Reasons People Fear FSBOs

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If there’s one thing I wish I could change about the real estate market, it’s that people fear selling without an agent. I am completely convinced that anyone who can own a home can sell a home. Period. My students are always telling me that I say this too much, but: everything an agent does, you can do.

Let’s take a look at some of the most common issues that prevent home sellers from choosing to sell on their own:

    This is especially common of first-time home sellers. There’s a lot of information to suddenly learn: legal paperwork, inspections, formal offers. It can be intimidating. Not to mention all the little things of day-to-day work: finding buyers, getting the word out and so on. But, home owners, listen to me: don’t let the fear of stress stop you from saving thousands of dollars!
    In reality, selling is only as stressful as you make it. Being organized, informed and persistent can serve to combat a lot of the potential stress-makers.

    This applies to a lot of things: spending too much money, too much time, too much effort. Sellers fear they will be consumed by the experience and still might not sell.

    Here’s what I say to that: when you determine the cost of your home, calculate 6% of that. If you determine to set a specific budget below that—say 2% or 4%, it’s up to you—then you’ll know how much you can not spend and still be saving. But really, there’s little to spend on. You’ll be surprised at the opportunity to maximize your money. The same thing applies to time and effort: determine from the beginning how much you will/won’t spend, and stick to that budget.

    This, I believe, is the largest factor. Sellers worry that they will go through the work of selling on their own and not be successful. It’s a valid concern, and it does happen to some people. I think the key is to be proactive in your efforts and to stay on top of the process. An article from ABC News (read it here) said it best:

    “The Realtors’ association crows that nine out of 10 homeowners end up hiring a Realtor after trying to do a FSBO. My answer is, ‘so what?’ Why not try to sell on your own to save the money? If you succeed, you’re a genius. If you don’t, you’re right back where you started.”

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  1. Well, it’s not just fear.

    Some people just don’t have the time!

    It’s a time-consuming operation to sell your home oftentimes. If you’re doing open houses (which I wouldn’t normally recommended) that’s A LOT of time. Answering phone calls. Waiting for appointments with buyers that run late. Gathering all the paperwork. Learning about the proper procedures.

    I’ll agree for some people going FSBO is the right approach.

    But it’s a major fallacy to think that going By Owner is for everybody.

  2. I agree that selling your own home can feel very overwhelming, but it is doable and the thousands of dollars that you can save are worth it. After selling and investing in real estate for the last 10 years, here are some things I have found helpful:

    Stressful Exoerience: Just because you do not hire a realtor doesn’t mean you have to go it alone. Build a team that includes an inspector and a good attorney. Consider having your own appraisal done as well. Although these services do cost money, they will cost less than a real estate agent commission and are worth the peace of mind they give you. Also, having these resources will give you a stronger negotiation position with buyers.

    Fear of Spending Too Much: Although traditional real estate marketing can be expensive, the internet has dozens of places to list your home for free, such as Craigslist. Also, starting a viral marketing campaing in your area can be done for just a few hundred dollars.

    Fear of Failure: People who hire real estate agents fail to sell their homes too, so there are no guarantees. But create a strong marketing strategy, a budget, and give yourself a timeframe – 30 days for example – to sell your home yourself first. Worst case, you call a realtor. Best case, you just saved yourself thousands!


  3. Thank you for those encouraging words, Jane! I can just imagine the stress that selling a home for the first time can cause the average homeowner.

    I would imagine that if the homeowner were to take less of the commission and offer the buyer’s agent a higher co-broke; he/she would benefit by selling their home much quicker.

  4. I’m a Realtor myself and in a really hot market I’d agree with you. In a hot market a home can sell in two weeks or less. In our current market your home may sit for a year or more if it’s not priced well.

    Something a lot of people don’t realize is that it’s usually not the Realtor you hire to list your home who finds the buyer. We Realtors all work together to find you a buyer. In effect when you hire one Realtor you are actually hiring every Realtor in your area. Wouldn’t you rather have 1500 people trying to find you a buyer than just trying to do it yourself? We have large databases of potential buyers, websites that generate hundreds of leads and when you multiply that by 1500 Realtors who do you think is going to get the job done quicker?

    It’s certainly not rocket science but we do this every day and already have good working relationships with layers, home inspectors, appraisers, financing companies and we have the raw data and experience to price your home appropriately.

    If your car engine dies you can buy a new engine and tools to replace it yourself, if your house needs a new roof you can also drag a couple thousand pounds of shingles up a ladder and do it yourself. Whats your time worth? We can make the whole process a lot less stressful but you certainly don’t need to use us. The choice is yours.

  5. Dallas: As the final quote in my post above illustrates, there’s no harm in trying to sell it yourself first. So what if you were to end up going with a realtor?

    Dan: Yes.

    RE Blog: Maybe not for everybody, but for most everybody. 🙂

    Dawn: Thanks for the valuable feedback! I am with you!

    Phx: Yes, exactly!

    Mike: Actually Mike, today’s slow market is a great reason to sell it yourself. You say a lot of people don’t realize real estate agents work together to find buyers. You’re right. In fact, I’ve found a lot of people don’t realize the magical “MLS” listing doesn’t find you buyers but agents. Those agents will maybe find you a buyer. Emphasis on the maybe.

    You’re also right about the connections agents have. This is something I’ve also found through Buy Owner, a help-you-sell-it company that can connect you with a mortgage (they work with Guaranteed Rate), title, lawyer, and more.

    I don’t mean to insult real estate agents; I’ve been one. I don’t deny that we work hard. I’m just completely convinced that intelligent, hardworking people work hard too, and they should get to keep their money.

  6. People who won’t sell their home unless they have an agent probably thinks that it’s the agents who do the selling, but in reality, the selling agent only lists the property while the buying agents are the one who bring in buyers. There are other options other than selling FSBO. Many people enlists the help of flat fee listing companies where their homes are placed on MLS sites, giving the seller more exposure.

  7. Having a realtor will end up with a higher sale price for your home. It is completely worth it as FSBO’s have so much trouble selling their homes that they end up signing up with a realtor anyway.

  8. @ Dallas Real Estate Buyer

    Couldn’t agree more. A realtor who knows what he or she is doing will net you much more money. I’ve heard of as much as 5-20% more with a good realtor in the Utah market, though lately with as depressed as land values have been its hard to say anymore.

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