For Sale By Owners (FSBO)

Why Most Real Estate For Sale By Owners (FSBO) Fail


One thing that makes the world go around is the desire to save money. Everyone likes to save a few bucks. In Real Estate saving a commission translates into big dollars. It is hard to blame anyone for wanting to save the type of money that is made when a Realtor sells a home or condo.

While commission rates are negotiable, in most areas around the San Jose Bay area someone selling their home will more than likely be paying a Real Estate commission between 4%-6% on the sale price of the property.

On a $400,000 home a commission of 5% is $20,000. There is no question that is a lot of dough! Selling a home for sale by owner is not an easy task and that is why most people end up using a Realtor. Nationally the success rate of a for sale by owner (FSBO) is very low. Over 90% of all FSBO’S end up listing with a Real Estate agent. Why is going the for sale by owner route so difficult to pull off? There are a number of reasons why selling a home on your own is a hard thing to make happen.

The Wrong Price

Over the last 25+ years I have taught hundreds of agents about pricing a home properly. It is the most critical element when selling any product but especially so when you are talking about something as large as a home sale. Over 75% of a home’s marketing is about setting the proper price. Homes that are listed with a Real Estate agent and are overpriced stand a slim chance of selling. Overpricing as a For Sale By Owner (FSBO) in the current Market in the Bay Area makes it next to impossible!

Many sellers seem to either do their own market research and end up choosing the wrong price or have a Realtor help them with appraising the property and ignore their advice. If more for sale by owners priced their homes based on comparable market data there would be a higher success rate. Doing extensive research of what like homes in similar neighborhoods are selling for would go a long way!

Often times people want more money for their homes because they have done some kind of recent improvement. Unfortunately many projects for the home do not have a high return. For example if you replaced a roof, a septic system, or added a pool don’t expect to see much payback on the money you invested.

Lack of Exposure

Some for sale by owners do nothing more than throw an old beat up for sale by owner sign in the front lawn and expect that will do the trick. Then there are others that think that going in one of the for sale by owner sites like I sold my, for sale by or buy is going to bring lots of traffic. WRONG!

 These sites generate a pittance of Real Estate traffic in comparison to the sites some of the top web savvy Realtors use to promote homes. Their sales pitch is always “we will give you world wide exposure and save you thousands of dollars!” This could not be further from the truth. Just go to Google or any other major search engine and type in a local search with Real Estate keywords a buyer would use.

Things like your town, state and homes for sale. Using my home town as an example would be San Jose Homes for sale. Do you think a for sale by owner site is going to come up in the results? Not a chance! Go ahead and try it with your town. It will be dominated by sites that show homes listed by Real Estate agents. These FSBO sites promise the world and deliver empty promises the majority of the time.

A Realtor that knows their way around proper internet exposure can change the traffic going through a home exponentially when compared to a FSBO site. Take a look at the  National Listing Distribution to 550+ Portals on the Internet I provide all my seller clients that provides maximum exposure of their home on Internet. There is absolutely no comparison what this kind of internet exposure can do when compared to a for sale by owner website. The cold hard facts are thousands of buyers will not even know a FSBO home is for sale.

Buyers Want to Save the Commission

One of the other factors associated with selling a home by owner is the fact that many of the people viewing the home are going to want to share in the commission savings. Many of the potential buyers who will be looking at for sale by owner homes are bargain hunters. The line of thinking is that since the seller is not paying a commission they should be able to offer less for the home. Sellers end up receiving low ball offers on many occasions. Buyers will often take 6% to 10% right off the top regardless if the home is priced well or not.

Home Accessibility and Buyer Qualifications

These last two reasons are often overlooked by someone trying to sell their own home. It is hard to sell a home if a buyer cannot get in to see it. Often times when a FSBO is trying to sell they need to match their schedules with the buyer which sometimes is not that easy especially for those that work full time. A Realtor of course makes this part of the home sale process go much smoother. Lastly, home sellers need to be equipped with the knowledge of knowing how to qualify potential buyers. There is no point in having unqualified foot traffic going through a home. This is also part of a Realtors job. Most buyers that view homes today are pre-approved. As a FSBO you need to make sure that the same holds true when showing your home.

If you can sell your home on your own all the power to you! You will be in the minority but you can make it happen! Above all else remember how important pricing and market exposure is to your home selling success.

If you are a San Jose Bay Area  for sale by owner and find you do want the help of a Realtor, I would welcome the chance to be interviewed for the job.