6 Pitfalls of a FSBO Home Sale

A For Sale by Owner (FSBO) home sale may seem like the ultimate in DIY projects. With just a little ingenuity and a lot of hard work, a seller can eliminate the real estate agent fees that cut into their potential profits. And yet, sellers who enter the process are often completely overwhelmed with the details they face. It may be easy for someone with a sales background to point out the original baseboards of the home as a sign of its integrity, but the endless paperwork may not nearly be so easy to navigate. See why hiring a real estate agent for the home selling process makes far more sense.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Listing the Home Is a Minefield

Picking a price for a home isn't as simple as averaging out the values on the rest of the street and then adjusting from there:

• Going low: In certain markets, it may make sense to undercut the home to promote a bidding war.
• Going high: In other markets, it may make more sense to overestimate its value to attract a certain type of crowd.

Only a real estate agent with experience can advise the seller on which strategy makes the most sense.

Sellers Can Miss the Red Flags

There is plenty of information on the internet about how to successfully sell a home without the help of a real estate agent. However, those articles aren't written about where a seller is located. Instead, it's mainly generic advice that is intended to give sellers a heads-up about the most common red flags. A real estate agent has the local knowledge that a seller can draw upon to spot the buyers who will ultimately be more trouble than they're worth.

Sellers Limit Their Interest

An FSBO seller is going to know all of the standard ways to advertise, but a real estate agent will know how to exploit their full network to get the most interested eyes on a home. From social media to websites, agents can find buyers in some unlikely places these days. That may be why homes that are sold by owners tend to sell for less than ones sold by a real estate agent.

Documentation Is Crucial

The paperwork on a home sale is there to keep sellers out of legal and financial trouble should there be a conflict with a home. Sellers have to disclose everything they know and they have to make sure that buyers do the same. Because the forms are full of jargon, the chances of making a mistake are high. At best, this will delay the escrow process. At worst, it can lead to a lengthy lawsuit after the close of the home.

Selling a Home is a Full-Time Job

Selling a home takes a lot of work, requiring more effort than creating an online real estate listing and waiting to see if anyone is interested. Things to do to get the home ready to be shown to potential buyers include decluttering, staging, and other prep work. Then the home needs to be photographed and listed—plus there are open houses and home showings at a moment's notice. Those wanting to sell their home without an agent can benefit from saving agent commissions but need to consider if the amount of work is worth the savings. 

Buyers Are Forewarned

Many real estate agents won't work with a private seller acting on their own behalf because it's ultimately too risky. This narrows the pool of buyers even further, which means that sellers generally wait far longer to sell their homes than someone who hires an agent. And while this may not bother someone with all the time in the world, most sellers need to make a move sooner rather than later.

The truth is that while there are some success stories, the risks ultimately outweigh the rewards for the vast majority of sellers. An FSBO sale is too volatile and full of pitfalls for most sellers to come out on top.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.