For Sale by Owner? 11 Reasons Why it's Not Great!


Ever Thought Of Selling Your Home Yourself? It Seems Like It Would Be Easy, Right? Many Homeowners Think Like You Do.

Here are 11 scenario's where a FSBO (for-sale-by-owner) homeowner could have used the help of a professional real estate agent.


Is a smart and tech-savvy homeowner who thought he would skip the agent commission and sell his house himself.  He researched his home’s property value, found a buyer and got the house under contract. It seemed like a done deal.

Until he realized in a panic that he had seriously undervalued the property — by more than $100,000. Frank had misunderstood the report he’d pulled and incorrectly valued the house.The error cost him $30,000 to get out of the contract. 

1. Scams Happen

FSBO scams happen to both buyers and sellers with little recourse besides hiring an attorney.

Judy fell in love with a FSBO home. She agreed not to use an agent and paid the homeowner $3,000 in earnest money.

Then the homeowner changed his mind. With no contract signed and no receipt, Judy lost all her earnest money. She trusted the homeowner when she should have trusted an agent.

Common scams include fraudulent papers (appraisals, loan documentation), foreign buyer deposits (scammer sends too much in a bad check and then requests a refund), purchases through a third-party (a fake attorney, etc.) and asking for personal information.

2. Liability Is All On The Seller

Everyone makes mistakes. A seller (or buyer) who doesn’t have the representation of a licensed agent pays for those mistakes. Attorneys can close a real estate transaction, but they don’t carry errors and omissions (E&O) insurance.

So if homeowner Sandy lists “hardwood floors” as a feature and the buyer discovers it’s just a wood veneer, chances are Sandy is going to pay for that mistake.

An agent would have either caught the mistake or covered it with E&O insurance. Let’s face it: this is a litigious society, so what homeowner wants to be a target for lawsuits?

3. Paperwork Is Daunting

The 2015 National Association of Realtors’ Profile of Home Buyers and Sellers showed that understanding paperwork was one of the most difficult tasks for FSBOs.

Depending on the state, there are a variety of legal forms and mandated disclosures that are needed, including but not limited to a sales contract, property disclosures, occupancy agreements and natural hazards disclosures.

Sure, ready-made contracts can be downloaded easily enough. But does an untrained seller understand what all that means? Would you know how to customize that one-size-fits-all contract?

4. Sellers Can Get Stuck In A Bad Deal

Like Frank, FSBOs who sign on the dotted line and then realize an error are stuck. They have to pay the buyer (if they’re willing) to get out of or just take the deal.

An agent will save you from that headache.

5. FSBOs Sell For Less

In 2015, FSBOs lost about 16 percent of the sales price with a median selling price of $210,000 (agent-assisted homes sold for $249,000).

Homeowners selling by themselves simply don’t have the time to devote to the process, don’t know the market value, don’t understand market reports and don’t properly market the property.

If the FSBO seller sold to someone he or she knew, the median dropped to $151,900 (because cousin Sue is doing them a favor and expects a deal).

6. FSBOs Spend More Time On The Market

Unless the seller knows someone who wants to buy the home, FSBOs take longer to sell than homes listed with an agent. For the same reasons, they can’t get the right selling price.

No one is “behind the curtain” running the marketing show. 

On average, 18 percent of FSBOs were unable to sell within their chosen timeframe last year.

7. FSBOs Lack Representation

There’s no one looking out for the homeowners who sell on their own. They have no one to call if they have a problem or a question.

Dave found this out when he sold his home himself. Studying for his real estate license, Dave felt confident he could handle the contracts. Then the unexpected happened.

When his house was under contract, a state patrol car pursuing a speeding motorist crashed into a downstairs bedroom. Repairs threatened to push back closing, and suddenly, the buyer was asking for a storage unit, the cost of temporary housing and more.

He was lucky enough to have an agent friend who could step in, but a homeowner with no representation could have been out thousands of dollars unnecessarily.

8. Inspections Are Problematic

Sellers who don’t know the rules can get stuck with unnecessary and costly repairs.

When Sue sold her 10-year-old home, after the inspection, the inspector said she needed to change the stairs from the garage to the house because the code had changed.

He listed other code changes, and the buyer began to demand these be done. Surprisingly, the inspector didn’t know that because these items were to code when the house was built, the seller wasn’t responsible for these changes.

9. Marketing Is Limited

FSBOs have limited resources to market their home.

The 2015 NAR Profile of Home Buyers and Sellers showed 42 percent rely on a yard sign, 32 percent rely on friends and family, and about 15 percent use social media.

Relying on the neighbors and Uncle Bob’s connection has its limitations. Even paying for the MLS listing won’t be enough because there’s no incentive for an agent to bring a buyer to a FSBO.

10. Hidden Costs Add Up

The mindset for most FSBOs is saving money. Chances are, these sellers are being nickeled and dim'd into a pretty big chunk of change.

They’re paying for a lot of extras: signage, flyers, photography, MLS listing, attorney (required in multiple states for FSBOs), home warranty (optional but hard to sell without one), home inspection, a wood destroying pest inspection, credit report for buyers (if applicable), web/print advertising, contracts, negotiated repairs and the list goes on.

11. Time Costs The Seller Money

The biggest cost to a homeowner is their time. You might hear the argument that it doesn’t take an agent that much time to sell a house. And honestly, given the technology at our disposal, an agents network and connections and marketing expertise; that’s true — to an extent.

But it will take a homeowner a whole lot longer. They don’t have the expertise or the access to the resources agents have. What is their own time worth to them? How much time will the seller spend researching the market and contracts? How many phone calls and inquiries will the seller have to field? Is the seller going to leave work to unlock the house each time there’s a showing? How will he know if it's a real buyer?

FSBOs Don’t Have The Expertise Or The Access To The Resources Agents Have.

If you are thinking of becoming a FSBO homeowner to sell your home, make an informed decision to use an agent instead. Connect with us for the information you are seeking, let us determine scenario for the sale of your home that meets your financial needs while making the process easy for you.

For 35+ years, Patty Rogers, Broker Associate, BRE#00669968 at Abio Properties, has been previewing and matching stylish homes to satisfied Bay Area homebuyers and breaking sales records with her listings. She is known for finding and selling unique homes with a "Modicum of Charm" and is a shrewd negotiator who understands how to successfully orchestrate deals.

Excerpts and links in this post sourced from  Post by: Chris Rediger