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Why FSBO might not be a good idea?

Selling or buying, find out cons and pros when looking for FSBOs

FSBO - For Sale By Owner

When homeowners, future sellers, tend to sell their homes by themselves, thus trying to avoid paying the commission to real estate agents, those listings are called FSBOs or homes For Sale By Owner.

Let's look from both angles, seller's and buyer's, on the positives and negatives in a such transaction.


When deciding to put your loving home on the market and if you have been purchasing and selling before, you might think that now you understand the process well and that you can put your home on the market by yourself. After all, who knows your home better than you do? Then comes up the question: why should I pay an agent a commission if I can do all the job and save myself a money?

Let's see what can go wrong with previous equation:

  • Because you are personally involved and you know how much love and work you invested in the house, you might think your home is worth more than it is. But overpriced home is more likely to prolong your stay on the market and deter some potential clients.

  • Then, even though you find a prospective buyer who fell in love with your home, appraisal might blow up your listed price away.

  • Not hiring a licensed real estate professional can dramatically limit your potential reach. All real estate agents are syndicated with Multiple Listing Service, giving them enormous reach to potential clients. Once a listing home is input in the MLS database, it goes instantly to thousands of syndicated websites throughout the state. Practically speaking, whoever is serious in buying is going to see your home for sale instantly as it hits the market. So, exposure is another cons to account in.

  • Even if you find some agents who will enter your listing in the MLS database for a flat fee(although a lot of them will not), you will still need to pay those fees plus ultimately a buyer's agent commission. Sellers usually pay the agent 6%, but that commission is split with both listing and selling (representing buyer) agent. If you already want to skip to pay for your agent, then you need to take in consideration to pay for agent who brought you a buyer.

  • If you're lucky enough to list your home without an agent and find a buyer without a help, you will still need to find an attorney to write you a contract and give you legal notices that apply, and above all to act as an escrow (neutral party) in closing the transaction. If not choosing an attorney, then an escrow office fees apply.

  • Studies show that FSBOs are selling for the lower price (average 6%) and they are longer on the market. Once your home hits the market, your DOM (days on the market) start to count. Buyers will see that, and the longer you're on the market buyers will be concerned why you're long on the market if everything is ok? That also can drop your potentials.

Sale of the home requires a lot of time and you will have like another part time job to do, from painting and cosmetic repairs to showing any time you get requests and having a lot of phone calls to address, all of it disturbing your regular job.

All said not necessarily mean that you cannot get your property sold. For some people who really understand disclosures, law in the state, timelines, etc. might not be such a bad idea to go FSBO.


Last year there were only around 5% homes listed by owner, which makes home or two in specific local market at a time. That further means you're not missing much when your broker present you a list of available homes. Sure thing, you can point out that you would also like to consider every possible listing on the market, including the ones listed by owners, but in that case you should go over who is going to cover the agent's commission. As mentioned in one of the previous paragraphs, brokers associated in MLS share the entire commission in half. When dealing with FSBOs, broker's compensation is not covered and no one would like to work gratis. It is good that buyers agreement is signed to determine who is going to pay for broker's representation: seller or buyer.

Why is a good idea to be represented by a trusted real estate professional? Real estate professionals are well educated and experienced with the entire sale process. They are constantly doing market analysis and are local experts. For you, they are determining if the asking price is supporting current market tides, by doing analysis of comparable homes for sale and recently sold homes in specific neighborhood. That gives you, as a buyer, good starting point in eventual negotiations. Real estate expert is a great negotiator and by representing you, he/she fights for your interests. Paperwork is overwhelming and your agent is here to give you all required by law disclosures and forms regarding the specific purchase.

What is actually different when buying property directly from owner?

  • Seller is not required to give you all disclosures that otherwise should. Form 17 is mandatory prior to mutual agreement (some restrictions apply), and in here seller must disclose everything he/she knows about the property or they might be liable later.

  • Inspections. Even if seller is honest, she or he may not know everything that is wrong with the home. To avoid surprises later, hire an inspector to check on everything, even to check for asbestos, electromagnet fields and radon; maybe even for lead based paint if home is built before 1978.

  • Appraisal is usually required by lender to justify the purchase price, but you can also pay for official appraisal when paying cash. As I said, homeowners are more likely to overprice their loved home.

  • Negotiations. Without an agent involved, conflict of interests can explode in some circumstances. An agent serves as a "buffer" zone and calms the passions, so the negotiations can go as smoothly as possible. Note: not every deal can be made and sometimes you just need to walk away without making a deal.

Regardless, if you’re buying a property in a short sale or as one that’s part of an estate, you should hire an attorney to help you navigate what can be complicated waters.

Other helpful advice, regardless of representation by an agent, is that you could ask to pay for the Comprehensive Loss Underwriting Exchange (C.L.U.E.) that cost approximately $20. This report reveals any insurance claims sellers have made on a property within the five years. Only the seller can made the request, but if there is nothing to hide it shouldn't be an issue. The report will include the dates of claims, the amount paid and cause of the loss, and if the issue was related to a catastrophe like a tornado. You’ll be looking for things like water damage that could cause future problems (mold or structural damage).

Everything said is that purchase of a home is a comprehensive and job you're not doing every day, so every detail is important. That's why statistic shows that approximately 95% of the homes listed or sold are done through an agent. It's for a reason!

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