The Truth About Selling a Home For Sale By Owner

Selling a home For Sale By Owner is certainly a viable option, and if done correctly, can be a great decision. However, in many cases, selling For Sale By Owner is the absolute worst decision. I have sold homes using both methods, and I am very much aware of the different circumstances that make one option better than the other.

Please know that I do have a major bias when it comes to the real estate luxury homes for sale in Guadalajara Mexico industry. I think it’s one of the most unethical industries I’ve ever been well acquainted with. I was a real estate agent for just enough time to see how corrupt the industry can be, and then my conscience forced me to walk away. I was literally taught how to take advantage of people, and I can show you the training books that have it all documented.

That said… my opinions should be considered with this bias in mind. I also believe there are good, honest agents that maintain high, ethical standards.

The Benefits of Selling For Sale By Owner

It is pretty clear that the main reason people sell FSBO is to save all or part of the traditional 6% paid to Realtors. Most people who sell FSBO do pay a buyer’s agent, but that still leaves several thousand dollars left in your pocket.

The Challenges and Risks of Selling FSBO (more than just the obvious ones)

Most people recognize that selling FSBO has it’s challenges as well. In fact, about 86% of people who start selling FSBO switch to a Realtor because they lose confidence. Some of the causes of that stress includes: the seller needs to make sure the house is priced correctly, do all the paperwork, make the marketing materials and get online anywhere they can, deal with showings without have a lockbox tied to the MLS, etc.

Even though the above mentioned challenges are annoying to deal with, it is very possible to deal with them. There is another list of challenges that is almost always overlooked by both buyers and sellers in a For Sale By Owner transaction.

Price Discrepancy. When houses for sale are priced, or “Comped”, based on market values of similar homes in the area, that price is comprised of two components: (1) the price of the home, and (2) the real estate agent’s commission. For example, if a home is comped at $200,000, then really the buyer knows that about $12,000 goes to the agents involved, and the seller is only getting $188,000.

If a home is listed at $200,000 and there is no agent involved, then it will be a major red flag for a buyer that the home is overpriced and should really be sold for about $188,000. If a seller tries to justify the same sales price without using an agent, then a savvy buyer will make the following points:

  • Real estate agents have the responsibility to make sure everything was done correctly and no critical details were undisclosed. Not selling with an agent adds risk and liability to the buyer.
  • Not paying at least the buyer’s agent adds stress and work for the buyer. Most people selling FSBO do pay a Buyer’s Agent, but one major legal detail often goes unnoticed. When a buyer uses an agent, the contract often says the agent will collect a 6% commission. The agent must first try to collect from the seller, but anything unpaid must be paid by the buyer. This means that a buyer could literally be paying up to a 6% premium to buy your home, which they probably will not be willing to do.

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