For Sale by Owner, or FSBO is not uncommon in Westchester County. I have sold quite a few of them. I had an interest in a FSBO assistance firm, and a number of selling gurus like Craig Proctor have systems for converting FSBOs to listings thorugh such programs. I have seen dozens of FSBOs sell their own homes, and I am firmly convinced after what I have seen that most people who sell on their own are doing themselves a disservice.
First, let me say "most." If a guy puts an ad in the paper and sells his house in one weekend with no broker involvement and the buyer closes, he can consider himself lucky. I'd call that catching lightning in a bottle. But the vast majority of FSBOs don't have that sort of luck, and they actually shoot themselves in the foot. Here are a few myths of selling "by owner" that should be dispelled
- FSBOs save money. Not really, no. The commission line item is certainly nice on the closing statement, but FSBOs do not net as much money as people who go through brokerage for a variety of reasons. One big reason is that the vast majority of buyers are already using an agent, so FSBOs have far fewer eyeballs, and therefore an anemic market, to showcase their property. In this market, good buyers hook up with an agent fast. And agents won't put a FSBO on the top of the list.
- Owners know their house better, so they can sell it more effectively. To be blunt, most owners already suck at selling anything, and that suckyness gets amplified when it is their own house. I have seen owners talk too much, annoy buyers, ask personal questions, say dumb things and shoot themselves in the foot, and disclose things they ought not disclose to buyers, all to the owner's peril.
- Who needs an agent's guidance? I have a lawyer. I have never seen a lawyer climb up into an attic with a home inspector. I could count on one hand the times I could reach a lawyer on an evening or weekend. Lawyers aren't brokers, and they don't want to do the running around or work that agents do. Moreover a law degree doesn't make someone good at selling or negotiating. Different skills. Watching a lawyer play broker is as unbecoming as watching a broker act like a lawyer. Embarrassing.
- Negotiation isn't a big deal. Buyer and seller both want the same thing. This is actually where choosing the wrong agent gives owners ammunition. If someone is going to screw up a deal, they'd rather do it them self and save the fee. I almost don't blame them, were it not for the fact that a good agent is worth their weight in gold. An expert negotiator knows when to push, when to pull back, when to "take it away," when to pursue, and what questions to ask. I have seen owners screw up a good deal in January and end up finally selling in August for $100,000 less. But they saved the commission!
There are a few other things a FSBO should consider:
- FSBOs don't know how to qualify a buyer or what questions to ask.
- FSBOs can't handle objections
- FSBOs seldom understand how to identify the buyer's wants and needs
- FSBOs often have BIG MOUTHS and buy their houses back with ill advised remarks. I have seen owners ask buyers about their nationality, marital or family status or equally unflattering questions to make the point that there are other Martians or Venutians on the same block.
- FSBOs can be played like a fiddle if the buyer has an agent representing them.
- FSBOs often don't price their house right, costing them in the long run.
- FSBOs are not objective. They can't be.
- Many buyers don't want to deal directly with the owner.
- Many buyers are suspicious of owners selling themselves.
- FSBOs are often the target of the poorly qualified and bargain hunters who also buy into the myth that cutting the brokers out saves money. So who saves? The buyer or the seller? It can't be both.
- FSBOs seldom grasp the liability they incur for lead paint, radon, property condition disclosure, code compliance, and plenty of other potentially expensive issues.
- FSBOs do not have access to the marketing resources a Realtor has, even if they pay a limited service company to put them on the MLS
- Bona fide buyers should be rightly aware of these facts prior to engaging a For Sale by Owner without a broker representing them.