Real Estate Blog - In Defense of FSBO's

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In Defense of FSBO's

After two posts about my daughter's failed purchase of a FSBO property and LOTS of comments to those posts over the past few days, I feel a need to come to the defense of FSBO's. Someone has to play devil's advocate, and I started this conversation - so why not me.

By way of background:

It all started because My Daughter Made an Offer on a FSBO this Weekend.... and it didn't work out. I wrote about her experience and my observations, expecting the post to receive little or no attention; but the ActiveRain gods featured the post. The dialogue in the comments took on a life of its own, with one individual saying "I welcome FSBO's and have no need to hate on them or their preferred method of sales." Whoa! My post was about my daughter's experience and my observation of why/how this sale failed to materialize. Hate FSBO's or their preferred method of sales - where did that come from???

I followed up with a second post based on Susan's FSBO experience over the weekend, FSBO Foot-In-Mouth Syndrome, thinking it might be a wake-up call for some homesellers and help save them from themselves. The post referenced a recently published list of 25 Mistakes Home Sellers Sometimes Make - mistakes NOT limited to for sale by owners - in fact, real estate rookies are prone to them, as well as home sellers.

Again, the dialogue took on a life of its own, and not exactly pro-FSBO.

And so this post was born: IN DEFENSE OF FSBO's

teacher

Some homeowners choose not to use a real estate agent for three primary reasons:

They want to save the commission and put it in their own pocket.
They never met a real estate agent they like or trust, or they had a bad experience with a real estate agent in another transaction.
They think they can do a better job if they're in control, rather than someone who may not know the property as well as they do.

Frankly, I understand and appreciate this logic because I'm a homeowner, too. I wouldn't list my home with another REALTOR because I want the commission in my own pocket; I never met another agent I like or trust enough to list with them instead of selling my own home; and I know I can do a better job than anyone else, so I'm not about to give up control of my home sale.

Is there any agent reading this who feels any differently? I didn't think so.

All I'm saying here is this:

Some very nice, intelligent, motivated, well- intentioned homeowners sometimes prefer to sell their own homes, or at least try. They have as much right to do that as I do to treat my cold with over-the-counter medication or to decorate my own living room, even though I might be better off making a doctor's appointment or hiring a decorator. Just as that doctor or professional decorator may do a better job for me than I could for myself, a professional real estate agent will probably do a better job than a homeowner selling his/her own home.

Those two posts happened to be about FSBO's in another state, and I was there solely as the buyer's mom - not as a real estate professional. However, I do always try to help FSBO's in my local area in every way I can, and I strongly encourage all agents to do the same.

When you reach out to FSBO's, they sometimes end up listing with you; they may refer prospective buyers to you; and it's possible they will recommend you to other homesellers - especially if their FSBO experience is not as easy and profitable as they expect.

Truth is, it probably won't be as easy or profitable as they expect. But I'm not going to say "I told you so." By then, they'll know.

In defense of FSBO's, remember they are not evil just because they decided not to hire a real estate agent. There's no reason for any real estate agent to feel threatened by FSBO's or to disrespect them. Yes, compete for their business; yes, tell them what you can do for them; yes, be proud of what you do for home sellers. And remember, FSBO's are people, too, and they're not your enemy.

Posted by Margaret Woda, Maryland Real Estate on 05/15/2008 01:34 PM

Comments (46)

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Originally posted at: Fort Meade - USNA - Andrews AFB: In Defense of FSBO's

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46 Comments on In Defense of FSBO's

MAY

2008

Margaret - I love this post - I defend the FSBO often - if you want to gain the FSBO - you better let them know you are the expert not the enemy

MHO: FSBOs are just plain cheap. Once they try it themselves and fail, they hire one of the agents who mailed them flyers while their FSBO yard sign was up.

Thanks for your post!

Exactly. It's the sheer respect that will lead them back to me if they are unable to sell by themselves. And they do deserve the respect as well. You are so right about those points. I wouldn't trust anyone else to sell my home...and I know I will do a great job at it. Good one Margaret.

Margaret - you are absolutely correct. And I would like to expand it. It will be more and more noticeable in the near future. And not only on the selling sidee, but on the buying side as well. We are in the service industry. Some people would find it beneficial to sell with the agent, and they would rather pay the agent and not get their hands dirty,

There are those, who would enjoy the process, and would not mind learning. If they don't do the best deal, they may still be happy, as they may not be aware of what they could get.

Same with buyers. They can do everything themselves, but some would choose agents to free them from the hassles, and some would do it themselves.

These are the realities, no reason to scream, no reason to fight.

Thesa - That's a good phrase, I like it - "the expert, not the enemy." That's an excellent summary of this entire post.

Kristi - I'm really sad to see you be so judgemental and negative about FSBO's - I see from your profile that you haven't been in real estate very long, but you will learn with time that all FSBO's are not cheap. Even if their motivation is to save the commission, that could be due to having inadequate equity for paying a commission rather than greed.

Sally - That's been my experience as well. I've listed many a FSBO over the past 40 years, and even helped them hold their FSBO sale together - it's always come back to me ten-fold.

Zon - Good point. Right now, I consider FSBO's as a fact of life but take buyers for granted.

Margaret- You are on a roll with these FSBO posts! You may just get some listings because of this series.

My husband and I were FSBO's long before I went into real estate so I really do see their side. I offer to help whenever I can.

Cute...Margaret.........I mean lets put it all in perspective......FSBO'S are REAL people too! lol....and of course its not hard to understand why they might feel the way they do - its up to us to overcome their objections.....and its so true...how often WE try and do things ourselves that we should hire a professional to do. Actually some of those stories might be good ones to use and share with our 'FSBO's' and potential Vendors! :-)

Margaret.... I think it's excellent advise, in helping out with FSBOs..... several things could come from it.... one would be that particular coming to you after several months on the market. or maybe a referral to a buyer. Or just word of mouth on helpful that you were.... good post.

jeff belonger

MAY

2008

Owners have a right to sell their own home without the assistance of an agent... they might not do it as well as some agents could, but ya know, many do as well, if not better than, some. Rather than seeing them as a plague, build a rapport with them... we are the experts, right?

PS... The snow is gone... WoHoo! :)

Morning Margaret,

Having been among the FSBO's myself I respect their efforts and mindset. I offer any help they need. Should the time come that they decide to hire an agent I hope they will remember my assistance and call me. Some have ... some haven't!

Katerina - Funny how I can write a brilliant post that no one reads 'til I leave it standing for days and go comment on 100 other posts. Then I write a quickie based on the day's experience and it takes off, like the fsbo posts have. I actually haven't posted these items to localism or Focus On Crofton - maybe I should tweak them, when I have time, and do that.

Lisa - I suspect there are a lot of FSBO's-turned-real estate agent in our business. 'Glad you saw the light!

Liz - Like anyone else, if we approach them with respect rather than assuming they're "just plain cheap", we'll get respect back... and maybe their business, too.

Jeff - I know a lot of loan officers who work this potential market. That's a good idea, too.

Jesse - Yes, as a matter of fact, my approach with local FSBO's is often somthing to the effect of this: Now that you're competing with 100's of experienced agents who sell homes full time, you might find it helpful to accept my FSBO-Helper Package. When would be a good time for me to stop by and drop it off? Guaranteed, they'll invite you in and ask your opinion on their home and price, and that's a chance to start appealing to their doubts in person.

Hal - Statistics prove that most do list and those who do not list often don't net more - or even as much as they would have with an agent.

Hi Margaret, I have to say I like FSBO's I know the statistics of their sales and I know that I can help them. I do not mind then trying on their own. I own a Hybrid company in Michigan. I own 18 FSBO self-sell website locations around the state of Michigan and a full service company.

I understand the motivation and the reluctance of using a professional. I have heard it all! Your top two reasons are exactly right the third reason is actually in 4th place...3rd is they think they can do a better job because they know more about the home.

My company provides my agents with a huge number of live leads...we treat them respect want them to sell and are willing to help them meet their goal. Why because we get a buyer too!

Do not hate FSBO's and they are not "cheap" they are like anyone else...if they can save a few thousand dollars....and they feel they can do as well as the Realtors they have met...wouldn't you? I have seen people drive mile to save $50.00 on a TV when they could get free delivery and buy it on line...

I understand the value differences we are talking about but understand where they are coming from. Once you do you could have a whole new source of listings.

Once again Margaret I have to applaud you for a great post. On a roll!

Whoa, Gary - the computer started talking to me when I read your comment! That was a surprise.

MARGARET - There is no reason to get mad at FSBO's for trying to sell their home on their own. In fact, now that I have become a Certified Buyer Representative, I look at them as a chance to increase the inventory of homes that I can show to clients, but that other agents will not show to customers.

Adam, you're absolutely right! And frankly, I've gotten my buyers some GREAT deals with FSBO's without the seller having any idea of what they gave away - and ignorance is bliss, so they're proud as can be that they sold "by owner" (with the help of a buyer's agent).

Margaret- This is a great series! FSBO's are people too =) They just need to be sold that a real estate agent can be of value. If we cannot prove our value to them then we do not deserve their business. If they sell their property for less than we could well good for them.

Best,

Scott

Great post. FSBO's are good for our business. If they move their home it gets rid of inventory. If they don't and go to a REALTOR they will sing your praises when you sell their home. Most of them are good folks just trying to make an extra buck. They can't know what they are getting onto till they try.

FSBOs actually attract a different buyer in a lot of cases. Those 6:30 am garage sale people looking for unbeleivable deals before anyone else finds the. They purposely seek out FSBOs and would never use a realtor. A sale is a sale!

Schrader Inc. at www.bojacy.com

I work with FSBO's, in fact I've even worked out a page on my website that allows them to list their home on it (although not complete just yet). I have no problem with them wanting to try to sell...and if they are willing to pay me as the selling agent...whats the difference really?? Great post.

I certainly wouldn't be threatened by FSBOs. They serve a good purpose and many, many, many lead to more business for everyone. My old company ran a FSBO site so we could pre-approve the bargain hunters for their upcoming mortgage. People would look around shop and waste time and then I would get my Realtor friend to find them a house. Done!

Thank you! The attitudes of some agents towards people trying to sell their own homes is very puzzling to me. I am a self starter who likes to do thing the hard and try it myself. That is probably a great description of most of those sellers too! So why not celebrate what we have in common instead of try to take them down a peg. Very strange behavior.

Very interesting post Margaret. Thanks for putting the thought out there. You know, when the market was hot, I saw an increase in FSBO sellers. I shuddered thinking about all the disclosures they might miss and potential lawsuits buyers and sellers might be getting themselves into because of lack to knowledge. But to tell you the truth, I've never heard stories about the FSBO from hell. Maybe the less you know, the smoother the transaction-the more willing buyers and sellers are to work out differences. I do have to say when we are representing a buyer purchasing a FSBO, the work (and liability) doubles and usually the commission is less. But sometimes you gotta take it in the gut to keep the Karma even! "Welcome to My FSBO World!"

Margaret,

...isn't it so that most FSBOS end up going back to a Realtor?

Steve

Margaret,
It's true there are Sellers who can and do handle the sale of their home very well on their own. But..........I think they are few and far between. The reasons you stated are accurate, in my opinion, but many find it is not the cake walk they thought it would be. Telling anyone "I told you so" is not going to get you very far. When I FSBO comes to me, I sympathize with what they have been through and commend them on a valiant try.

I agree with you Margaret. I have seen agents get downright angry with FSBO's. They have every right to try it on their own. A few of them do a really good job and sell their home. (Of course, I will always believe that they possibly left money on the table, because they cannot expose their home to the market as much as I can, but I will save that for my own post...)

Most will end up listing with an agent once they realize the scope of the job they are paying for. At that point, they appreciate their agent.

Besides, wouldn't it be great if every seller put up a help wanted sign. Then we wouldn't have to prospect so hard for them... ;)

I agree that there are many very educated, honest sellers who know the market, have no problem dealing with people and can negotiate. I also agree there are many that are not, hence is where "I" come in. A Buyer needs to know the difference.....

In many things, I am a "DiY guy" (a do-it-yourselfer...). I have a welder, and more (I'd even say better) tools than a lot of mechanics. I don't much of my own work... some I like, some I don't. But, I know that when I am working on the brakes on my wifes van... that my kids are taking to the beach... it is much more importatnt to me than it is to the guy at the quickie brake shop... and I have the skills to do it at least as well as he can.

But, my accountant pays for himself.

Many unrepresented sellers fall in to the first group... they have the tools and the abilities, and feel they can do a better job than the "professional." But, many others really fall in to the second group. A real pro would pay for his services many times over, financially as well as time and aggrevation.

I'm not sure why it's important to point out these facts to a real estate community...maybe to show us the "other" competition? ...Either way, very well written.

You've struck a chord here with these FSBO posts: they're really well written and great reads. Well done.

I went to a Mike Fery Productivity Schooll last year and one part we had to sat all the nasty things we feel about FSBOs like : know it all's, greedy, mean, unmotivated etc.

and another part we thought of all the things they thought about us, and alot of the same things came up.

The bottom line is: they want to sell, that's what we do for a living. If we can't appeal to their better judgement on why it costs them less in the long run to hire a pro, than that's that. (by less I mean the median FSBO is 32% less than Realtor's median price in my state, and carrying costs of longer market time)

I'm going to stop typing now.... just inspired myself to call some FSBOs.

You hit the nail on the head: they want to make as much money as possible, what's wrong with that? They simply just don't know what we know.

Very well said! I like hearing updates on your daughter's housing search ;)

MAY

2008

FSBOs have every right to sell their home on their own. I don't have a problem with it at all.

I think you have a good outlook on the FSBO market. They earn every penny that they save. More power to them.

I have to say this is a very admirable post and even more so with the associated comments. I'm not a realtor, but was a former FSBO. The 3 points that Margaret made were EXACTLY the same as I had in my head when I went to sell my first home. Did a little research, took some pictures, and put it on BuyOwner.com. I figured all I had to do was sit back, watch the Chicago Cubs lose in the 9th inning, and wait for the phone calls/emails to come in. They did in fact come in, but as some pointed out, from people looking to strike a quick deal, looking for a bargain, trying to drop the price knowing there wouldn't be any commission paid, and those who "thought" we (my wife and I) were desperate and had to move. It was a nightmare. Everyone that called/came in for a showing was an "expert". They used sites like Zillow, Trulia, etc and the "smarter" ones even looked up the price we paid for the house and did their own calculus formulas to tell us what our house was worth. The most frustrating part besides all that was just handling the showings and the frustration when "potential buyers" never showed up or those who hadn't even been pre-approved.

We honestly did FSBO to save a buck. We had no grudges against realtors or the industry and we were pretty honest in the fact that we didn't have a heck of a lot of experience in selling a home. We were simply trying to save money and get more revenue back on the sale of our biggest asset.

We eventually learned a lot. We learned it was a bad market and we were overpriced even though we "thought" we knew the value of our home. We eventually got a realtor (actually 3) who went from okay to just plain weird on a rating scale. It took a year, but we finally sold it....just about at the same price all 3 realtors told us we would sell it for ($15k less than we thought).

The biggest thing that we took away from it all was that we learned about the industry and to be quite honest, we didn't know as much as we thought we did. Yeah, it cost us a lot more and we didnt get back as much as we had planned, but we just had to keep our home up to par to sell and we let the realtor do everything else. It was nice to have a closing only go 30 minutes. I've seen/heard the horror stories.

Would I sell/buy another house with a realtor? I don't honestly know at this point, but I've "promised" myself and my wife that we would never move again :). I learned a lot about the process and would hope I would be better prepared to handle the process myself in the future, but at least I would know when I was behind the eight ball and to call a realtor.

If nothing else, I learned alot from our experience and from our last realtor about the industry as a whole. I'm sure 95% (or more) or FSBO's are greedy, etc., but I imagine that they only do it to save a buck. As many have pointed out, they eventually come to you (realtors) to get the deal done.

Sorry for the long post...good luck to you all :)

I thinke the agents that be-little or bad mouth FSBO's are the very same ones that give REALTORs a bad name.

Homeowners have the right to do whatever they want with THEIR property as long as it is legal, and selling your own home is certainly legal.

Great post. It shows that you veiw others as people first, and potential clients second.

FSBO's are like everyone else, some good, some bad. You can usually tell with one phone call. Here's a simple script, don't let them talk until you're done-"Hello Mr. FSBO, This is Name and Company. Could you take 10 seconds and tell me the age, square footage, and asking price of your home?" This will tell you a lot about a FSBO plus create conversation starters. Treat everyone with respect and trust your gut.

Chicago Home Seller - Thank you for sharing your story! I enjoyed reading it, and maybe some other real estate professionals will learn more about the FSBO perspective from your comment. I'm sorry you didn't have a "WOW!" experience when you talked with real estate agents, but please know there are a lot of true professionals out there who have a boatload of knowledge, skills and experience - that really care about consumers. Hopefully you're finding some here on ActiveRain... Even after four decades in this business, I'm still learning from many of the hard-working and talented agents who post here daily.

Scott - Thanks for your compliment - funny how that one little trip to breakfast turned into a blog "series"

Barry - You're so right!

Paula - I think that's terrific. I'm sure they value that service from you, and you'll be their first choice if they decide to list in the future. How many have you converted or sold?

Sara - Yes, I agree. I was almost embarrassed by some of the comments on the two earlier posts, and that's why I felt compelled to write this.

Diana - You're right about that - 'never heard of a "fsbo from hell". Maybe that's because ignorance is bliss or both parties were so tickled at saving the commission they would never admit things didn't go smoothly. ... or they didn't really expect it to go smoothly, so they didn't feel they could complain.

Steven - It is.

Cynthia - Very well stated. I've never targeted the FSBO market, but it is like a "help wanted" sign. Maybe I should target them now that people in cybersapce may consider me an "expert" in FSBO's, with three featured posts on the topic. LOL.

Margaret...been following your whole FSBO...um....experience! I think we as REALTORS often look at FSBO's as "how DARE you try to do this without us!" And they do it without us for a variety of reasons...bad experience, save money, etc. But, this is when it shows how important it is for us to let our Sellers know WHAT ALL WE do for them, so they appreciate us and respect us. But, then, we have agents out that that don't all do it the same way.

I've worked some FSBO's (altho not as many as I should) and have had succes with them. But, most of the time, it was the marketing fee that was a sticking point...and the ended up listing with one of those limited service agencies, just so they could get on the listing service.

You put a great "spin" on the whole FSBO experience from both sides....and informed all of us!

Thanks!

Margaret, I have found the biggest weakness about FSBOs is they have no market knowledge. Case in point they will want to sell their home (because it is so much better) at $121 per sqft when the comparables show $90 a square foot. Also you mentioned the mineral rights staying in one of your posts, that is a big thing for many sellers nowadays on the Barnett Shale, and is not a biggie to put into the Special Provisions of the contract. Most FSBOs once again are clueless about contracts. I like your point that FSBOs are not evil. Many agents think they are.

Sandra - That anger was evident in some of the comments for those two earlier posts, and that's what motivated this one. My reaction, when I see a FSBO sign in my community is more along the line of "Those people have no idea what's involved in selling their home!" - I almost feel sadness for them, knowing how unarmed they are for today's market... but ignorance is bliss, I guess.

Phil and Terry - My daughter was a uniquely well-qualified individual for buying a FSBO, since she's absorbed a certain amount of knowledge by living with a REALTOR her whole life. However, even she was very concerned about disclosures and other details. In the end, I think she was relieved to NOT get this property, and to start working with an experienced agent the next day.

Lane - I "get" your analogy because my husband does most of the work on our cars for the same reason - he knows that HE cares more about his family's safety than any mechanic would. It is this same mentality, I think, that motivates some home sellers, and I respect that. However, like my husband servicing our cars, there is a time for turning to the pros who may have more experience in dealing with certain situations.

Alan - If you read the comments on the two posts that preceded this, you would know why it's necessary to point out these facts to the real estate community!

Matt - Thank you! Who knew this could be such a hot topic?

Andrew - Good luck! Let me know if you get any of those FSBO's listed...

Cindy - She's waiting for her agent to get back in town - already found 4 or 5 homes on the agent's website and driven by them. I'm sure her home-buying adventure will be the inspiration for many blog posts!

Marty - I LOVE IT! "They earn every penny they save" - That could be a blog of its own!

Pam - I agree, that's probably true. 'Never thought of it that way, but I did click through to some of the negative commenter's profiles and posts...

Robert - Great script, and one I've not seen before. I'll have to try it!

Thomm - You snuck in that comment while I was typing this, so let me add that I've noticed that too - the fee really was the sticking point. They never do "get" that a true professional brings so much more to the table than a discounter. But, as someone said in their comment, they earn every penny they save!

Gary - That's true, and they think marketing is all about their house rather than a buyer's wants, needs, and budget.

I think I'm caught up with comments, so please forgive me if I missed you! I really am surprised and pleased at all this interest in the three FSBO posts. Thank you to everyone who has taken the time to read them and comment.

Margaret, OK! Now I know what you were talking about last night! There are some people who pull it off. My sister sold her own house in Norfolk and did very well. But when a FSBO has to do serious negotiating, or even in a sellers' market when they have to evaluate competing offers, they might be better off with an agent. I know that I am a fabulous negotiator - except when I'm doing it on my own behalf!

I actually sold 2 houses FSBO back when the market was hot- and before I went in real estate. Each time I had less than a week to sell- because I got a new job and was moving out of the area. I was able to sell my house for less than similar houses- but still put more money in my pocket- because I didn't discount it the 4, 5, or 6% I would have had to pay an agent. I sold my houses in 1 day- each time at an open house with multiple offers (boy, I wish we could bring those days back!!!).

If the market wasn't going crazy at the time- I would have definately hired an agent. And I did get calls and postcards from agents who offered their services. As soon as I picked up the phone- I could tell if it was an agent I would consider using. Many were arrogant and simply rude. They seemed appauled that I would even consider putting an ad in the paper and selling my house for less then neighboring houses- I was "going to ruin property values" one agent told me.

When dealing with FSBO's- just offer your services without judging why they're trying sell by owner. Maybe they are greedy- and that's fine. They bought the house- they paid for it- it's their money they're paying. It's important to realize that.

Patricia - Thanks again for last night... 'had a great time! Yes, I agree - negotiating for yourself is the worst.

Becky - You're right - those were the days!

MAY

2008

Marg - This is a free world and they are entitled sell their own home if they so desire. as you say "They have as much right to do that as I do to treat my cold with over-the-counter medication or to decorate my own living room,... "

We are the ones who provide them with the free information that enables some of them to do this so how can we complain when they try?

FSBO's are indeed just normal people like all of us. Some are better suited to sell their homes than others. I agree that you need to show their properties and build a relationship with them.

MAY

2008

What you say about real estate agents is very true. In a resent RE class I attended the students were asked if they would list property they had for sale with their RE agencies. The vast majority said they would prefer to sell on their own.

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