Why do "For Sale by Owner" sales often fail?

By
Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119
https://activerain.com/droplet/56j6

As a licensed real estate professional, I've seen my share of FSBOs. Most of the time, they end up with a Realtor sign in the yard after months of languishing on the market with a "For Sale By Owner" sign. I just passed a former FSBO yesterday. As usual, I chuckled when I saw the Realtor sign in the front yard.

Why do they fail at a higher rate than a professionally listed property?

  • Homeowners seldom really know the current market. That leads to an overpriced home that savvy buyers would never buy. I showed one this past Monday that was 62% overpriced. I guess the seller assumes there is always a buyer with more money than brains out there. What you want, and what a home will sell for may be light years apart.
  • Showing a FSBO can be challenging. When an agent sets up a dozen showings in one day, scheduling becomes an art. Access is the key to making that day successful. If a FSBO can't allow the house to be shown except on a limited schedule the odds are radically against him. That's true of listed properties too. Access is really important.
  • Homeowners may not know how to negotiate an offer. There is usually some give and take in a real estate offer. If a FSBO is locked on a price and won't budge, or won't let a home inspection or repair request become a part of the deal, or is refusing a termite inspection, or is demanding of a closing date closer than a lender can accommodate, then a buyer can't buy it. 
  • Homeowners may not disclose things, or they may disclose too much.
  • Homeowners may not understand legal contracts. I ended up re-writing a contract for a FSBO last year because there were so many legal liabilities in in it that could eventually come back to bite the seller. The seller had no idea, and the buyer, who wasn't represented either had no idea of the legal ramifications of a binding contract full of potholes.

This list could go on and on, but the reality is that a FSBO is almost always better off selling through a competent Realtor. It will reduce stress and it will help the seller get across the finish line with a better deal. 

 

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Rainmaker
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Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Those are excellent points to make about FSBO homes, Mike!  And, often homebuyers try to discount the same agent commission that the seller is hoping to save!  So, nothing is gained, and risk is at hand.

Aug 05, 2017 07:04 AM #1
Rainmaker
2,633,350
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS Mike, on having this blog FEATURED in the Old Farts Club group!    

Aug 05, 2017 07:05 AM #2
Rainmaker
3,241,789
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Thank you for sharing this information...have a great weekend!

Aug 05, 2017 07:27 AM #3
Rainmaker
3,282,871
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Good Morning Mike,  FSBO have lots to learn of how to sell a house and how to get it to close also.  They need a Realtor.

 

Aug 05, 2017 08:01 AM #4
Rainer
220,382
Ben DeHaven
Haven Realty & Investments - Winter Haven, FL
Proudly serving Winter Haven & Lakeland, Florida

This week I called 19 FSBO's in the area. I met with 2, one called me back yesterday. I guess the rest dont actually want to sell? No calls or emails returned. 

Aug 05, 2017 12:20 PM #5
Ambassador
2,801,628
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Mike - Those are all commonly seen with our area FSBOs as well. I am surprised, however, that in our very hot, low-inventory market, we're not seeing a huge jump in the number of them.

Aug 05, 2017 03:01 PM #6
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Mike Cooper, GRI

Your Neighborhood Real Estate Sales Pro
Winchester has a place for you! Call me.
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