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Top 5 Reasons You Should Not For Sale By Owner

Top 5 Reasons You Should Not For Sale By Owner

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

  • 51% on the internet
  • 34% from a Real Estate Agent
  • 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.

3. 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 For Sale By Owner:

  • 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

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 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

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 estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 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.


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68 replies
    • Walter
      Walter says:

      Not likely, in fact I believe that in the future with all the regulations that a homeowner
      May by so overwhelmed with regulations that they could not navigate the process without the help of a professional. Remember the old saying that a person who acts as their own attorney has a fool as a client? Need I say more?

      Reply
    • Casey
      Casey says:

      Agree. We just sold our house FSBO in less than a week for over appraisal price. Buyers want houses, no matter who is selling it. Get listed on MLS with a small fee. Contracts aren’t rocket science if you can read, and we all know the title companies do all the work anyway. Real estate professionals have convinced the general public that their job is so daunting as job protection.

      Reply
      • Michael
        Michael says:

        You may be able to sell your home FSBO, but actually making more money is questionable. Selling a home over “appraised value”, seems unlikely. Maybe what you were give. As a Competitive market analysis, ands are pending at a higher price. A bank WILL NOT give a loan for more than appraised vale as they have to be able to use the home as collateral. Trust me when we say an agents job is a lot more then meets the eye!

        Reply
        • Maggie Lee
          Maggie Lee says:

          Agree! The lender will not do a loan if the house sold over the appraisal amount. Someone is going to have to make up the difference – either the buyer will have to bring the difference to closing (that should never happen) or the seller will have to reduce their agreed upon amount to match the appraisal.

          Reply
          • Cindi J
            Cindi J says:

            in the MI market we have been seeing buyers guarantee certain amounts over appraised value in order to get their offer accepted. I always talk to my sellers about this and often we accept an offer that can do this so that a bidding war doesn’t go to high just to crash in 3 weeks when we get the appraisal. WIN WIN the seller is protected and the buyer gets the house they want if they are willing to pay for it. Many homes are worth more that the appraised value, we all know that.

        • Ian Williams, Realtor
          Ian Williams, Realtor says:

          A home can easily sell for over the appraised value if a Realtor has a cash buyer. Since over 90% of buyers use a Realtor (and since they aren’t paying for the Realtor out of their pocket), this increases the exposure and is therefore more likely to occur. Also, knowing the market is important. I’m North of Austin, TX, where everyone wants to live. Due to this, the appraised value is ~10% higher in a lot of cases. Many people don’t study the appraisal trends.

          Reply
        • Jeanette
          Jeanette says:

          I’ve sold numerous homes over appraised value. In our seller’s market, most appraisers can’t keep up. And if you have a cash buyer coming from California who thinks the house is a steal, it isn’t going to matter what it appraises at.

          Reply
        • Paul Franklin
          Paul Franklin says:

          Banks and lenders (assuming one was even used in this sale) are concerned with Loan to Value (LTV) ratios, not Appraisal to Sale. As long as the lender is not lending more than the home is worth with a safe margin for depretiation and/or foreclosure/reselling costs, the sale price is irrelevant.

          Reply
          • Donna Gundle-Krieg
            Donna Gundle-Krieg says:

            Paul Franklin I am confused by your comment. The appraisal IS the value according the bank’s definition. At least in Michigan, that appraisal is key to what is loaned.

      • Jeanette
        Jeanette says:

        That is HILARIOUS! What Realtor are you working with to have that opinion?!?!? LOL Just listing your home in MLS(which with my company exposes you to 178 different websites all over the country takes sometimes days of work to gather all the information, pictures etc. It has been proven that Realtors MORE than pay for themselves, not to mention the stress reliever of knowing things will be done correctly–

        Reply
          • Cindy Gibson
            Cindy Gibson says:

            Anna this sounds like my husband for Sure! I can’t count the time in 25 years of service to THE PEOPLE , helping them with their real estate needs, that my poor husband has opted to stay home and watch old westerns, as he didn’t really want to go places with out me. People don’t realize that once they leave their jobs , it stays there for many until Monday on their return. Our job entails a 7 day on call situation most of the 365 days of the year. BUT, we are Realtors, and strive to help people in our comunities.
            4

        • Beth Allen
          Beth Allen says:

          #word Some of these people have absolutely no idea what they’re talking about! 20 years ago we were “smart” FSBO sellers before I was a Realtor. We “saved” $6k on the commission and probably lost $20K in too low price and inspection items that we shouldn’t have paid for but we had no one guiding us or fighting for us and we are so lucky we didn’t lose any more money or miss any of the state-mandated disclosures (there are way more now). Gotta stop reading these ridiculous comments. I’ve got a listing to input, an offer to write, and emails to answer for my wonderful, loyal clients that I would do anything for! And it’s 8:30 pm.

          Reply
      • Hope Cudd
        Hope Cudd says:

        I have been a Realtor for 26 years Casey. Trust me…you got lucky. For every lucky For sale by owner, I can show you 10 that had a nightmare of an experience and will never try it alone again.

        Reply
    • Jason
      Jason says:

      Yes, you can sell on your own! However you still open yourself up to possible law suits est. Example. You did not disclose a past insurance claim as required by law. They have the same issue after moving in and find out you did not disclose this. You can now be held liable for damages up to three times the amount. Or in Texas you are required to have a T-47 signed and notarized to the title company with in 72 hours of contract acceptance. If not the buyer can back out of the contract at anytime and you are required to return all earnest money.

      There is more to it than just a sign in the yard and a hand shake.

      Reply
      • Sawsan Gharib
        Sawsan Gharib says:

        In Texas for example there are 17 fill in the blanks in a contract that can get the buyer out without loosing their earnest money . Not to mention opening your house to “buyers” that are not qualified and god forbid can be criminals so u r japordizing your safety . In addition to the fact that realtors accompany only qualified and serious buyers to your house when u r at work so u do not have to leave everything to go open your door

        Reply
    • Dean
      Dean says:

      The amount of people that now use an agent has grown to 89% from about 69% 15 years ago. The trend has gone the other way as the marketing and paperwork has gotten more complicated.

      Reply
    • Shawn Schwartz
      Shawn Schwartz says:

      Real estate agents will not disappear! If you think so then you will be hiring a lawyer to sell your property which will cost you more . Your home is the biggest investment of your life. When you have a legal issue. Do you try to represent yourself? NO!
      Your agent knows the market more than anyone. It is a small amount to pay so you get top dollar for your big investment ! Never question your real estate agent and what they do for you. We work 24/7. I don’t know any other profession that puts that much time on the job.

      Reply
    • Raymond
      Raymond says:

      Did you not read number 3! Think you can negotiate with a experienced Agent who knows there stuff? Also keep in mind, Agents will be redirecting there Buyers away from your home because they belive that you won’t offer a commision! So your home gets little exposure. And besides if I can get you more $ than you could, why wouldn’t you hire me? If being a Realtor was that easy, than everyone would be doing it!

      Reply
    • Alyse Sands, Broker
      Alyse Sands, Broker says:

      Real Estate is an experience based vocation which requires knowing laws, forms, timing and how to advise in certain circumstances. I’ve been doing it for 18 years and, still, things come up that can challenge me. Professional Real Estate is not going to dimish. It can’t. It is not as easy as you seem to think it is.

      Reply
    • Jeanette
      Jeanette says:

      Oh I beg to differ–I’ve provided numerous comps to appraisers and negotiated raised appraisals to substantiate an offer–negotiation is everywhere. If you don’t have the comps to substantiate your listing price or buyer’s offer, you’re not going to be able to negotiate!

      Reply
    • Dave
      Dave says:

      Matt,
      Negotiate is probably not the right word when dealing with an appraiser. As an agent, you want to make sure that the appraiser knows everything they can about the area, comparable properties, and unique things that may substantiate the offer. Because lenders have to go to a pool of appraisers, they may not necessarily know the area as well as a local agent. So, it is important that they understand where we, as agents, are coming from and what the differences may be for the subject property vs others in the area. Many appraisers appreciate your point of view, and some just don’t. We provide this as a service to our clients.

      Reply
    • Rebecca Roble
      Rebecca Roble says:

      How do you know you saved “$45,000?” Did you have a bidding war? Did you pull comps? Did you valuate the difference with location, square footage, renovations, market trends? There’s a lot involved with coming up with a price, and unless you are a seasoned broker, most will not have this knowledge.

      Reply
    • Rebecca Roble
      Rebecca Roble says:

      How do you know you saved “$45,000?” Did you have a bidding war? Did you pull comps? Did you valuate the difference with location, square footage, renovations, market trends? There’s a lot involved with coming up with a price, and unless you are a seasoned and numbers-savvy broker, most will not have this knowledge.

      Reply
  1. dave carr
    dave carr says:

    #1 problem is authentication of buyers and nosy people who want to see your house. Who are they? How will you know their intentions? I recommend FSBOs look at the drivers license and mortgage pre – approvals of everyone who comes in their home,and require 24 hours appointments.

    Reply
  2. Skye
    Skye says:

    Yeh, said by the realtor. Unless??? You have a firm grip on how to advertise your house online. Being a social media/search engine programmer marketer I can almost guarantee that I can get as much if not more exposure for my house then a realtor can. Plus, I have the added bonus of taking a serious interest in my home as appose’ to a number of other realtors that tried to sell other homes of mine. It was basically, put up the lock, sign and mls and then sit around until someone called.

    Here’s some pointers for anyone that wants to sell their own home. Eye candy is important as well as curb appeal. Not all improvements are a great idea. Some potential buyers like to do things like paint and carpet in their own way (unless it is bad and takes away from the eye candy).

    Open a browser, go to Google (or some other better search engine hehe) and type in ‘free classified ad sites’. Don’t list on them all but take a look at the list. Determine which one will be most effective in your area. Look at your local stores and see what kind of magazines are out. Look them up online and if the price is right.. put some money into advertising. and and and… did you know there are places as well that will put your home on the MLS service for you? It’ll cost but it depends on how bad you’d like to sell your house.

    Then theres the social media platforms. Go to facebook, do a search on classified ads groups in your area. Join and ask if you can list your home. Make a nice little instagram ad and post it and ask all your friends to share.

    Reply
    • Shawn Schwartz
      Shawn Schwartz says:

      First of all we realtors don’t just put up a sign and sit around and wait until it sells.
      We work 24/7 believe it or not. I am a full time realtor and I work very hard for my buyers and sellers. With the market being low in inventory, it is a challangr for buyers to find properties and they better be pre qualified before their search.
      Sellers want pre approved buyers. They are getting multiple offers and it takes a talented agent to be able to handle 5-15 offers on their listing. NAR has proven stats that 16% of sellers could have gotten more money for their home even with listing it with an agent. We currently have 22 forms that we use to protect buyers and sellers buy and sell homes. Why would you not hire a professional to help you sell the biggest investment in your life? If I need legal advise I would not go to court by myself. I would hire an attorney. Sellers beware if selling your home in your own. Realtors know the market and can get you top dollar for biggest investment!

      Reply
  3. Melisa Smith
    Melisa Smith says:

    I have sold several for sale by owner homes (5 of my own and 2 for family) and it is only when realtors are involved does it get way more complicated. Selling for sale by owner is extremely easy. The scare tactics listed here are quite comical and the points are irrelevant. Anyone can sell on the Internet, it is 2017 right?? I have worked with and without realtors and I cannot believe how much easier it is without one. There is no middle man when dealing with the home inspectors, appraisers, ect ect. I believe the only reasons to hire a realtor is:
    1. You do not live in the same state as property you are selling.
    2. You truly don’t have a clue what you are doing and have no desire to figure it out.
    Otherwise you should definitely sell by owner and you will save thousands!

    Reply
    • Vita Ragulina
      Vita Ragulina says:

      Totally agree. I was an agent for many years, but my other business was more profitable. If you are willing to do some work and have basic understanding, there is no magic to selling your own house! Let me tell you – it is not that hard to be a realtor. Again I was 6 figure income as a realtor. And there are only a few realtors that do go an extra step or really help. These days especially in my market there is absolutely no reason to go through realtor, if your house in a good shot and or competitive pricing, you should not have an issue selling within few days…

      Reply
    • Luke
      Luke says:

      Melissa – You’re probably in some small cow town where everyone knows everyone.

      Let’s just pretend that the realtor doesn’t have more information than you do ( I said pretend – I am sure a good one does). You lost ALL CREDIBILITY when you said “I cannot believe how much easier it is without one”.

      It might be debatable if you can get similar results, if you’re lucky, selling it yourself or with an agent.

      It is NOT EVEN CLOSE to debatable that selling it yourself is “easier”. It’s a major, major hassle on so many levels.

      Reply
      • Melisa Smith
        Melisa Smith says:

        Hahaha you are correct I do live in a cow town but I’ve never sold a home to someone I knew. I can say with confidence it is easier when a realtor is not involved. There is no middle man, and I work directly with the buyer/seller. There is so much less paper work and in my opinion that makes it much easier without a realtor. For the record I have bought and sold with and without a realtor so I am fully aware of the difference. By no means is selling without a realtor a hassle!

        Reply
  4. Rpt
    Rpt says:

    Baloney! Did a realtor write this? We have always sold our homes FSBO and never had an issue. We’ve used a property attorney for closing most times. Last home we sold we connected with the buyer through Zillow. We said we would work with a realtor, so the buyer’s realtor handled nearly everything. It was a win-win situation.

    Reply
    • Kristie
      Kristie says:

      I understand that you felt the buyer’s realtor handled everything but you paid that realtor. The sellers pay the buyers agent so you basically paid someone to represent the other side and went unrepresented yourself. It may have turned out fine this time, but I’ve seem many people end up in court. I know if I was being sued or suing someone, I wouldn’t want to pay for their lawyer and not have a lawyer myself. Just sayin.

      Reply
  5. Rob
    Rob says:

    How about the safety perspective of selling for sale by owner. Would you simply open the door to any stranger walking up to your home asking to come in? Furthermore, would you do so with your children at home? Why is the obvious legal and financial exposure the only concern discussed? Any good agent will be concerned not only for netting you more money and protecting you legally, but also making sure that you and your family stay safe throughout this process.

    Reply
    • Donna Gundle-Krieg
      Donna Gundle-Krieg says:

      As a realtor, I never spent more than a few hours learning about security. So I really don’t think I have any secrets that a seller can’t figure out. I do a lot of business, but would never say that you must have a realtor. Many people are capable of selling on their own.

      Reply
  6. James
    James says:

    For all the Realtors defending their position as such, what is your reason? The numbers show that more people than ever are using Realtors. So, why not give a big congratulations to those who sold their homes without our help? Telling them they are wrong or they could have earned more money only cements their position against you. When instead we should come from a place of contribution and help in anyway we can. You’re job is secure for some time….. And as for the ones bragging about working 24/7 for their clients, shouldn’t you respect your own time a little more? Set some boundaries and leverage your business.

    Reply
  7. James Reyes
    James Reyes says:

    As Realtors we should come from contribution, not tell people they are wrong or oh we could have done it better. First off, what sales training are you getting using that kind of approach, second why do you feel so threatened by the comments to go so far with your rebuttals? The last time I checked the numbers show Realtors are in high demand, higher than ever in fact. So chill and let those who want to sell without you do it, be there to offer advice if needed.

    Reply
    • Kathy
      Kathy says:

      If someone wants “advice” they should hire me. If I give advice and something they do goes wrong, I’ll get sued regardless, and so I would have to insist on either being their agent or not. I’me either “all in” or not, but I’m not getting in the middle of a situation that I am not fully understanding or aware of.

      Reply
  8. Jackie Hoffman
    Jackie Hoffman says:

    This is so true. I put my mother’s house for sale by owner and initially there was a lot of interest. The problem being no one looking even had the money for a down payment or ability to get a mortgage. Big waste of my time.
    A big thanks to Jeff Karnes for all his help getting us on the right track to sell this house.

    Reply
  9. Kathy
    Kathy says:

    There is an exception to every “rule”. Sure, there are successful FSBO transactions in every market. Did they net ALL they should have? Hard to say. Did they do everything right? Again, hard to day. Did they open themselves wide for future lawsuits? Absolutely. Did they get the exposure to every possible buyer for their home? No. Period. I have been involved in every facet of the real estate industry for almost 30 years and will tell you there is no way I would sell a house or buy a house without the help of a good Realtor. A Realtor provides objective, un-emotional services and up to date information. When I buy property I ask someone to represent me as a buyer’s agent, simply because buying a home is a hugely emotional experience and I need someone not emotionally attached to keep me from making costly decisions. Same for when I am selling. Sure, you can “get lucky” and sell you house yourself, but with solid statistics showing that in over 95% of the cases you would have netted more having a professional handle that sale, and with the fact that people sue for the slightest thing, I think it extremely cavalier and very un-wise.

    Reply
  10. ROB MACK
    ROB MACK says:

    Only 9% of FSBO’s actually sell, the other 91% are listed with an agent. When appraisers get a price it is from listings that sold with a commission included, so really a FSBO is only worth the appraised value less 6%.
    If i’m a buyer why would i want to pay the owner the commission when i can get a realtor that works in my best interest?
    If i’m a homeowner selling a FSBO do i pre-qualify interested parties? how do i even know if the buyer is qualified to buy my home, even worse could this be a felon staking my home out?
    Good luck FSBO’s I’ll be calling you to get your home SOLD!!

    Reply
  11. Kevin
    Kevin says:

    A lot of points this article states makes no sense. Zillow, Trulia and other local sites will list your house regardless of whether or not you have an agent. You don’t need an agent to list your house on the internet. 3 out of the 5 parties that you have to negotiate with are really just one party. The buyer, agent, and possibly an attorney all represent the buyer and you won’t be negotiating with them individually, that makes no sense. You also don’t negotiate with a home inspector, they simply inspect and deliver a report. The last point makes absolutely no sense at all! That statistic means nothing except that homeowners are more likely to sell their home when it has less value. I actually agree that it’s best to hire an agent to sell your home but for none of the reasons listed above.

    Reply
  12. Debra L Bruckman
    Debra L Bruckman says:

    As a mortgage originator I can tell you that a FSBO borrower takes a lot of extra time. Most don’t realize what they don’t know until it is too late. The average sellers/buyers are not skilled negotiators, masters at deciphering home inspections, have lists of reliable sources to estimate costs of repairs, have sway with both the loan officer and the title companies if needed and most importantly point out any potential red flags for both seller and borrower.
    Always amazes me that the FSBO is willing to take on one of the largest transactions they will make during their lifetime without the help of a professional.

    Reply
  13. Linda Griffin
    Linda Griffin says:

    Over the years, I’ve sold three homes without an agent and did just fine. Once you’ve found a buyer the real estate attorney takes over anyway.

    Reply
  14. Chet
    Chet says:

    This article doesn’t mention anything about safety ……you are putting your family in serious jeopardy buy going FSBO as you are inviting unscreened strangers in to your home …..maybe they are serious buyers …..or maybe they are casing your home or seeing what time you are home …or checking out your wife or kids ……. is your family’s safety worth saving 6%

    Reply
    • Matt
      Matt says:

      I love FSBO! Keep them coming. I’m a RE Broker, Auctioneer, and Investor. I typically buy FSBO properties at 20% to 90% discount. I teach investing as well. One item I stress is that once a property has been listed by a competent agent, it is rare to get a good deal. One other item to mention, the bigger the Seller’s EGO, the bigger my profit!

      Reply
  15. Jimmy
    Jimmy says:

    I whole heartedly disagree with this article unless it is a buyers market. If it’s a sellers market, you can get the same price as you would with an agent. Have an attorney ready to draw up a contract and have them be your atty at closing. The buyers can use which ever atty they want, but if I’m having to pay for the title insurance I’m using my atty of choice. I don’t need an agent telling me who the best closing atty and title company is. I can find that out relatively easy. IMO the real estate agents in our town are greedy and tell the sellers their house is worth way more than it actually is so their commission will be higher. This in turn means that a brokers house will stay on the market longer because of the greed of the agent.

    Reply

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