Understanding For Sale By Owner
Occasionally, one of our buyers will hear from a friend of a friend, or a co-worker, about an owner who is trying to sell their home without the help of a real estate agent.
We affectionately refer to such sellers as FSBOs – For Sale By Owner.
The truth is, FSBOs can be pretty challenging, and it’s not because we have any issue with them trying to save money by not paying commission. It’s because they’re naïve to what they don’t know about real estate transactions, and 99.9% of the time it becomes very complicated.
Luckily, most FSBOs will cooperate with a buyer’s agent and pay a commission to them. And although we appreciate this, the true challenge results from their lack of knowledge and experience as a seller. It often costs both buyer and seller the transaction.
Here are 6 common pitfalls of FSBOs:
- Showing the home can be difficult – If the seller works full time and has limited availability it becomes even harder.
- It’s too close for comfort – It might not be obvious, but it can be pretty uncomfortable for a buyer to poke around and really look at a home with the seller present. No one wants to peak into cabinets or closets with the home-owner over their shoulder.
- It’s harder to negotiate – Similar to showings, negotiating can also get too personal. The seller may have a hard time distancing themselves from the emotion of the transaction.
- Information may get lost – FSBOs often don’t understand the importance of disclosing vital information about the home or the association prior to accepting an offer.
- Details aren’t discussed – It’s not uncommon for FSBOs to forget to talk about fixtures that they may want excluded from the sale. This can lead to very tense negotiations at the closing table.
- Not ready for closing – Are you aware of 6(d) and smoke certificates? Exactly! These are just two of the items a seller needs to have ready by closing, and most FSBOs don’t know how to obtain them.
We totally understand the desire to save money on commission. But, the question we would like to ask FSBOs, is “at what cost?”
If you’re considering FSBO, consider this – I have sold several properties over the years that started out as FSBOs and after a while, every single one of those sellers was beyond excited to hand over the keys and let me handle the sale.