Why an FSBO (For Sale By Owner) can Hurt Your Chances of Selling

If it is your first time selling a home, you might be shocked to learn just how much some real estate agents charge to sell—it is not uncommon to come across fees of three percent or even more. That means that if your home is currently worth $400,000, you might end up paying a real estate agent as much as $12,000 in order to complete the sale.

For most people, that is quite a lot of money. And that’s also why it can be very tempting to try to sell your home as an owner rather than working through an agent.

There are plenty of success stories regarding people trying to sell their homes as the property owner. However, for every success story, there are approximately 12 failures; and we’re being literal here—the success rate for selling properties as an owner is around 9 percent.

But why, exactly, does conducting an FSBO sale so often result in failure?

Let’s take a closer look:


1. Lack of Necessary Connections

Success in the real estate industry, for better or for worse, depends on the ability of the real estate agent to access necessary and supporting resources. And, in most cases, unless an FSBO owner has deep connections within the industry, these much-needed resources will simply be out of their reach.

These “connections” extend far beyond having a simple buyer’s network—they also include home inspectors, carpenters, landscapers, lenders, and many others. It’s not uncommon for people to deal with more than 10 people during the home selling process. Taking the time to develop these relationships can significantly delay the selling process.


2. Few Marketing Resources

If you are a real estate agent without any pre-existing connections, then you are likely going to need to invest heavily in marketing for your property to ever be seen. But unfortunately, developing a well-positioned marketing network is something that requires a considerable amount of time—something that most FSBO sellers, frankly, do not have available.

There are many different possible paths that can lead to someone discovering a property you are trying to sell. Real estate platforms, such as Zillow, Redfin, Xome, and others, are among the most frequently utilized resources for aspiring homebuyers. But other general marketing methods, including social media campaigns, email blasts, in-person networking, and more are also extremely valuable. By working with an established realtor, you’ll be able to immediately tap into this pre-existing infrastructure. But if you try to do all these things on your own, you’ll have to start from scratch.


3. Property Attachment

You’ve lived in your home for years—you’ve formed memories there, you’ve poured money into it (along with blood, sweat, and tears), and you’ve worked hard to make it your own. Naturally, your home is probably something you currently have a very strong attachment to.

But, for better or for worse, memories have no value on the open real estate market. It is extremely common for people who are selling their homes themselves to overvalue their homes because, well, it’s theirs. The fact that is your home can lead to an inevitable source of pricing bias, which makes it much harder for people to efficiently put their homes on the market. This sort of bias is especially common among people who overpaid for their homes, to begin with (something you may not have even realized until now).

4. Inefficient Process

Having access to the “infrastructure” that’s already been built by a real estate agent extends far beyond their marketing network: this so-called infrastructure will be reflected in nearly every component of the buying or selling process.

If you are a first-time home-seller hoping to save some money by selling on your own, you should prepare to encounter a few road bumps along the way. What would you do if the buyer suddenly changes their purchase conditions? What would you do if you were to suddenly run into a tax problem or a property lien? Suppose a pipe breaks in the basement and causes thousands of dollars of damage? Do you know who you’d call?

If you don’t have a plan to address these problems—and they certainly do come up—the entire process will take much longer and will likely end up costing you money.


5. Real Estate Inexperience

Ultimately, it’s the experience that distinguishes the best real estate agents from those who are hoping to sell on their own. Even though plenty of FSBO sellers like to tell themselves otherwise, there is a lot of expertise required throughout the buying and selling process—if you don’t know what you’re doing, it simply doesn’t make sense to try to sell on your own, just as you probably wouldn’t trust an inexperienced friend to be your dentist or even your tax accountant.

Expertise pays dividends and—though there is no denying that the premium is sometimes a bit too steep—there are plenty of clear reasons why the average American home seller is willing to pay 3 percent for a decent real estate agent.


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