best chance of getting multiple buyers interested in your property which inevitably drives up the sale price of the home. In today’s hot real estate market we often see many homes sell for very close to if not over asking because there are multiple offers on the home. The chances of multiple offers with FSBO homes is far less because they don’t get the exposure of the MLS system and the activity of other real estate agents showing the home.
Again Realtors Help to Educate Buyers on Value. A buyer of a FSBO home may not realize that the home is actually priced very competitively and come in with a ‘lowball offer.’ Because Realtors have access to sales history we can show buyers that a price IS or IS NOT appropriate therefore reducing the amount of low ball offers for sellers or the amount of buyers who over pay for a home.
For your FREE microsoft excel net proceeds worksheet please click the link below
Net Proceeds Worksheet
At Knight Realty we strive to educate our clients on the entire process so they feel comfortable and confident with the decisions they make when purchasing the biggest investment of their lives. It’s a SMART MOVE!