Selling a house is a big deal. It's typically a person's largest asset and the most valuable thing they will sell in their life. There is an entire industry dedicated to the art of buying and selling homes - so it's no surprise that when amateurs try their hand at it -they soon come to realize that it's not as easy as it looks. Thousands of home sellers out there have gone through the frustration of trying to sell their home only to get burned out by the whole process. This probably explains why according the the National Association of Realtors , over 80% of FSBO sellers eventually use an agent to list their home.
Why is this the case?
When I talk to "For Sale by Owner" sellers, they tell me the same thing over and over again. They're getting interest in the house from potential buyers and they're getting phone calls but they're mostly getting ridiculous offers and people are asking them to carry the loan. They feel like their time is being wasted by people that aren't even pre-qualified. Most phone calls are from agents looking to list their home.
There are plenty of reasons why an FSBO home might sit on the market for a while. I'm going to list 5 of the most common reasons why they don't sell quickly and are more likely to sit longer:
1 ) They are invisible
FSBO properties are not always the easiest to find - they have a sign in the front yard and that's about it. Unless they are on major street, than the only people seeing it is their neighbors, so the reach is limited to their neighbors' friends and family. Sellers can list their home on craigslist but there are so many other ads that the postings get buried quickly and are soon irrelevant, lost in a sea of words. You would need to post everyday, several times a day to be effective. Lucky for sellers, there are more and more websites that allow you to list your home for free - still many sellers don't realize that these resources exist and even worse, neither do many buyers. However, well-known websites like Zillow and up-and-coming sites like ForSaleByOwner.com are starting to carve out a market for FSBO sellers so we may see these properties come out of the shadows and into to limelight in the near future.
2 ) No marketing plan in place
A big part of what real estate agents do is marketing. Not just on the properties that they are listing, but in general. Many agent shave already been spending time and money on marketing their business and their listings. Agents work hard to build a reputation in their community and have a large network of other agents. They have a marketing machine already in place and their phone is always ringing with people looking to buy and sell houses. Most FSBO sellers do not have any such thing. They typically lack the budget or the knowledge to launch an effective marketing plan. As such , they are unlikely to have the same kind of impact and may see less activity than a home listed on the open market with an agent.
3 ) Showing availability is scant
Many times when I called FSBO sellers I've had to leave a message because no one answers the phone and I have to leave a message - many times never getting called back. I've had an appointment to view a home and then the seller wasn't even home for the appointment! So rude. When I reached out to her again - she said she was too busy to talk - how's that for great customer service? She isn't like to sell her home if she continues like this. The point is that typically when dealing with a real estate agent - you get better access to homes and have someone who answers calls or returns calls. It is very rare that a real estate agent doesn't call me back - even when I don't leave a message they still get back to me. When FSBO sellers have to be at work all day or don't want to show the house when it's most convenient for the buyers- it can difficult to sell it. Buyers can be fickle and tend to have short attention spans when it comes to houses - if a home isn't available they are likely to move on to other homes and forget all about the homes they didn't see - "Out of site - Out of mind"
4 ) No Open Houses
Most FSBO Sellers that I talk to have not held any open houses nor do they plan to. By not holding an open house - they are missing out on a great opportunity to showcase their house on their own terms. Open houses create several chances for their home to gain attention. Advertising it lets buyers know you have a home for sale even if they don't attend the open house - they may call you in advance to make an appt ahead of the open house and make an offer. Agents are more likely to take clients to an FSBO showing if there is an open house - especially if their clients request it.
Many sellers don't realize that there are many agents who would host an open house for them with no obligation. They do it so that that they can build a buyers list of clients looking for a house. If they don't buy the open house property then perhaps they are interested in one of their other listings. Sellers could take advantage of all the marketing power of the agent without having to list with them. They don't. So they sit.
5 ) Other agents don't bring buyers
True story. Agents don't bring buyers around to FSBO homes. Why not? (see Reason #1.) The rare exception may be when a client specifies it or you have a super agent who takes the extra time to scour the internet for FSBO homes for his client. Most agent aren't super agents. They will show you what is on the MLS and FSBO properties for the most part are not on the MLS. Agents cite that they prefer to work with another agent who understands the process and knows the right paperwork and disclosures. Also homes that are FSBO come with the connotations that the seller doesn't want to pay any commissions. This can scare off a lot of agents that who don't take the time to follow up with the seller to see if they will pay a commission to the buyer's agent. Of course there are exceptions and some agents regularly work with FSBOs on behalf of their buyers - but this is not as often as you might think. So without agents driving traffic to the property -it's likely to sit longer. The longer it sits, the more likely buyers are to offer less for it - assuming that it has already been passed over for several months and are hoping the seller will finally cave in just to unload it.
All of these are issues that can be overcome. It's simply a matter of how much time and money a seller is willing to put into it. There is a reason licensed Realtors are required to be licensed. There are a plethora of legal documents, contracts and disclosures that have to be filled out correctly and signed when selling a home. It's no accident that professionals get paid to handle these kinds of details. Have you ever had to sell your house? What was your experience like? Let me know in the comments if you would do it again
Please be sure to check out my others articles on real estate, investing , and cryptocurrency ( and some other random dog stuff)
I always upvote comments to my blog posts
Good post @jorlauski I have sold 3 houses and the agents earned their commission each time. In fact, in my last sale the transaction got a little adversarial and I actually gave the agent power of attorney so I didn't have to attend the closing. An unsung role of the agent is keeping the negotiations on an even keel.
thanks @steven-patrick -I'm glad you had a good experiences with an agent - I always do my best to prove the value that I provide to my clients- dealing with unruly parties is one of the perks of the business ;)
Good Job on your post. I'm finally finished with my schooling-got my BS degree...so I hope to get posting on here again. I just got my breaker box wired up last week so I have the rehab wired and plumbed...now I have to pass inspection.
Good to hear from you - congrats on your degree! I look forward to seeing what you have to put forth - I hope you post up pics of your rehab - make it a great day!