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Tyson Properties, Inc.

FSBO – “For Sale By Owner”

Some property owners are able to sell their home without the assistance of a licensed real estate agent. These successful do-it-yourself sellers are usually very experienced in home sales. Others may be transferring ownership of the home to a tenant, a child or a family member or friend who already lives in the dwelling. However, these home owners are the exception and not typical seller.

For many property owners, a for-sale-by-owner (FSBO) transaction isn't part of the sales process. Here are five reasons why most home owners are unable to manage a “for sale by owner” transaction.

Here are five reasons why most home owners are unable to manage a “for sale by owner” transaction.

  1. The MLS does not permit listing FSBOs. Sellers placing their FSBO on the market are prohibited from placing the home on the multiple listing service (MLS) because an MLS is only opened to licensed real estate agents and brokers as an industry membership only organization. Likewise, professional search engine websites dedicated to real estate listings prevent FSBO properties from being listed.  A “For Sale” sign in the front yard and a small add in the local newspaper does not receive nearly as much advertising exposure as an MLS listing.
  2. Real estate agents will not show an FSBO home. Typically, a home sale generates income for the buyer’s agent in the form of a percentage of the commission paid by the seller to the listing agent. FSBO homes do not usually have a listing agreement and that means there is no guarantee of a commission for the buyer’s agent. In addition, many buyers are not interested in transacting with a seller who is ill-informed or ignorant about real estate sales. This indicates that the pool of prospective buyers is likely to be much smaller for an FSBO home.
  3. Property owners often overprice a FSBO property. Many home owners have a distorted view of the value of their home and do not believe their home should be priced comparably to other homes selling in their neighborhood. Real estate agents provide updates on market conditions, assessments of comparable selling prices and additional tips and suggestions for improving the home’s curb appeal and the desirability of the interior. Potential buyers will never be interested in an overpriced FSBO home.
  4. Buyers are often intimidated when the owner is present during a home showing and may not spend the needed time to view the home. Often, the buyer is so uncomfortable they may not bother making an offer. It is difficult for anyone to discuss the pluses and minuses of an FSBO with the home owner present because pointing out problems with the home owner listening is considered bad social manners. Having an agent present for both the buyer and the seller creates the right emotional buffer for negotiating a transaction.
  5. A FSBO transaction may signal legal problems. Buying transactions can be filled with the potential for liability. Overlooking a single a state mandated disclosure or required document could trigger a lawsuit after the purchase closes.