Why Try To Sell Your Home For Sale By Owner

Posted by Joe Manausa on Tuesday, June 2nd, 2009 at 12:45pm.

The potential savings in commission dollars makes it a strong reason why sellers should attempt to sell by owner right?

Yesterday's blog on "For Sale By Owners" created some interesting discussion both here and at a real estate networking site that I visit on a regular basis. It seems that, oddly enough, my viewpoint was shared by most REALTORS®, yet some of our readership was mixed. I absolutely love when we get reader comments, because it helps steer the direction of this blog, as well as the direction of our customer service directives at our Tallahassee Joe Manausa Real Estate.

Reader Asks "Where Is My House"

So the first comment is from longtime reader "WW' who writes:

How do you measure FSBOs? If I'm smart enough to say, "Hm, all the $200K's in my neighborhood are failing to sell," and list my house FSBO at $110K, and it sells in a week.... which of your charts do I hit?

Not trying to be difficult, and I enjoy your posts, just pointing something out. -- WW

My answer to this, as usual, is somewhat analytical. As I replied to WW yesterday, the answer to his question is that sold homes, regardless of the methodology, end up on my "sold" chart (graph). That is why we measure both the Tallahassee MLS as well as the Leon County Tax rolls for real estate sales in Tallahassee. WW's home sale would show up as a new sold property ... and that's the point. Not many people are showing up as new solds. They need help!

Real Estate Brokers Opinion On FSBO

The next is a comment I received by a top real estate professional in New Orleans. He writes:

FSBO's dont always know how to sell a home. And, marketing the home is not the only difficulty. The majority of FSBOs dont have a clue about what forms and disclosures are needed to even complete a transaction. All that trouble just to save a little comission money! -- CJ

As I told CJ, I agree with most of what he said. But I do not agree with his conclusion where he stated "just to save a little commission money!" The fact is, my clients are not so rich that they see it as a small amount of money. Nor do I. Our commissions are a large price to pay, but the fact is, the seller will pay it either way.

Who Really Saves The Real Estate Commission

Every FSBO seller I've ever talked to said they would pay my fee if I brought a buyer. This means they are only trying to save 1/2 of the fee, not all of it. Additionally, every buyer knows a FSBO is not paying a fee, so they expect to save the fee and offer less (the full fee less ... not just 1/2!). So the real question is....can both parties really "save" the money?

Not with any calculator that I have ever used. The chances of a FSBO selling their home without a REALTOR being involved (at least working for the buyer) is less than 10%. When a home is sold "For Sale by Owner," the home seller usually nets significantly less than if a top real estate brokerage company had been hired to sell the home. So, the final result is a home seller who either does not sell the home, or one that does all the work themselves, opens themselves up to significant legal issues, and all for the benefit of netting less money.

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Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

4 Responses to "Why Try To Sell Your Home For Sale By Owner"

Doug wrote: Joe,
I tend to agree with you to a point. A true real estate professional can probably sell your house faster and maybe have you net more verses the FSBO. But.....the world has changed....you now have craigslist and other sites that never were available or accessible to market your house. There is so much free web software available to help you market a property on-line (as far as layout etc..) . Also it used to be that you either had to have a mls book or be working with a Realtor to find out whats on the market. Now , there are numerous sites that show all the listing information that was never available before. National sites like Trulia, Zillow and Realtor.com are great sources . Not to mention informative sites like yours. I just think there is so much more info and marketing available to FSBO's than ever before.

Posted on Tuesday, June 2nd, 2009 at 7:31pm.

Joe Manausa wrote: Doug, no doubt a FSBO can get the property out on sites for exposure, the problem is that exposure is not nearly as important as "correct exposure." So a FSBO can get it out on all the aggregate sites, but not on the lists that we use to help buyers sift and sort what is available. For example, you can be on Zillow, but you cannot really tell if something on Zillow is a good deal in current market conditions.

But that being said ....

Who cares?

If you are thinking that the value of your real estate brokerage is purely marketing, your missing the real point. The value comes in bringing a buyer to the table, and helping you negotiate from a strong position. FSBOs are notorious for "giving it all away" at crunch time. I for one will always negotiate a contract to the advantage of my buyer when facing a FSBO, and I can tell you it costs the FSBO seller a lot more than they realize. Think about it, this is my full-time job; for FSBOs, it is something they do maybe once every five to seven years.

Posted on Tuesday, June 2nd, 2009 at 7:38pm.

Doug wrote: Joe,
What you say is true......but i venture to guess that the way you approach the business with your professionalism and knowledge, can not be said for a number of the real estate agents. Now that statement my get some reaction. I'm not saying someone should be a FSBO, but only that the technological tools available to him or her are greater today.

Posted on Tuesday, June 2nd, 2009 at 8:12pm.

Joe Manausa wrote: I agree Doug. The internet is as full of tools for home sellers as Home Depot is full of tools for homebuilding... :). Thanks for commenting again!

Posted on Wednesday, June 3rd, 2009 at 1:29am.

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