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5 Reasons You Shouldn’t For Sale by Owner


Do Not FSBOSome homeowners consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). We think there are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of our reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value
  • Your bank in the case of a short sale

2. Exposure to Prospective Purchasers

Recent studies have shown that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3.  Results Come from the Internet

Where do buyers find the home they actually purchased?

  • 43% on the internet
  • 9% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 9% over the last 20+ years.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $184,000 while the typical house sold by an agent sells for $230,000.   This doesn’t mean that an agent can get $46,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

TRY KCM FOR FREE!

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35 Responses to “5 Reasons You Shouldn’t For Sale by Owner”

  1. Pat Tasker February 6, 2014 at 3:48 am # Reply

    This past week I wrote an offer for my buyer client on a for sale by owner. The for sale by owner seller(also a licensed and practicing attorney!), countered for a secomd time and actually FORGOT to counter the price....had my buyer been cut throat and signed it, his error and self representation would have cost this seller TWENTY GRAND $$$$

    • Harold Hodapp February 23, 2014 at 6:11 pm # Reply

      In Texas, a licensed attorney is also allowed to practice real estate.

  2. Betty Johnson February 6, 2014 at 7:14 pm # Reply

    It's wise and profitable to sell you home- FSBO- A good idea to hire a lawyer for all the paper work and negotiation. THOUSANDS of dollars cheaper. You only need an attorney not a Realtor. Real Estate companies get paid WAY more than they should to sell a home Being an award winning Realtor for 28 years- now retired- I can now say I'm AMAZED that people pay what they do for the services realtors provide.

    • Billy Club February 12, 2014 at 3:13 pm # Reply

      @Betty Johnson Cut & Paste from your post: "Being an award winning Liar for 28 years-now retired- I can say now I'm AMAZED at what I fraud I was for my entire career.

    • Robin Leigh April 20, 2014 at 1:24 am # Reply

      I've been a Realtor and Broker for 28 years and I couldn't disagree with you more Betty Johnson. You denigrate the training, knowledge and value an experienced, professional Realtor provides to their clients.

      I hear over and over again from my clients how they could never imagine all how I and my staff do all that we do for them and how grateful they are for our services.

      Of course I know not all Realtors are the same (or equally qualified and truthful) by a long shot. Please tell me what 'awards' you were bestowed and the board of Realtors you were affiliated with.

      I want to do a bit of checking into your career history before I take you at your word.

    • Dawn May 8, 2014 at 4:02 pm # Reply

      Betty I'm AMAZED that you would even consider saying what you said, let alone saying it online! Did you hate you hate being a so called AMAZING Real Estate Agent for 28 years? Yes, there are some Real Estate Agents that are not worth paying for because all they care about are their commissions and not their clients. However, there are the ones that truly do care about their clients (like myself) and who really work hard at providing great service that is worth paying for (LIKE MYSELF)!
      Don't bad mouth Realtors because you seemed to have resented being one.

    • Bib August 4, 2014 at 1:59 am # Reply

      If all of you cared so much for your clients you wouldn't be charging outrageous fees to sell homes. The market has radically changed. The internet does 80% of your work. No agent, I don't care how good, deserves 2.5% for homes that sell these days in a month in most hot areas of the country. I live in southern California in an $800,000 home. I watched as I sold it in 2 weeks time and $40,000 of my money drained away. Neither agent did $20,000 worth of work. I am sorry many of you show homes on Christmas or have lost clients, but I would never ask you to show me homes on a holiday and I am certainly not around to pick up the bill from your lost business. It is ridiculous highway robbery and this virtual monopoly on sales ought to be opposed by every thinking home owner in our country.

      By the way, I can't help but notice that all those opposed to FSBO's are all real estate agents here. I never hear anything from brokers, escrow agents, lawyers, appraisers. Don't you think that is most telling? Look, no one likes losing an industry, but the world changes. It's time for this one to change as well.

      • Steve Harney August 4, 2014 at 12:47 pm # Reply

        Bib,
        We are not agents. No one at KCM even has a real estate license.

    • Diane August 30, 2014 at 9:50 pm # Reply

      For being a now retired Realtor® of 28 years, sure is quick for you to turn your back on what you stood for. You know this choice of career is not an easy one. Also, good Realtors that do stand for their clients regardless if buyer or seller, will do everything within legal limitations to get them all i not more than what they want. As well we are here to catch many error that a For Sale By Owner may not see. Furthermore, if you were a 28 yr award winning agent you should have more knowledge on how beneficial is to hire a REALTOR®.

  3. Veronica Sims February 6, 2014 at 8:41 pm # Reply

    Selling your home as FSBO seems like a great idea to save money ...until you have to deal with a lawsuit that can wipe off your savings and more. Buyers can come after the seller for not disclosing something and in that case you'll be happy that broker's E&O insurance and legal team will handle the mess.

  4. jim February 6, 2014 at 10:06 pm # Reply

    I sold my house by myself using Kijiji and it was not a issue. I saved about 18,000$ . I asked Realtors before my decision and the value they put on my house and then expected me to pay made me decide I could do it myself and I sold the house for 50k more than the Realtor said it was worth. The other issue I have is the quality of photos some realtors use a simple point and shoot camera.
    5 Reasons You Shouldn’t For Sale by Owner I have 18000 why you should and the 50000 more

    • Mike February 11, 2014 at 8:19 am # Reply

      "The other issue I have is the quality of photos some realtors use a simple point and shoot camera."

      This is a key--as a professional real estate photographer, I am constantly amazed at how low the bar is set for marketing photographs in real estate. I am always trying to educate realtors how I can make them more money by using pro photography. The vast majority of them just don't get it (until a seller complains about the photos they provided). I think sellers also need to realize they have a choice, and start insisting that their agent hire a pro photogapher.

  5. Billy Club February 12, 2014 at 3:11 pm # Reply

    Wow…28 years as a realtor but sees no value in using one. That IS dedication.

    This week I dealt with a FSBO seller who had a serious mold issue in the house. They went to great lengths to document the updates and upgrades they had completed on the house but nowhere in the material did they provide the receipts and estimates for the mold remediation they did…until pressed for it. But a conversation in the driveway of the house revealed they were moving because their kids were deathly allergic to mold. Partway in to the deal, they decided to hire someone to do their negotiating. We bailed.

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  7. Bill February 20, 2014 at 1:03 pm # Reply

    Reasons you should not work with realtors:
    They are way overpaid for what they do.
    They list with an inflated price and suggest lowering when it does not sell in a slow market.
    Most are interested in getting the listing and hope another agent brings a buyer.

    Regardless of how you are listed, it still takes the right buyer at the right time to sell any house.

    • The KCM Crew February 20, 2014 at 4:38 pm # Reply

      Bill, you are definitely right...if you are working with a real estate agent that fits your description, it's better not to work with one. However, the vast majority are not like that at all.

      Most agents earn every single penny they get.
      Most agents list with the intent to get it sold in the time table that best fits the family's needs.
      Most agents are interested in doing what's best for the buyer/seller and their families.

    • Harold Hodapp February 23, 2014 at 6:25 pm # Reply

      Question: How do FBOs screen who they are letting into their homes?
      How do they determine if a potential Buyer is pre-qualified to purchase
      An attorney has to specialize in real estate to keep up with the contract changes, etc, and I know for a fact that their fees are similar to a professional Realtor (side).
      There are more FSBO failures than successes, you just don't hear about them. Who is going to brag that they got less for their property?

    • Dawn May 8, 2014 at 4:12 pm # Reply

      Bill

      A great Realtor IS worth every penny...you must have had a bad experience. I agree that not every Realtor is ethical and does not have their clients best interest. Yes, there are some Realtors that will list your home for more than it's worth...but a great Realtor will tell the seller the hard truth and walk away if needed. Greed is sometimes with the seller, not the Realtor. Our goal is to actually "sell" the property because it's only a waste of time for everyone involved to have an over priced listing.

  8. Susan February 21, 2014 at 3:16 pm # Reply

    Hi
    I was very disappointed to see this article. It is a misrepresentation of the truth. I have no issues with real estate agents, just the fees that are charged for the amount of work done. The fact is that 92% of buyers do their own searches for properties that they wish to see and lawyers do the bulk of the paperwork to close. The form in between to start an offer is not rocket science, and a lawyer can do this too. Yes, I am aware it costs money to pay for the lawyer but it is a far cry from the 10's of thousands of dollars it costs when a real estate agent is involved. I think this article is a misrepresentation of the facts. There are many savy owners and buyers out there who realize and are turning to this method or lower flat fee services. Just like the Travel industry was toppled by internet travel services aiding consumers in finding the deals for travel and have lowered the cost of travel to the end user, it is only a matter of time before the same thing happens to the real estate industry. It is time to change a now defunct system that was created in the times that real estate agents had to go and find listings to show their clients. Most Realtors IMO are sullying the good reputation of the few good ones. This industry now seems attract allot of bottom dwelling types that get into real estate to reap the huge payouts of little work.
    I feel there needs to be reform in the way that this model works. There should be fees attached to looking with an agent paid by the buyer and a lower fee to the sellers. Why should real estate agents work "for free" until their client finds the home they want. This would hopefully make buyers a little more accountable and not make the sellers foot the whole bill.
    I for one applaud the system that has allowed people to choose how they wish to have their property and their investment marketed and sold. To each his own.
    This article is based on scare tactics to make the under educated buyer feel that this is such a hard job.
    Not so.
    Get a good real estate lawyer instead to help you close the deal.
    The comments about all the people a seller has to deal with was laughable.

    • Paul Anderson February 27, 2014 at 12:38 pm # Reply

      The fees that are charged are set by the market, not carved in stone. If there were a way for me to get paid for all the time I spend working with people who don't end up closing, get turned down for financing, buy a fsbo on their own, don't take the job in my city, can't get their present house sold in another state, decide rates are too high/property taxes are too high/prices are too high/whatever…basically charge by the hour or a fee paid up-front, THEN fees would come down.
      But the way it is, there are hours and hours of unpaid work that I am compensated for by the sales the close. Lawyers get paid by the hour, take a retainer up front and really don't care if or when you close. They are on the clock. Same with Flat Fee Listing Companies: they won't help you price or market your property, they would rather get a renewal on their Flat Fee than see you close.
      Funny how the "Travel Agent" analogy comes up time and again. I spend an awful lot of time making travel arrangements and happily pay a competent travel agent for most of my vacations. Worth every penny.
      Lastly, why do you think the Seller pays foot the whole bill? The only person bringing money to the closing table is the BUYER. Maybe is FSBO Sellers would actually lower their price to reflect the "savings" of not paying a listing agent, that idea might fly. But, oddly, every single FSBO seller I have ever dealt with claims they are due the money that they save, they don't offer it to the buyer. Not since the beginning of time has a FSBO seller every sold their house for less because they didn't pay a listing agent.

  9. teamsmithva@gmail.com February 21, 2014 at 7:39 pm # Reply

    I absolutely respect everyone's right to their opinion and their choice as to how to sell their property.

    Here are a few thoughts from my perspective as a Realtor who lists a lot of former FSBO properties:

    1. Owners are often not aware of current laws, policies, and regulations that can impact the sale of their property.

    Examples:

    Advertising
    I have seen many FSBO ads that include phrases like "perfect for couples" or "1 block from the synagogue". These statements can be in violation of Fair Housing laws.
    Buyers who find the content of your advertising or even something that you say while showing your home have up to 1 year to file a complaint with HUD, or 2 years in Federal District Court. The cost of defending against these types of complaints may be significant.

    Disclosures:
    I have met several owners who are not aware of the requirements of the Toxic Substance Control act, which requires them to disclose in writing if their home was built prior to 1978. Owners are also required to provide buyers with an EPA approved pamphlet explaining the dangers of lead exposure.

    Others are not aware of their state/local requirements as it relates to Residential Property Disclosure. Our state requires written and signed disclosure (by both seller and buyer) that addresses every major system in the home.

    I recently listed a home that was formerly marketed as FSBO. The owner stated that he had 7 bedrooms. When I researched the county-issued septic permit, I found that it was only for 4 bedrooms. So he had been advertising a misrepresentation! When I informed him that I would have to disclose what the septic permit said and make a copy of the document available, he got angry.

    As a Realtor, I can actually be fined if I list the square footage of a house incorrectly, even if the data that I use is supplied by the county government.

    2. Representation: State and local laws regarding this issue are changing. For example, in our state Realtors are not permitted to represent both a buyer and seller in the same transaction. Recognizing the conflict of interest that this can represent, the state has worked to educate both buyers and sellers about the importance of this change in the law.
    Dual agency limits the disclosures and counsel that an Agent can make to either party, rendering them little more than procedural assistants in most cases. I am in favor of this change in our state for ethical reasons.

    3. Policy changes. Our state recently enacted a change to the Home Inspection Process that limits the time frame in which such inspections can be conducted. More importantly, it limits the kinds of repairs that a buyer can request from a seller. For example, if a system is old (or not up to current code), but is deemed as fully functional by a licensed home inspector, then a buyer cannot request that it be replaced. In my experience, home inspections used to be a second round of negotiations. Buyers would leverage inspection reports to request additional discounts to the sale price or free upgrades within the home. This change serves to limit that process and make it more affordable for owners to sell their home (albeit buyers can still withdraw within 10 days of inspection results).

    As licensed Agents, we are required by law to participate in continuing education and pass state regulated exams in order to keep our licenses active.
    As a member of the local, state and national boards, I am apprised of ongoing changes that affect the sale of residential real estate.
    For example, a decision made in federal district court last week regarding RESPA may impact how/if agents recommend closing / title companies to their clients.

    When an owner hires me to represent them, it is not only my job to effectively market their property. I am also dedicated to ensuring that every aspect of the sale process is conducted in compliance with applicable laws, regulations, and policies.
    The law requires that we maintain records of every transaction (even those that do not close) for three years. We are subject to state audit at any and all times.

    So in closing, I would say that writing or receiving an offer is just a small part of my job. I am ethically and legally responsible to represent, guide, and protect my clients in the sale of their property.

    It is more than a full time job. I have shown property on Christmas day and taken calls about a listing during my wedding anniversary dinner. I have missed family functions and evenings out with friends in order to get the job done.
    I won't even go into great detail about the (thankfully rare) safety issues, e.g., angry neighbors who don't want the house next door listed for sale threatening me with a firearm, etc. Despite all of that, I still love what I do.
    I am not proud of myself, but I am proud of the dedication, education, and commitment that it takes to survive and thrive in this business.

    I truly respect your opinion and your decisions, but as an Agent who has worked with a lot of formerly FSBO listed properties, I did want to share my observations.

    • Stacey@Staceysellsidaho.com April 3, 2014 at 12:54 pm # Reply

      Very well written and I completely agree with you on every aspect of your very valid points! We do spend HOURS upon HOURS of time for our Clients, and in the end, the ones that just walk away- that's time and money we put out and never received back. It's so common for us to show a home on Christmas, Thanksgiving, New Years- every holiday and everyday of the year, because that day is usually a day that our Buyers have off. I've missed many family events and special quality time because of someone wanting to see a home and I go do my job! We aren't paid hourly and I wish that the general public understood that where we hang our license, is not our employer paying us every time we open a door.

      I LOVE what I do and I am proud of what I do! I respect others opinions and decisions as well, but I wanted to share with you that I support what you wrote. Agents are here to promote the best interests of the public- we do it everyday to make the American Dream come true!

    • Dawn May 8, 2014 at 4:26 pm # Reply

      Teamsmith...thank you!!! Thank you for explaining what so many people are oblivious to when trying to sell their own house and for what they say about Realtors not being "worth" what they are paid to do. This just shows that we are worth it..we put in countless hours of work that people do not realize that go into selling a house.

  10. teamsmithva@gmail.com February 21, 2014 at 7:45 pm # Reply

    One additional change that I forgot to mention: Even responding to a buyer's inquiry about the quality of your local school system can also leave you exposed to a possible Fair Housing complaint.
    Our local Board recently informed us of a case where an owner was asked by a buyer "how are the schools?" The owner responded "good".
    The Buyer then complained to HUD that the owner was actually making racial inferences, i.e. "good schools" = those with a primarily caucasian student population.
    Our Board recommends simply referring buyers directly to the local School Board.

    • Robin Leigh April 20, 2014 at 1:33 am # Reply

      I train my agents to provide our clients with resources about what they want to investigate. A good school can mean 100 things to 100 different people. We don't investigate school quality, crime statistics or anything else which has to do with an individual property or location.

      We are REALTORS, not arbiters or mediators of lifestyle choices in any way shape or form.

      And we are liable for every single thing we say and do. I'm thrilled that FSBO's have dropped to 9% of sales. It is a nightmare to be the agent representing buyers who are trying to purchase from a FSBO. We end up doing both sides of the sale, take all the risk, get paid half the fee and usually have to deal with a seller who 'knows everything' until they see the contract and discover they don't…and want us to handle it for them for free.

  11. Kurt Underkofler March 21, 2014 at 7:17 pm # Reply

    As I get older, I am getting a little more head strong. Do not get me wrong when I say this but, I think sometimes For Sale By Owner is easier if your ducks are in a row. I recently sold a house for $ 495,000 and by hiring all the right people, I ended up saving $ 20,000. It went smooth and I was grateful it did. I also think a good real estate agent is worth his weight in Gold. Great Information Thanks Kurt

  12. Ray April 2, 2014 at 3:54 pm # Reply

    My in-laws in Colorado used a service called PowerMLS to sell their home themselves that they have been raving about. The service only cost a few hundred dollars and saved them the selling commission. The service listed their house on the MLS, gave them access to MLS data of recent comparable sales in their neighborhood, and had a series of videos that taught them everything they needed to know. When we sell our home, we will probably use the same service.

    • sm July 31, 2014 at 10:24 pm # Reply

      Can you please let me know if by putting the house for sale in MLS your in-laws had to sell the house with a buyer realtor? I was told that realtors are the only ones to use this service is not that a home buyer can see this website right? Please let me know. Thanks.

      • cm August 7, 2014 at 8:58 pm # Reply

        Using PowerMLS provides internet exposure. The seller still pays the buyer's realtor. But, many real estate agents will not show a home when negotiations are directly with the seller.

  13. travel insurance To cuba June 25, 2014 at 12:14 pm # Reply

    I couldn't resist commenting. Well written!

  14. Daniel July 28, 2014 at 6:00 am # Reply

    when is it the right time to call a potential buyer to find out if they are buying the house???

  15. sm July 31, 2014 at 10:20 pm # Reply

    PER THIS ARTICLE SELLING YOUR HOME BY YOURSELF WILL NOT BE SAVING MONEY? IF THE HOMEOWNER SELLS AT THE APPRAISAL AMOUNT OF COURSE THAT HE/SHE WILL BE SAVING MONEY BUT IF SHE/HE SELLS WAY LOWER THAN THE APPRAISAL AMOUNT OF THE HOME THEN YES, WILL NOT BE SAVING MONEY AT ALL. I HAVE SOLD SEVERAL HOMES ON MY OWN AND HAVE SAVED LOTS OF MONEY!!! REMEMBER THAT THE BANK WILL NOT PROVIDE A LOAN IF THE PRICE OF THE HOME IS HIGHER THAN THE APPRAISAL. ALSO, WHY A HOMEOWNER WILL SELL HIS/HER HOUSE FOR LOWER THAN THE APPRAISAL...UNLESS THEY ARE DESPERATE TO SELL.

  16. David Plourde August 18, 2014 at 10:39 pm # Reply

    I’m intrigued by the comments in this article. There is dialogue for reasons to consider both sides of the decision. Agent or No Agent? In full disclosure, I’m not a Real Estate Agent, but I am a Real Estate Consultant, and there is a difference. As a consultant my job is to build relationships, study the market, ask great questions and listen to the answers, uncover my client’s needs, help them make informed and intelligent decisions, and satisfy all their needs. That goes way beyond sticking a sign in the yard and letting the internet sell the house. Consulting is what most “Agents” are missing in our industry, and why many feel the need to take the FSBO route. “Mr. Seller would you list with me if I could Net you what you want, and do all the work for you?” If the answer is “Yes”, this is not a money issue. Selling your home is going to cost you between 4-8% of sale price either way. Every market is unique, but you’re basically saving 3% in most markets by selling it yourself. Statistics show us in most markets homes with an agent sell for more than ones sold by FSBO’s by 10% or more. How much are you saving?

    It is a Seller’s market, but its slowing. With short inventory for 2 years, FBSO’s have more options. However, inventory is on the rise and soon we will see a balanced market again. Don’t forget about all that great new construction out there resale’s. If I have buyer’s I’m probably taking them there first, and showing the FBSO second. When it shifts to a buyer’s market again, how will FBSO’s fair without agents?

    Real Estate is the most litigious industry. Any one practicing real estate deals as a FBSO opens themselves up to it. It’s your path to choose. 1) Attorney fees, photographer, website listing, advertisement, stager, handy-man, buyer’s agent commission, seller’s closing costs...etc. Have your time away from family and work, hours on the phone, a lot of paperwork running around, negotiation, and open up for unchartered territory. 2) Hire a professional consultant to help guide you to decisions that make sense for you, and help achieve your goals. Have them do all the work. If they are not doing that, along with meeting or exceeding your needs, fire them! Get one who does!

  17. Jasmine August 30, 2014 at 6:44 am # Reply

    Ridiculous! Obviously written by an agent/broker. THERE IS NO NEED FOR AGENTS. We have bought and sold two properties fsbo with no problems.

    Remember BUYER: You do not own the property, the bank does! The bank will make sure the i's are dotted and the t's are crossed. Agents will be obsolete in a short time with the advent of the internet. Only the ignorant and the naïve go the "traditional" route. Fortunately, for brokers and agents most people are sheep.

    • Steve Harney August 30, 2014 at 2:14 pm # Reply

      Hi Jasmine,
      Congratulations on your success selling the two properties! However, regarding the rest of your comments, we would like to look at the facts instead of an anecdotal example.

      1.) It is true that buyers have used the internet more and more over the last ten years. But, it is also true that, during this time, the number of buyers using an agent to purchase their home has dramatically increased.
      2.) The percentage of sellers that have successfully FSBOed in the last fifteen years has decreased from 19% to 9%.

      BTW, there is no one working at KCM that is either a broker or agent.

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