If you’re considering selling your home, one of the first mental exercises you’ll inevitably entertain is forgoing a real estate agent. It’s your house, no one could present it as enthusiastically as you might, you tell yourself. Naturally, you are correct. Sort of.
A Risky Way To Save
Can you sell your house without a realtor? Absolutely!
You can also represent yourself in a court of law, fix your car’s brakes without a mechanic, and give yourself a root canal with the help of some Youtube tutorials! See where this is going?
Just because you can sell your house without a realtor doesn’t mean you should. Don’t take our word for it though. There are plenty of reasons sellers should be wary of selling a home without a real estate agent and the risks are easily found through a quick Google search. For example, this list, or this other one, or this third one…. and so on.
FSBO – “for sale by owner” – is a concept borne out of the right idea. By selling a property without a listing agent, the owner theoretically saves more by eliminating that commission. Savvy sellers should certainly take ownership of the selling process and find ways to maximize their return. However, FSBO transactions usually end up being a much bigger net detriment to a seller’s pocket than a listing agent’s commission.
A host of reasons explain why. Most of the aforementioned articles overlap in detailing the known issues with FSBO sales: time and frustration, hidden costs that add up, the danger of assuming 100% liability, the potential for fraud, a lack of professional experience undermining the sale, the necessity of hiring real estate attorneys, or some combination of these factors. There is no doubt these are very serious risks that accompany the decision to sell a home yourself.
These are not just hypotheticals either. It’s easy to stumble upon actual horror stories about FSBO gone wrong. There’s no shortage of accounts of getting ripped off on price or getting robbed during an open house. Reading these cautionary tales provides equal parts shock and a sense of “you get what you [did not] pay for” karma. There’s even a book about it!
“Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think”
The Forgotten Downside of Neglecting Real Estate Professionals
However, there is one more, crucial reason to be wary of selling your home yourself that is chronically overlooked.
Buyers are extremely avoidant of FSBO homes for their own set of risks. It’s easy to focus on purely the selling side when it comes to your home, but taking a step back to break down the other side of the transaction highlights more issues.
First consider the extreme marketing limitations. Most real estate agents have years of inter-channel experience in reaching prospective buyers and dedicated budgets. A seller going it alone would likely need to spend even more money just to induce the same number of offers in their local market. Finding buyers is a mixture of art and science that a homeowner cannot replicate on their own, as is navigating a purchase and sale agreement. Even with the assistance of a real estate attorney, a seller would not have access to years of selling experience of the multiple listing service (MLS) that they could get from real estate agents. The final sale price will never come close to the listing price in an FSBO home sale.
Even if a seller could market and promote their FSBO property to a vast pool of potential buyers (spoiler alert: they cannot), the pool of actual buyers would be far smaller as many buyers’ reluctance would immediately rule out a FSBO property. So not only would a seller induce fewer total offers, but also fewer quality offers. Last year 87% of buyers used a real estate agent when purchasing a home. If buyers already have an agent, the seller is going to be expected to compensate them, making the total FSBO savings (on agent fees) less attractive. Worse, a buyer's agent will probably be dissuaded from submitting offers by their realtor in the first place. Buying agents tend to avoid FSBO sellers, so a homeowner is truly handcuffing themself in the name of saving money.
Without the legitimacy of a credible institution backstopping the transaction, buyers arguably have way more to lose in a FSBO deal. Getting stuck with a lemon, falling into a money pit, or being straight up defrauded on payment are all massive risks to accept – most buyers won’t even bother with FSBO regardless of an enticing purchase price. So perhaps that is the clearest sign that sellers should not either.
Like this article? Know someone who needs to hear the risks of FSBO real estate transactions? Share this with someone embarking on a home sale who thinks they can outsmart closing costs by being their own agent.
