Selling a home is a monumental life event, often fraught with emotions, significant financial implications, and countless complexities.
For many homeowners, the temptation to bypass the traditional route of hiring a real estate agent in favor of a “For Sale By Owner” (FSBO) strategy can be alluring.
The prospect of avoiding commission fees and maintaining a sense of control over the entire process might seem like a win-win situation. However, as someone who has been in the real estate and mortgage industry for over 17 years, serving thousands of clients, I can assert that this route is full of hidden costs, legal pitfalls, and unnecessary headaches.
You might think that with the rise of the internet, anyone can list a home online and find a buyer. While that may be technically true, the real question is: at what cost?
Not just financially, but emotionally and temporally. This allure of convenience and supposed savings can often turn into a complex web of issues that most homeowners are not equipped to handle. The promise of saving a few dollars in commission might seem tempting, but the potential for lost time, reduced selling price, and the stress that comes with managing the process yourself often outweighs any perceived benefits.
I want to share with you some real life experiences that we have had here at North East with our clients. In this way maybe we can help save you some time and frustration. Please note I have changed the names of the clients to protect identities. If you recognize the story, drop a little heart at the bottom of the page. 🙂
1. Unrealistic Pricing
Sellers often have emotional attachments to their homes, making it difficult to set a realistic price. They also lack access to real-time sales data and comparative market analyzes that a realtor provides. Consequently, FSBO homes are often overpriced, scaring away potential buyers. On the flip side, underpricing is also a possibility, leading to significant financial loss.
When you opt for FSBO, you’re taking a gamble on the most critical aspect of selling your home: the price. A trained realtor leverages comprehensive, real-time data to accurately assess your home’s market value.
Patty and John: I once had a couple who initially went the FSBO route and priced their home at $450,000 based on their own calculations. After three months of zero offers, and countless deadened visits. I received a call from them asking me for my advice. They reluctantly accepted to meet with one of our realtors as they felt that the home they had would eventually sell.
After meeting with our broker they finally enlisted our services.
A quick market analysis showed comparable homes selling for around $435,000. We listed at this price point and received multiple offers within the first week, by the time all the offers came in we were able to sell the home over asking and got Patty & John $446,000
2. Limited Exposure
In the age of digital media, it may seem like listing a home is as easy as posting a few photos and details online. While many FSBO sellers make use of social media or local online bulletin boards to showcase their property, what they don’t realize is that they are severely limiting their reach.
Realtors have the ability to list your property on the Multiple Listing Service (MLS), a tool that immediately exposes your home to thousands of other agents and their clients, as well as various high-traffic real estate websites like Zillow, Realtor.com, and Trulia.
Sarah: I once had a client, who I will call Sarah, who thought she’d save money by advertising her home on Facebook and a couple of other local websites. After several months with just a handful of low-quality leads, Sarah decided to consult with us at North East. Within just a few days of listing her home on MLS, we had scheduled over 15 visits and received three solid offers, ultimately selling the home above the asking price.
This drastic difference in results isn’t unusual; it’s the norm.
By restricting yourself to limited platforms, you are effectively narrowing down your pool of potential buyers. The chances of the right buyer stumbling upon your FSBO listing are dramatically lower compared to having your property actively marketed by a professional with vast networks and marketing tools at their disposal.
3. Time-Consuming
When you opt to sell your home yourself, you’re essentially taking on a second job. From answering calls, managing advertisements, arranging and hosting visits, to negotiating terms — every step requires a significant amount of time and dedication.
Many sellers underestimate the sheer number of hours that go into effective home-selling; it’s not just a weekend activity, it’s a full-time commitment.
Mark: One of our clients, Mark, is a business owner. Mark tried to go the FSBO route initially, balancing phone calls from potential buyers with running his business. Not only did he find himself constantly interrupted, but the stress and divided attention started to affect his business operations negatively. When he finally sought our services, Mark realized how much time he had been investing in a process that he was not an expert in, time that could have been more effectively spent on his own business.
In the real estate market, time is often of the essence.
A property that sits too long on the market becomes a “stale listing,” potentially leading to lower offers. Even if you’re retired or between jobs, think about the value of your time. Would you rather spend weeks learning the ins-and-outs of real estate transactions, or would you prefer to entrust it to a professional while you focus on your life, career, or family?
4. Lack of Negotiation Skills
One of the most underappreciated aspects of real estate transactions is the art of negotiation. A professional realtor doesn’t just list your property; they actively work to get you the best possible terms and conditions.
When you opt for FSBO, you’re typically going up against buyer’s agents who are seasoned negotiators or you are going up against potential buyers who are experts at negotiations. These people are trained in the art of negotiation, and they represent clients who expect to get the best possible deal.
Norman: A few years ago, one of our brokers represented a buyer who was interested in an FSBO home. The seller was adamant that his asking price was fair and wouldn’t budge. Using his years of experience and deep understanding of market conditions, He was able to present a compelling case that led to our client buying the property for $25,000 less than the initial asking price.
The seller later confessed he hadn’t considered some of the factors we brought up during the negotiation, effectively leaving money on the table.
Often, FSBO sellers are emotionally attached to their homes, which can cloud their judgment and make objective negotiations difficult. A realtor acts as an impartial advocate who can introduce hard facts and figures into the negotiation process, thereby avoiding emotional pitfalls that can cost you real money.
In addition, the negotiation doesn’t end with the agreed-upon selling price. Home inspections, timing, and financing are just a few of the many elements that require skilled negotiation to arrive at a deal that benefits you. Navigating through this maze without experience can result in financial losses and unfavorable terms that far outweigh the commission fees you think you’re saving.
5. Legal Risks
In the world of real estate, legal stipulations are not to be taken lightly. From disclosure requirements to contractual obligations, the list of legal must-dos is long and complex. When you decide to go the FSBO route, you’re not just acting as your own sales agent; you’re also taking on the role of a legal advisor, without the expertise.
Vince: I encountered a situation where an FSBO seller neglected to disclose that their property was in a designated flood zone. The buyers, upon discovering this information post-purchase, took the seller to court for nondisclosure. The seller faced thousands of dollars in legal fees, plus the potential cost of reparations to the buyers, far exceeding any savings they had by not hiring a realtor. This could have been avoided with a proper and honest seller’s declaration.
The intricacies of real estate law require a deep understanding that most homeowners just don’t possess.
Errors or omissions in disclosure forms, purchase agreements, or other legal documents can result in financial penalties, legal action, and a voided sale. The stress of potential legal action post-sale can loom large, and the cost of defending yourself in court can quickly mount up, not to mention the cost to your peace of mind.
Failing to adhere to local laws, not understanding how disclosure forms works, or mishandling the sale contract are all potential legal pitfalls that could lead to a canceled sale, or worse, a lawsuit. With stakes this high, the commission fees for hiring a real estate agent who knows the ins and outs of legal requirements start to look like a worthwhile investment.
I CAN NOT STRESS ENOUGH
The potential legal risks can not only cost you time but also substantial sums of money, negating any perceived savings.
I have countless other stories that I can write an entire book about. One thing is for sure we live in a society today that is not our parents’ generation. Back in the old days you would buy a home and if something was broken you would fix it. Today things are different. Buyers of properties today look for any excuse to go after you, the seller or anyone else involved in the transaction. Having a licensed realtor by your side is like having an insurance policy in your pocket.
Selling your home is a complex process that involves more than just putting up a “For Sale” sign and waiting for buyers to knock on your door. While the allure of avoiding realtor commissions can make FSBO seem tempting, the hidden costs — both in time and money — are often far greater than any potential savings. Limited exposure, a lack of negotiation skills, and significant legal risks are just the tip of the iceberg. As someone with years of experience in the real estate and mortgage industry, I’ve witnessed almost everything that FSBO sellers often encounter, from losing 10s of thousands of dollars to facing stressful legal complications.
In most cases, the security, expertise, and peace of mind offered by hiring a professional far outweigh the costs. Before you decide to take the FSBO route, consider the full picture; your financial and emotional well-being may depend on it.