8 FSBO Fails: How Home Sellers Go So Wrong Without an Agent

Daniel J. Goldstein

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Daniel J. Goldstein

December 22nd, 2022
Updated December 22nd, 2022

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It may be the biggest financial transaction you'll ever make. Still, how hard could it be to sell your own home? Do you really need an agent? Besides, who wants to pay all that commission?

As a realtor, I hear people say things like this a lot.

In fact, an estimated 36% of sellers decide to try For Sale By Owner, or FSBO (pronounced Fizbo.) However, Zillow data shows the success rate is only 7 to 10% – and half of those sellers already know the buyer.

Further, FSBO homes sell for an average of 35% less, more than swallowing up the commission savings even if you manage to sell on your own.

One more thing: If you were hoping to avoid agents by going FSBO, you would likely fail at that, too.

Who's going to bring you your buyer? If you don't offer to pay a buyer's agent commission, you're cutting yourself off from their clients.

Even if you go alone without a seller’s agent, your buyer likely has an agent. That immediately puts you at a disadvantage. They have a pro on their side.

Once you place the FSBO sign in your yard, you will likely get calls from real estate agents – listing agents. They're trying to get your business after you fail. They know the odds.

"A FSBO always gets more interest from seller's agents than buyer agents,” says Aaron Schwartz, my broker at Keller Williams Capital Properties in Bethesda, Maryland.

Notice how we keep saying the word "fail?" FSBO is full of failures.

Let's list how FSBO sellers fall short – and how a good agent can better serve your purposes.

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8 Ways That FSBO Sellers Fail

Dejected man sits on front lawn next to a house

1. Mispricing your home

Everybody wants to think their house is the best on the block and worth more than all their neighbors. As a realtor, I face this all the time.

It’s natural, of course. Maybe you've made a lot of home improvements. Some improvements do indeed pay for themselves, but others don't. Like a pool, for example. I get two reactions when I show a buyer a home with a pool. It’s either excitement or a downcast "Oh, great. There's a pool."

Naturally, you’ll value your home higher if you're the homeowner. But a smart agent will tell you it’s a neutral factor on balance – unless your neighbors all have pools and you don’t. (Even then, it doesn’t hurt as much as you think.)

Also, be on the lookout for less scrupulous seller agents. They may try to “buy" listings by inflating the home's value to impress the seller. But they fall short at sale time. As a FSBO seller, you may inflate your home's value just like those agents do, but you just don't know better. The result is that your home stays on the market longer, forcing you to lower your price beyond what it should have sold for or doesn’t sell at all.

Peter Green, a retired San Francisco firefighter looking to buy a home in Palm Desert, California, encountered such a situation in 2022. The home he wanted was a FSBO, but he says working with the seller was difficult, mainly because he overpriced the home.

“The seller just looked on Zillow for comparable prices and set his price the same, not taking into account that his home needed hundreds of thousands of dollars in repairs,” Green says.

2. Lack of MLS market data

The MLS, or Multiple Listing Service, provides agents with a wealth of real estate data to get you the best deal. Regular people have access to much real estate information on the web, but it can't match the power of the MLS.

A FSBO seller cannot list their property on the MLS – unless they go through a discount broker who will charge a flat fee of several hundred dollars. However, the broker doesn't help with marketing, photography or disclosures.

On the other hand, a full-service seller's agent will use the MLS to properly value your home with an insightful comparative market analysis (CMA). They will account for factors affecting comparative sales, such as seller credits or closing help, which won't show up on public sites. Appraisers can use the agent's CMA as part of their home appraisal.

Without the benefit of the MLS, the FSBO seller has less exposure to buyers and less information to price their home and defend that pricing with an appraiser or buyer's agent.

In sum, when hiring a realtor, you also hire the MLS. If you’re not, you’re bringing a knife to a gunfight – and the buyer’s agent has a gun. Not a good place to be with tens of thousands of dollars on the line. That’s what Green discovered working with his agent.

“My agent had far more information about the seller’s home than the seller himself,” he says.

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3. No network at your disposal

A good realtor will have a network of vendors, contractors, and often, ready buyers for a home. Do you?

Often a realtor might have the buyer for your home lined up already or know an agent who has a client looking for a certain property. Agents share information on their clients with other agents looking for a match. Most sellers don’t have this network.

Moreover, when it comes time to prep your home for sale, you likely don’t have a network of contractors and vendors like a good agent does. Without them, you'll probably spend a lot of time getting bids and sometimes getting unreliable contractors and indifferent work.

Agents should have good relationships with vendors they know, like, and trust. Usually, those vendors and contractors will put their realtor-relationship first and put their clients on the priority list. When you hire a realtor, you also hire the MLS and their network.

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4. Not understanding how to best prepare a home for sale

One of the biggest issues FSBO sellers face is preparing their homes for sale. A realtor can help you prioritize what to do and what you can skip.

Yes, most people understand the importance of curb appeal and what a fresh coat of paint and new carpets can do. But in my experience, some sellers get “remodeling fever” and do far more than is required.

Here are 12 renovations that won't increase your value much – and 10 home projects that will increase your value for under $1,000 each.

5. Failing to stage the home (and knowing when you don’t need to)

Staging really works. While most sellers understand decluttering, they often don’t realize how important “depersonalizing” the home is. Both are key to good staging.

While often we can’t remove our entire lives from our homes, a realtor can help you with the little things needed to depersonalize the home, such as removing pictures, religious icons, or offensive items that can turn off a buyer.

Working with a realtor is key. A stager generally won’t want to work with a FSBO seller because they have a limited inventory of furniture and staging materials.

Given that a FSBO home stays longer on the market and sells for less, the stager's reputation is on the line. Working with a realtor means getting a good deal on staging – and often you don’t need to stage the entire home. And a realtor should also know the market well enough to tell you when the market is strong enough that staging drops in importance.

6. Lack of marketing and selling skills

Most people have a limited understanding of how to market and sell a home. Even salespeople in other fields may not understand the nuances of real estate sales.

On the other hand, the skills are in a realtor's wheelhouse. A good agent ensures your marketing is effective, engaging, honest and ethical.

For example, It’s fine to move a trash can out of a listing photograph, but it's unethical to use photo-editing software to erase a transmission tower or the "duplicate” tool to hide missing roof shingles.

A realtor also knows how to use professional real estate photographers and improve your listing with attractive photos, nighttime photos, videos, drone photography, and more.

Good listing agents know how to position your home with buyer's agents and their clients. They know when to push, when to pull, and when to stay quiet.

7. Not understanding legal pitfalls

Walking distance. Close to church. Family-friendly. Safe neighborhood.

If you encounter these seemingly innocuous phrases in a real estate listing, it's probably violating a local, state, or federal housing law. If you’re writing your own real estate ads, would you know what’s against the law?

“When you’re hiring an agent, you’re hiring a professional who can guide you through the legal pitfalls of the marketing,” says Schwartz.

FSBO sellers aren’t subject to the same scrutiny as real estate licensees but are still subject to the same housing discrimination laws if a complaint arises. Do you know all seven protected classes under the Federal Housing Act? The states and cities that have even more? For example, in the District of Columbia, where I am licensed, it’s illegal to discriminate in housing based on political discrimination and even personal appearance!

Moreover, a realtor helps you avoid personal biases in picking an offer. (This happened to me.) Let's say you had three similar offers. All of those offers included warm hand-written letters from families who included a photograph of themselves and their children. You happened to pick the offer that wasn’t as well qualified but whose race of the buyer matched yours.

Guess what? You’ve opened yourself up to a housing discrimination lawsuit. Hiring a realtor would have protected you because they would have been smart enough to strip those letters and photos out of the offers before presenting them to you.

8. Lack of negotiation and closing support

Let’s say you do get an offer from a buyer’s agent. Now the real fun begins. Can you negotiate effectively without the MLS to determine whether the offer is fair? Can you understand all the contingencies and their impact?

In addition, a realtor will help you evaluate offers and the strength of a pre-approval letter from a lender. Some aren’t worth the paper they’re printed on. Do you know the difference between pre-approval and pre-qualification? Do you know what to ask the buyer’s loan officer to make sure the transaction will close? If you don’t use a realtor, it’s on you.

Another disadvantage is that you simply don’t know the buyer’s agent. Experienced realtors will know many agents in an area. They will know who is easy to work with and who isn't.

For example, would you know how to handle an offer from an agent who offers you a great price but slips in a “poison pill” of multiple contingencies? That agent may plan to keep reducing their offer with repair credits (not fixes) as a strategy. Some brokers instruct their agents to do that. Do you know which ones?

How about the paperwork? We all hate paperwork. And a real estate transaction is full of them. There are disclosures, disclaimers, contracts, addendums, title company closing documents, and wiring instructions. If you hate filling out paperwork, then a FSBO is definitely not for you.

In Peter Green’s case, he says the FSBO seller didn’t provide solid answers on structural and mechanical issues. That made it difficult to make an informed offer.

“He would often change his answer to our questions by the day," Green says. "We asked if certain repairs were permitted. He said they were, but when we went to the county to pull the permit there weren’t any. As a result we just didn’t feel confident that repairs were done correctly.”

Listing a home requires dozens of forms and disclosures that must be filled out correctly and signed by the owner. If your disclosures are incorrect, incomplete or missing, you could lose an entire deal by giving an unhappy buyer an “out.” Worse, you could be sued. Same with contracts. An incorrect name or date can void a deal or hold up closing.

Sure, you can hire a transaction coordinator or a real estate attorney to manage your sale. But guess what? Most real estate transaction coordinators are realtors with licenses in associate status. And they can charge between $800 to $2,000 to close your transaction. And a real estate attorney will probably charge the same. Almost as much as hiring a realtor to sell your property from listing to close.

“The simple fact is that the cost in time and money for a FSBO is almost always a negative value,” says Schwartz.

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