A FSBO (for sale by owner) is when a homeowner decides to sell their property without a broker or real estate agent representing them during the transaction. The obvious reason why homeowners would want to sell their home on their own is to save the money they would need to pay in agent commission. Unfortunately, many FSBOs fail. Here’s why.
Preparing a home for sale
When preparing a home to sell, the time it takes to get your home show ready is an important factor that FSBOs often don’t take in to account. When a home goes on the market before it’s ready to be seen, you will lose potential buyers and may not get what the home is worth. Real estate agents know the timeline and know the importance of pre-listing tasks like decluttering, cleaning, staging and repairs.
Knowing how to correctly price a home requires extensive training, experience and knowledge of the market. If FSBOs price their home too high, buyer’s agents know it. FSBOs will be on the market longer and run the risk of receiving even less than they would if it was priced correctly. On the flip side, many FSBO’s leave money on the table by pricing their home too low. Often, they lose out on more money than they would’ve if they hired a listing agent.
FSBOs don’t have the knowledge, technology or connections to get their home in front of the right potential homebuyers. Without the right exposure, days on the market increases and the people that do see their home aren’t necessarily those who will be able to purchase it.
It’s a common misconception that agents don’t do much during the sale of a home. FSBOs understand that myth very quickly when it comes time to be available and handle property inquiries. It’s no easy task to coordinate showings and take time off work to do so. Homebuyers want quick responses and flexibility when they want to see a home. If they don’t get that, they have no problem moving on to the property down the street that does.
Experienced real estate agents know that for a sale to be successful, they need to do their homework on who is qualified to purchase a home. FSBOs often waste time and money showing their home to unqualified buyers because they don’t know how to ensure someone is pre-approved.
When the homeowner shows the home to a prospective buyer, it often makes them uncomfortable. They feel a sense of pressure and the space they need to envision themselves in the home is often compromised.
Navigation and negotiation
An important skill that good real estate agents learn is how to navigate and negotiate real estate contracts. Real estate contracts are confusing and there is much more to them than the home price. FSBOs usually don’t have a strong understanding of that and they can be taken advantage of if they don’t know what should be negotiated.
After a home goes under contract, most buyers will want to have an inspection done on the home. The chances that the inspector will find something wrong with the property is almost a given. That report will often have several issues. FSBOs often have an emotional response to an inspector’s list of what’s wrong with their home. That often clouds any understanding of how to handle the findings and can lead to losing the contract with the homebuyer.
Paying the buyer’s agent
Many FSBOs don’t realize that they are on the hook to pay the commission due to the buyer’s agent. Most buyers will have an agent when purchasing a home and refusing to pay the commission will drastically reduce the number of potential buyers.
If a FSBO manages to get through these other 9 challenges, there is still the daunting task of getting their home to closing. This includes a very tight schedule of timelines, tasks and paperwork that needs to be done by a certain time. Without knowing what each one is, FSBOs can drop the ball and the closing will fall through.
Everyone wants to save a little money, but when 10% of FSBOs actually sell per the National Association of Realtors, this might not be the way to do it. If you are considering selling your home, make sure you hire an experienced COListings agent to get it done right for you.