Why "For Sale By Owner" is a bad idea, especially in a strong buyer's market

It’s a simple law of supply and demand.  We currently have more sellers than buyers in the Phoenix Metro area.  Combined with tough for-sale-by-ownereconomic times, we all know the real estate market has been hit hard.  That’s why I’m surprised when I see a “For Sale By Owner” (FSBO) sign planted in someones yard.

The reason most seller’s try to sell their homes without representation is no secret….they want to save the commission.  But, what sellers may not know is the fact that buyers who will even consider purchasing a FSBO, are doing so because they know the seller is saving on the commission so the buyer feels they will probably get a pretty good deal on the home.  So which is it going to be?

A FSBO is not going to benefit from being listed in the local MLS so visibility is going to be greatly reduced.  High Tech Realtors are also going to post their listings all over the Internet, so unless a seller has this background, this is going to reduce the home’s visibility even further.  It’s proven that the longer it takes a home to sell, the less it will sell for.  Surprise! Invisible homes don’t sell.

A Realtor is also going to separate the looky loos from the qualified buyers.  I don’t know of many sellers who are prequalifying the buyers who are visiting their FSBO.

Throw in some emotions (we all know the home buying/selling process is typically emotional) and chances are the FSBO transaction is not going to be an easy one.

And how about safety?  I can’t fathom anyone opening up their home to a complete stranger today.  I won’t even go down that road since the dangers are obvious and very real.

Most FSBO’s eventually list with a licensed Realtor, but not before they’ve lost considerable time as the value of their home has continued to decline in today’s market.  So, the FSBO seller has lost more money than the commission the they thought they would save.

My only advice for FSBO sellers today is…With the commission you’ve saved, hire yourself a real estate attorney if you’re going to sell your home yourself.