Is FSBO a No No???

Due to the anti-real estate agent sentiment and the promise of saving lots of money, selling as a FSBO seller has never been more popular.  Over the past 10 years, selling the home yourself, or FSBO (For Sale By Owner), became popular and marketing companies selling FSBO kits and promotional materials have quickly cashed in on the craze.   Internet shopping for homes has increased in popularity and it’s much easier now for the do-it-yourself home seller to promote their own house.  But I don’t think that’s the reason FSBOs became popular.

FSBO’s Popularity

The real reason for FSBO’s popularity, in my opinion, was the ease of selling in a seller’s market.  It’s always easier to sell a house in a seller’s market.  With tons of buyers picking over a smaller inventory of homes, all you have to do is plant a sign in the yard and they’d find you.  FSBO makes sense in a seller’s market, but that was then.  It’s a buyer’s market now and selling a house is no longer easy.  A lot of “hobby” agents are finding that out too.  The market is more competitive now.  Houses are taking longer to sell and competition to attract buyers’ attention has become fierce.  Lots of lazy or ineffective agents are leaving the business because it’s no longer an easy career.  Good riddance!  Lazy agents will not be missed.  They’ve done enough damage to our reputation.  Maybe they should sell something else like insurance.  In buyer’s markets, like today’s market is where real estate agents earn their money.  Home buyers are expecting and, in many cases, demanding bargains in every local real estate market,  and they are getting their way.  In the case of a FSBO seller, buyers expect additional discounts because they know you’re not paying a commission so there’s extra money to play with and they want it.  Don’t get discouraged, but be prepared.

Negotiation:  The Key To Success

One of the advantages good Realtors bring to the table is their negotiation skills.  This is one area where the commissions are earned.  More than likely, when you negotiate your first contract, you’ll probably wish you’d done something different when it’s over and invariably you’ll leave money on the negotiating table.  Good Realtors learn from every transaction they do so the more they do, the better they are at doing it.  Unfortunately FSBO sellers do not have this pool of experience to benefit from.

Attracting Sharks Instead of Buyers

When you put that FSBO sign in your front yard, a majority of what you’ll attract will be real estate agents, instead of buyers.  Real estate agents know that FSBO sellers usually get fed up with the lack of attention and resort to hiring a real estate agent out of desperation.  A FSBO sign in the yard is the agent equivalent of chum in the water to attract sharks.  Ironic reference if you think about it.  Many agents, looking for listings, devote most of their marketing attention to FSBOs to win their listing business because they know there is a high failure rate among FSBOs so they hit FSBO sellers at their lowest point.  This is usually on a Monday, after a dissappointing turnout at last weekend’s open house.

Am I saying don’t do FSBO?  No.  If you’re good at promoting your house and you are patient, you could save up to 3% of your commission costs, assuming the buyer has an agent.  You could even save all of the commission if you and the buyer arrange the sale without any Realtor.  However, the buyer will probably feel entitled to some of this savings in the form of a price reduction.  Just be prepared for the lower than expected offer.

Know When To Hold ’em and When to Fold’em

The most important advice I can share is don’t let your house sit on the market for too long.  I’d pull it in three months max if you can’t sell it!  At the time this article was written, the selling season just started and you don’t want to be caught with the house on the market during the slow winter season, which in Texas is after October.  If it’s still for sale in October, you will have to ride out the slow selling season from November to March.  Cold weather discourages buyers and no one wants to shop for a house, buy a house, pack up their belongings and move between Thanksgiving and Christmas.

Remember all of these factors when you sit down and negotiate with an agent that wants your listing.   While you can easily calculate the cost of an agent’s commission, what you can’t calculate is the expense of a FSBO gone bad.  The extra monthly costs of keeping the property and paying the mortgage, the cost to promote and advertise the house in papers and on the Internet, and the low ball offers that FSBOs usually attract are hard to calculate.  But they can add up quickly.  When you add up all those costs, how much money are you really saving, not to mention hassle and time wasted.

On a Positive Note

I’m not anti-FSBO.  As a matter of fact, as an investor, I buy and sell several properties each year, but I’ll be the first to admit that I left money on the table with my first few transactions.  I have learned from my mistakes, and still learn from my mistakes even now.  I know there are advantages to using a Realtor.  That’s why I decided to become a Realtor, and I’m glad I did.  I can now have the best of both worlds, an agent (me) with access to all agent resources like MLS, CSS, and other marketing tools to promote my listings and I can save up to 3% of the commission on each transaction.  If you buy and sell multiple properties per year, then it’s worth it to learn how to sell FSBO, but if you’re only doing it for a one-time only sale, I’d reconsider.  It may actually cost you money in the long run.

The Wrong Agent Could be Just as Bad

Just because I recommend using agents, doesn’t mean that I recommend using any agent.  There are a lot of agents out there that will also cost you money due to inexperience or just plain laziness.  Please avoid these agents.  Helping you to avoid bad agents is what AgentHarvest is all about.  We find the top selling agents in your area and help you interview those agents, while avoiding average performing agents or worse.  AgentHarvest makes using a Realtor a valuable and rewarding experience.  Did I mention that our services are free?

Whether you use our services to find your next agent, or you hire your neighbor’s brother-in-law who is just getting started in real estate, or you decide to sell it yourself, I wish you good luck.  Just make the right choice for your situation.

If you are buying or selling a house and are looking to hire a successful real estate agent to help you through the process, take a look at AgentHarvest's list of top-ranking local Realtors in your area. We found these agents by examining their sales track records, awards, rankings, client testimonials and by conducting personal interviews.

This entry was posted in Selling Your House and tagged by Bill Petrey, Realtor. Bookmark the permalink.

About Bill Petrey, Realtor

Bill Petrey, the CEO and Founder of AgentHarvest, has been written about in the Los Angeles Times, Inman News, AOL Real Estate, and Inman Next, among others. He founded AgentHarvest for the sole purpose of making the process of finding a good Realtor better and easier. Bill Petrey is an author and editor of both The AgentHarvest Blog, Real Examples of Really Rotten Realty Blog, and the creator of Really Rotten Realty.

1 thought on “Is FSBO a No No???

  1. I don’t understand why people selling FSBO have signs that announce “for sale by owner” as the main attraction and you often can’t read their phone number. I always advise FSBO sellers to spring for an attractive custom sign and hire a sign placer to install a professional looking post. For $100 you can look like a pro! Sadly, most people who are selling FSBO stick up a cheap sign, put the house on MLS (maybe) and hope for the best. Then they wonder why the couldn’t sell.

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