For Sale By Owner? Why It's So Hard To Sell Your Home

Some people are able to sell their own home without the services of a real estate agent. Some of these successful do-it-yourselfers are very experienced home sellers. Others are transferring ownership of their home to a child, co-worker or a tenant who's already living in the home. These circumstances are the exception, not the norm. For most people, a for-sale-by-owner (FSBO) transaction simply isn't in the cards. Here are some of the reasons why:

1) FSBO's can't list their home in the Multiple Listing Service (MLS). FSBO's aren't permitted to put their home into MLS because these industry membership organizations are open only to licensed real estate brokers and agents. FSBO's are also locked out of many home search engines and web sites, including FirstWeber.com and BrendonKrull.com. Sure, a determined FSBO can put a "for sale" sign in his or her front yard and run a tiny advertisement in the local paper, but the home won't receive as much exposure as it would through the MLS.

2) Agents sometimes avoid showing FSBO homes. In a typical home sale, the buyer's agent will be compensated for his or her services, unless the buyer has signed a buyer agency agreement that specifically provides for such compensation (and usually comes from the home seller). Most agents find FSBO transactions to be too much work as opposed to a typical transaction with a property that is already listed with a broker. That means the pool of potential buyers for FSBO homes is limited primarily to unrepresented and probably unqualified prospects.

3) FSBO's usually overprice their home. Like most homeowners, most FSBO's honestly believe their own home is worth more than comparable homes in the same neighborhood. Usually, they're wrong. A real estate agent can provide an update on market conditions, an assessment of the likely selling price of the home and tips for improving the home's buyer appeal. Overpricing a for sale home is a sure way to deter potential buyers because they will never step foot through the door!

4) Buyers will feel intimidated. Potential buyers will spend less time in a FSBO home if the owner is present during the showing (this goes for certain limited service listings as well), and they'll be shy about discussing the pros and cons with their own agent if the owner is within earshot. Buyers will also be less inclined to make an offer they know will be negotiated directly with the seller.

5) Buyers will negotiate a lower price immediately. Potential buyers know that the FSBO seller is not paying any commission to a listing agent and can cut the price immediately by 4-7 percent along with the typical 10 percent reduction that most buyers take to start their negotiation, that leads to an offer that is almost 20 percent under the listing price. Buyers know about issue #3 (described above) and really hold most of the cards when coming into a negotiation strategy.

6) FSBO's are likely to stumble into legal trouble. Real estate transactions are fraught with potential liablility for unwary sellers, particularly in Wisconsin because of the extensive disclosure requirements. A FSBO who overlooks even one required form or legally mandated disclosure could face a protracted and expensive buyer lawsuit after the transaction closes.

Avoid the hassle of selling your home on your own. You may have negotiated a few hundred dollars off on your last car purchase, but that does not make you an experienced negotiator. Rely on someone who has the knowledge and experience of negotiating hundreds of real estate transactions, all on your behalf. If you have any questions regarding this post, please feel free to contact me at any of my contact points listed to the right of this article.