For Sale By Owner Properties Often Fail. Why?
As a licensed real estate professional, I’ve seen my share of for sale by owner properties around. Most of the time, they end up with a Realtor sign in the yard after months of languishing on the market with a “For Sale By Owner” (FSBO) sign. I just passed a former for sale by owner property yesterday. As usual, I chuckled when I saw the Realtor sign in the front yard.
Why do for sale by owner properties fail at a higher rate than a professionally listed property?
- Homeowners seldom really know the current market. That leads to an overpriced home that savvy buyers would never buy. I showed one this past Monday that was 62% overpriced. I guess the seller assumes there is always a buyer with more money than brains out there. What you want, and what a home will sell for may be light years apart.
- Showing a for sale by owner can be challenging. When an agent sets up a dozen showings in one day, scheduling becomes an art. Access is the key to making that day successful. If a for sale by owner can’t allow the house to be shown except on a limited schedule the odds are radically against him. That’s true of listed properties too. Access is really important.
- Homeowners may not know how to negotiate an offer. There is usually some give and take in a real estate offer. If a for sale by owner is locked on a price and won’t budge, or won’t let a home inspection or repair request become a part of the deal, or is refusing a termite inspection, or is demanding of a closing date closer than a lender can accommodate, then a buyer can’t buy it.
- Homeowners may not disclose things, or they may disclose too much.
- Homeowners may not understand legal contracts. I ended up re-writing a contract for a for sale by owner last year because there were so many legal liabilities in in it that could eventually come back to bite the seller. The seller had no idea, and the buyer, who wasn’t represented either had no idea of the legal ramifications of a binding contract full of potholes.
This list could go on and on, but the reality is that a FSBO is almost always better off selling through a competent Realtor. It will reduce stress and it will help the seller get across the finish line with a better deal.