Disadvantages of ‘For Sale by Owner’

When you want to sell your property by yourself, without taking services of a real estate agent, such a property sale is termed as a ‘For Sale by Owner’ or FSBO property.

Though FSBO has advantages to it, you should also be aware of the many drawbacks that it can entail and this is applicable for both the sellers and the buyers. Let’s take a look at the negative aspect from both aspects.

As A Seller

As someone opting for FSBO, here is a look at things that can be a cause for concern here:

The FSBO property sale property is as such quite cumbersome – While you enjoy the freedom to work by yourself without the interference of a broker, you face an uphill task to sell your property on your own. You need to work a lot to make it possible – the research work, pricing your home, putting ads, screening applicants, conducting open houses, showing the property and so on. This, at all times, seems like heavy burden on your shoulders.

Emotional attachment: You have an emotional attachment with your property and value every small detail about it. This has perils of its own –

1. You tend to over-price the property

2. You tend to describe very minute details of your house to the irritation of the prospective buyer when you are showing your property to the latter.

Also, you find it very difficult to market your house as a product, to speak in that ‘marketing language’ which is required to satisfy buyers.

Lack of market, legal and financial know-how: Being the owner of a property and not a real estate broker, you fall short of the knowledge you need to possess to facilitate a house sale. Not only are you unaware of the market conditions, the prevailing prices, the prices of similar houses in your locality but also all the other legal and financial matters that go along with it.

Time consuming – A lot of information is available to you at the click of a button through the internet, but you don’t have the time to go through the huge web and also get utterly confused with the enormity. All this research work, the task of choosing where to place ads, how to place them, what to write and so on takes a lot of time. Investing that much time is difficult.

Limited exposure – If you avail the services of a real estate broker, your property gets more showings and a greater exposure than if you sell it by yourself.

Higher costs – Although you feel that by selling your home on your own, you can cut down on the costs the real estate broker would take for the purpose, you actually end up spending more! The advertisement costs are huge. Many real estate brokers include the costs in their services; you get it as a package. Also, you incur costs running around for placing ads, opening bank accounts, doing research and so on. Above all, is the cost of losing your peace of mind over the sale!

As A Buyer

You are attracted to an FSBO as in this case you are not required to pay the real estate’s commission. Here is a look at problem issues that you need to be aware of:

Unsure of the ownership: As a potential FSBO buyer, you are not sure about the ownership of the same. The person who has put up the house for sale might only partially own the house and the other owner might not actually be interested in selling it!

Unsure of the price: As FSBO houses are generally over-priced and there is no agent involved, you don’t know the market and are hence you are unaware of the ideal price of the property to help you bargain well.

Unaware of the faults: As the owner is putting his house for sale and values every little bit of it, he/she will not come out with the faults to the prospective buyer. This creates a difficulty as the latter is deprived of the right to know all the aspects before deciding to buy.

Unaware of technical details: The owner of an FSBO home isn’t aware of the exact measurements – the total area, the carpet area, dimensions of each room, section etc. Hence, he/she will not be able to provide you with details on the same!

Bereft of expert advice and help: A real estate owner’s job is facilitating the buying and selling of homes! He comes up with his expert advice from time to time which an FSBO home owner cannot provide! He can think about the property neutrally, without any bias and hence you can value the same. Also, a broker helps the buyer throughout the entire process including interpreting the agreement, handling registration details etc.

Disadvantages of For Sale by Owner Transactions

A property owner may have a vast amount of information about his or her home’s specifications. However, knowing about one’s property and closing a deal are two completely different things. Many homeowners falsely believe that For Sale by Owner transactions are the best option. They may choose these kinds of transactions in order to maximize profits, to minimize expenses, or because they think it will be easier.

It is statistically proven that the vast majority of houses in Laval were sold with the assistance of a professional real estate broker generate more significant profits. These profits are usually more than sufficient to cover commissions and pocket additional money. The National Association of Realtors declared in their 2013 Profile that “For Sale by Owner (FSBO) transactions accounted for 9% of home sales. The typical FSBO home sold for $184,000 compared to $230,000 for agent-assisted home sales, a difference of $46,000 – or an addition $32,200 after agent commissions.”

For sale by owner

Disadvantages of For Sale by Owner Transactions

There are many disadvantages to not working with a professional real estate broker. Here are a few to consider.

Buyers working with brokers will sometimes avoid placing offers on For Sale by Owner homes, which narrows the pool of potential buyers.

Most For Sale by Owner success stories involve buyers and sellers that previously knew each other.

Homes for sale by owners stay on the market an average of eight weeks longer than those listed with a broker.

Dealing with unqualified buyers can tie up homes for weeks, which could cost you the attention of viable potential buyers.

Buyers don’t usually pay commissions for a broker’s service, advice and insurance protections. Many buyers hesitate to purchase without insurance protection unless they get a great deal. This contradicts the For Sale by Owner goal of profiting more by saving on commissions.

The Advantages of Employing a Broker

Brokers have access to market data, are aware of the latest transactions performed in the community, and they collaborate with homeowners eagerly seeking to sell comparable properties also on the market.

They can be sure to price your home accurately. Market analyses have repeatedly demonstrated that homes priced correctly when first listed not only sell faster but also secure higher profit than those that are not.

It is the broker’s duty to take care of your business even if you are not present. He or she can show your home when you’re not available, is always ready to answer phone calls from potential buyers and their agents, and can provide you with valuable feedback.

Brokers have the experience to objectively evaluate and assess the condition of your home. They may even propose means to improve and emphasize its worth, suggesting tasks such as minor renovations, cleaning and staging.

With For Sale by Owner transactions, the seller must be present for all showings, which can make prospective buyers uncomfortable. Working with a broker allows prospective buyers to relax and visualize themselves in the home without the pressure of the homeowner hovering over them.

Brokers have widespread marketing experience as well as associations with other brokers.

Being experienced negotiators, brokers can obtain the right price for your home.

They’ll guide you through all the paperwork, ensuring your compliance with regulations. They will also see to it that all timelines are prudently met, including home inspections, appraisals, surveys, lending deadlines, and closing.