For Sale by Owner Leads to Lower Sales Price

It’s no secret that home sellers want to sell their property for the highest possible price, while homebuyers want to buy for the lowest possible price. One of the ways people try to save money is to avoid paying the commission typically charged by Realtors by choosing to sell the property themselves. This is called a For Sale By Owner (FSBO). Unfortunately for those sellers, studies show that residential sales that involve Realtors often sell for higher prices than those sold by owners directly.

Here’s why: Realtors know what they’re doing. You wouldn’t hop on an operating room table and say, “Hand me that scalpel. I got this.” While I admit that real estate isn’t a life or death situation, real estate law is complex and one wrong move can haunt a seller for years.

Most buyers seem to understand this. They find a Realtor to represent them, to save them time by identifying all the properties that match their criteria, to make sure appropriate disclosures are completed, and to negotiate on their behalf. The only reason a buyer would look at a FSBO is to save money. And while a buyer’s Realtor will certainly be fair and honest with the seller, that Realtor’s job is to look out for their client’s (the buyer’s) interests.

As a FSBO seller, you must do all the work you’d pay a Realtor to do. You must figure out a sales price that attracts buyers but doesn’t leave too much on the table. You must look at your house with an objective eye and make only those improvements that are likely to influence a sale. Once the house is ready, you must figure out how much to spend on what type of advertising. You must go to the online housing search engines that accept FSBOs and enter your information there. You must try to figure out who would like to buy a house like yours and how to entice them to look at your house.

You must also be available to show the property to any and all comers (without the benefit of a Realtor’s screening). An unscreened prospect may or may not be a looky-loo who is just curious and has time to kill, or a sketchy person casing your home to rob it.

And there are some things you simply cannot do without a real estate license, like uploading your property information to the Multiple Listing Service, which feeds third-party online databases used by real estate offices across the country.

Speaking of third party, one of the most important services Realtors provide is assistance in negotiations. As a FSBO seller, you need to follow up with potential buyers to see if they are interested, thereby tipping your hand as to how eager you are to sell. Realtors who follow up are simply doing their job.

Let’s say everything went your way: you found a buyer and are ready to sit down and sign a contract. Here’s where things can really get challenging. Do you know which inspections to get and who should pay for them? Do you know how to write contingencies into the sales agreement? When I began in real estate more than 40 years ago, a transaction file had about 30 pages, 28 of which came from the escrow company. Now, the Mendocino County Disclosure form alone is 11 pages long. And the ramifications of not making the required disclosures, whether standard forms or disclosures to address a specific issue, can be financially devastating.

Not surprisingly, many FSBO sellers eventually decide to list with a Realtor. Sadly, by that time, the listing is old news rather than an exciting new prospect, so it can be harder to sell. However, a good Realtor can often highlight the property’s best features and find buyers who are just the right fit.

If you have questions about getting into real estate, please contact me at or call (707) 462-4000. If you’d like to read previous articles, visit my blog at Dick Selzer is a real estate broker who has been in the business for more than 40 years.


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