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Why Do For Sale By Owners (FSBOs) Fail Without an Agent??

Why For Sale By Owners Often Fail Without An Agent

If you are looking to sell your home, the lure of selling it yourself and cutting out the expense of a Realtor® is understandably tempting. It seems that if you could just sell it yourself, you will make more money simply by not having to pay 4-7% for “unnecessary” help.

However, statistically speaking this thought process has been proven false time and time again. Of course there are exceptions to all rules, but for the most part “for sale by owner” does not deliver the results that people initially expect. In fact, did you know studies have shown by owner sales take an average of 3-4X longer and net an average 10-15% less than homes sold with professional help? So you may ask, why do “for sale by owner” (FSBO) deals often fail?

Most importantly, the homeowner (unless he/she is a real estate agent) is not a professional in the field of selling homes. Professionals do what they do for a living full-time. The homeowner is taking on something that is a lot more complicated than it appears–with little or no experience.

First, they typically do not price their homes correctly. Is the average homeowner fully aware of how much homes are going for in their current market? How could a homeowner be expected to know how to price their home including price adjustments for blemishes or advantages that their home includes? A home priced too low will cost you money and a home priced too high will generate little or no interest in the property.

Another reason “for sale by owners” fail is a lack of marketing. When you hire a real estate agent, you are effectively hiring ALL of the agents in the area. Agents share listings on the Multiple Listing Service. Most agents have access to out of town buyers and investors who are often looking to move quickly. The listing agent spends their own money marketing your home effectively to give it maximum possible exposure.

The average homeowner usually does just three things: stick a sign in front of their home, advertise their home in the local newspaper for a couple of weeks and on the internet somewhere, and hope for the best.

Now if by chance the “For Sale By Owner” sign is located on a street that gets quite a bit of traffic, that “marketing” approach may garner some success (as well as a parade of unqualified and unknown passers-by). However, if the home is tucked away somewhere the sign is practically useless, isn’t it?

Even if your home does get enough attention to bring about showings and eventually an offer, what about the stress of all of the legal paperwork, contingencies, negotiation, buyer financing issues, property approval, inspections, title commitment contingencies, and legal transfer of possession? Wouldn’t it be nice to have someone that can handle all of that for you?

As you can see, in a FSBO situation, the money you thought you would save because you did not hire an agent could easily be lost in the end simply because you did not know how to navigate the transaction. This is why 85-90% of FSBO sellers end up listing with a local agent.