Why For Sale By Owner Fail

You see it all over the place, list your home and with the internet you can sell the house you own without even using an agent. This is a fallacy for owners and gives people and owners false hope on getting the property on the market and sold within the right amount of time the house should be sold. While this may give a small amount of people success when selling a home, would you or your family like to chance “maybe” selling your home the first time, or confidently selling your home the first time. Why most for sale by owner (FSBO) fail while working to sell their home.

What is a For Sale by Owner

Let’s start with some background on this topic prior to discussing failures of listing without an agent. People that own a home, or property have the option of selling your house with or without a real estate professional. Homeowners have the ability to do what they would like to do with their home when they sell the home. They can sell it through a real estate agent, a real estate wholesaler, or even on their own.

When owners chose to sell it on their own, then that is a home sale that is a “for sale by owner.” This means that they have not hired anyone to sell it for them, and the seller is looking to save money on not using a real estate professional to sell the home. Prior to the internet it was sticking a for sale sign in the ground of the front yard of a home, and now with the advances in the internet, owners can list their home on all the home websites without putting it into the Multiple listing Service (MLS). This requires no experience, except being technology savvy and getting some photos of the home (typically there are FSBOs list the home without professional photos).

Why Do Homeowner’s List without an Real Estate Professional

There are a couple real reasons why people would rather list on their own without an agent or professional helping them sell their home. A key reason is the expense that it takes to sell your home with a real estate professional can reduce the net proceeds from the sale. The next one is the thought that the owner can sell it on their own without hiring a person because it is a simple task to do, and they do not have to deal with getting another party involved. A third reason is the accessibility of the internet these days provide an owner to get more eyes on the home without putting the house up for sale on the MLS or with a real estate professional.

These have scenarios above have produced options for the homeowner that continues to fuel the for sale by owner wave. The price and expense have always been a driver for those who do not want to pay for a professional to do it, and the ability to not use the agent is another standard thing that pushes the option of selling the house on their own.

The internet changed the landscape of getting onto the radar of people looking around for homes and seeing for sale by owners. A long time ago it was just a sign in the ground, and that was it. Sellers would have to hope that buyers would drive by and see the sign to call on, which is a lot less traffic than what the internet gives a listing from an owner.

Stats on Listing as a For Sale by Owner

Here are some stats on listing as a for sale by owner, and what the results are as someone lists themselves. The percentage of houses listed as a FSBO and sold as a FSBO is 8% of the total market. A total of 88% of people use an agent to purchase a home and 89% of sellers used an agent to sell their home (National Association of Realtors).

These stats indicate that nine out of ten people either looking to buy their home or sell their home do it successfully with a real estate agent. The odds that there will be successful transaction without a realtor, broker, or real estate professional is 10%.

Why For Sale by Owners Fail

The failure of a for sale by owner is primary the seller attempting to take a shortcut from costing themselves the fees of listing the property with a real estate professional. This is the first mistake by attempting to short cut the process that will reward the owner in sale more than doing it themself. I remember back when I needed to change out my battery in one of my cars, and I went to pick up the new battery in my other car with my wife. Once I got the battery, I brought it back home and started to get everything really to put the battery into the car then realized I did not have all the right tools for the job. The end result was that I had to call out a professional through my insurance company to perform the fix themselves, and I had to pay them for the labor to do the task. The moral of the story is the shortcuts that the seller is not using the people with the right tools for the job.

There is a lack of experience in negotiations and contracts that the seller does not have to complete the listing. This is from listing it to getting the home into escrow to close successfully. It’s another good example of not using the tools of a professional and adding to the job of an homeowner to have to manage the whole transaction along with getting a buyer on their home into escrow. It takes time, effort and proficiency to be a good negotiator and manager to get something into and through escrow.

Another part to FSBO failures is marketing the property. Everyone has access to putting the property onto the market with some photos that are done professionally; however, they do not have the experience to list the home correctly online to get the right views and attention to sell the home. What about writing a descriptive and captive story in the listing to get the house sold, which is not a part of an owner’s wheelhouse either.

The last challenge is not having access to the MLS and the huge network that a real estate agent, wholesaler, real estate professional has when they list a home. FSBOs do not have these benefits and tools at their fingertips, which creates a wider gap between being successful in selling the home by themselves.

Conclusion

It’s an uphill battle to make a successful home sale as a FSBO even with a fully remodeled property, you would think a remodeled home with great photos then putting it online would get it sold quickly. There was a guy I know that would flip properties and did just that, which he was unsuccessful at selling those nice homes while selling as a FSBO and he had to get a real estate license to be a success. He went through the steps to get the tools he needed to win at these listings.

The for sale by owners should take into account their full goals and what they need to do to meet those goals with proper expectations. Paying a little more for the professionals is what will get their home sold and make it a success instead of a failure.