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5 Reasons FSBO’s Never Sell

April 5, 2009

fsbo“For every winner there are dozens of losers. Odds are you’re one of them.” The first time I saw this statement I almost peed my pants laughing. How true it is. You’ve probably seen motivational posters lining the halls and walls of corporate America, as if these little one-liners are going to bring out the best in people. On a site called www.despair.com I found the above gem and it really stuck with me because it says something we all like to pretend isn’t true. Not everyone can win. Of course, this doesn’t make those that don’t win “losers,” but it gets the point across.

Selling your home without a Realtor is a losing proposition. You could have the world’s most gorgeous magical wonderland of a house, but odds are you’re going to be a loser if you try to sell without a Realtor. Here are 5 reasons why it rarely works to go it alone:

1. FSBO’s cannot be listed in the MLS
Only licensed real estate agents and brokers can place a home in the Multiple Listing Service. And the majority of search engines and real estate web sites lock FSBO’s out. The reasons why only agents and brokers can list homes in MLS are irrelevant. Not that they aren’t valid reasons. But they’re irrelevant. The point is….you can’t use the #1 selling tool. And the reason why search engines and real estate sites don’t list FSBO’s is also irrelevant, but I’ll share it with you. When you list your home in MLS your home information propogates out to potentially thousands of other sites that are automatically connected to the MLS system through something similar to an RSS feed. No, the Realtor didn’t do something mysterious to dissimenate your listing to the online world. It happens automatically by virtue of it being listed in the MLS. The point being…it happens.

2. Realtors won’t show FSBO homes
Why would a Realtor bother attempting to contact each FSBO owner and individually, one after the other, negotiate a commission and showing agreement? The market is saturated with available homes where the Realtors commission is protected with a legally binding listing agreement. FSBO’s are avoided like the plague. If a home seller is so concerned with paying commission that they have chosen to sell without a Realtor they are assumed to be a waste of time. Realtors don’t get paid when they waste time. They’re only paid when they sell a house. In addition, most Realtors know that negotiating with a FSBO owner is a painful and sometimes irrational process where the FSBO owner doesn’t understand the rules and laws and procedures to the sales process. FSBO’s are more pain than they’re worth, and in this declining market there is absolutely no logical reason to show FSBO’s to buyers. There are simply too many listed homes available.

3. FSBO’s are usually over-priced
Heck, in this market most listed homes are over-priced, but at least a listed home has a trained real estate professional representing the seller. A buyer’s agent is more comfortable negotiating/arguing price with a listing agent than directly with an emotional FSBO owner. It is very difficult to tell a home seller that their home is not worth what they imagine it to be worth. But one agent showing another agent solid facts and comparable home sale statistics is a lot less prone to disaster. FSBO sellers also don’t have access to comparable home sale statistics. They lack the tools to price accurately.

4. Buyers are nervous around FSBO owners
Buyers don’t feel comfortable previewing FSBO homes with the actual owner present, let alone guiding the home tour. When buyers walk through a listing with an agent they feel they can discuss the good and bad points about the home openly with each other and their agent, but when those same buyers are being guided through the home tour process by the actual owners they tend to clam up and wait till they get outside, out of earshot, to discuss their feelings on the home. Nobody wants to hurt someone else’s feelings, so they hurry through the home and then start talking outside. They also are far less likely to open closets, look in closed rooms, check out the air conditioning system or stare at the ceiling for roof leak evidence if the seller is right there watching over them. In other words…buyers avoid FSBO’s.

5. FSBO’s often run into legal troubles
FSBO sellers usually don’t understand all that goes into a successful real estate transaction. What contract works best? The FAR-9 or the FAR/BAR?  How much of an escrow deposit should be required for a particular transaction? What should the seller to with the deposit once received? What title company should be used? What is a title company? When a buyer threatens to back out of the contract, which happens all the time, how does the FBSO owner keep the deal together? What disclosures and addendums should be used to protect the seller aganist future lawsuits? The list goes on and on and on. Only an experienced Realtor knows the answers to these questions. We deal with this every day.

In summary the average FSBO has between 5 and 10% chance of selling without a Realtor. What other activity in life would you voluntarily engage in with such a high rate of failure? Not many I’d guess. So why gamble with your time, energy and money?

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