For Sale By Owner Challenges

It’s not a legal requirement – some home sellers do attempt to sell their house on their own (for sale by owner or FSBO). There are a number of reasons why homeowners may attempt the FSBO approach, with the leading motivation being saving money on commissions.

Contrary to what sellers may assume, FSBO typically doesn’t result in the seller pocketing more money. Although local sales figures vary based on a number of factors (most importantly the local housing market), the national median sale price of a home sold by an agent is $345,000, while the FSBO median is $225,000.

If a home sells for the median agent-listed price, and assuming a five percent agent commission ($17,250), home sellers will receive $327,750 from selling their home – which is obviously still more than the $225,000 FSBO proceeds. It’s also worth keeping in mind that if the homebuyer is represented by an agent, the home seller may still need to pay the buyer agent’s commission.

The national median home sale price is inherently unrepresentative of every local housing market, but as a point of reference for comparison purposes, it’s useful for demonstrating the primary disadvantage of FSBO sales.

Selling your house for less isn’t the only potential downside of the FSBO approach. There are a number of procedural challenges homeowners face when they attempt to sell their home without the help of a real estate agent. 

Appropriately Pricing the House

Maybe the most obvious variable that influences the speed of a home sale is the listing price of the home. Home shoppers won’t bother putting in offers on an overvalued home when there are comparable homes in the same area that cost less.

There are a number of reasons why FSBO sellers have a tendency to overvalue their homes.

Homeowners understandably have an emotional attachment to their home. They know how much time and money they’ve invested into improvements and often assume they should get an appropriate, positive ROI for the funds they spent on renovations.

Even well-informed homeowners who do research on nearby home prices still lack the decades of professional valuation experience real estate agents bring to the table. Agents factor in variables like location, proximity to amenities, condition, size and market trends to appraise value.

Emotional attachment and unrealistic expectations regarding the value of home improvements don’t factor into their calculation.

FSBO sellers often fall victim to an unavoidable confirmation bias, meaning they focus on home attributes that justify a higher price while ignoring data that should push valuation lower. Some sellers who choose the FSBO path are motivated by financial challenges and fear losing out on funds by putting their home up for sale for too little.

This fear of leaving money on the table can lead to greatly overpriced homes, especially when FSBO sellers assume the unrealistic asking price will act as a negotiation cushion. Intentional overpricing in anticipation of negotiations often results in qualified home shoppers simply passing over properties for consideration.

Paperwork and Compliance

From disclosures and compliance paperwork to adhering to local and state home sale regulations, there’s often more paperwork involved than many FSBO realize when they first embark on their home sale journey. Unfamiliarity with procedures and legal requirements can lead to delays and even potentially costly legal issues or procedural errors.

Price and Term Negotiations

Most people don’t negotiate professionally for a living, and many FSBO sellers don’t realize just how challenging and skills-based the process of home sale negotiations can be. If a home is on the market for longer than the FSBO seller initially imagined it would be due to an inflated price, they may be more inclined to compromise just to get the process over with – ultimately increasing the likelihood of leaving money on the table. 

Wasting Time With Unqualified Buyers

Real estate agents recognize when a buyer is serious and when they’re just window shopping and wasting time. There’s a risk that an FSBO seller might enter into an informal handshake deal, take their home off the market and only realize days or weeks later that the buyer actually isn’t in a position to purchase the home, forcing the seller to start the process all over again. That scenario doesn’t happen with an experienced agent who can filter out unqualified window shoppers.

Lack of Network and Marketing Knowhow

Relationships and professional connections have a tangible impact on home sale price and the speed at which homes sell. Real estate agents have professional contacts with buyer agents, professional home stagers and photographers and a wealth of marketing knowledge to implement effective home selling strategies to sell homes quickly. FSBO sellers who aren’t real estate professionals don’t have any of these connections and typically can’t replicate the full suite of real estate agent services on their own.

You Don’t Have to Trade Sale Price for Speed When Selling Your Home

The 72SOLD system is tailored to maximize the value of offers and the speed of home sales. Our real estate agents utilize decades of local market knowledge, cutting-edge marketing tools and sprawling professional networks to get our clients higher-than-average offers in eight days or less. Find out how we can accelerate your home selling process without leaving money on the table.