The Pitfalls of For Sale By Owner
Let’s be honest here… with the exception of the homeowner who is simply transferring ownership to a relative or friend, or the investors and experienced home sellers, most everyone who is opting to sell their home For Sale By Owner (FSBO) is doing it to avoid paying the commission to a Realtor.
Let’s explore the pitfalls of this attempt.
First and foremost, who is buying a FSBO?
A recent survey conducted by the National Association of Realtors (NAR) revealed that 86% of buyers in the market today prefer to use a licensed real estate professional to aid in the purchase of a home. So you are left with 14% of the entire buyer market as your potential pool.
96% of the buyers who do purchase FSBO’s are professional investors. These investors choose to work with FSBO’s because they love to prey on the inexperience of the home seller. Furthermore, investors are looking for a “sweet deal”. So unless you are offering your home at a significantly discounted rate from fair market value, these sharks aren’t even swimming in your waters.
So, if you’re not marketing your heavily discounted property to a professional investor, you are left with a little more than ½ a percent of the entire buyer market as your potential customer. For arguments sake, let’s say your area has a high rate of buyers- approximately 300 buyers in the market today. 86%, or 258 of those buyers are using a Realtor. That leaves 42 Buyers in your market that would purchase a FSBO. 96% or 40 of them are investors looking for a great deal or a weak negotiator to prey upon. What’s left? 2 buyers! That’s right- 2 buyers out of the 300 (a high figure to begin with) that you are possibly marketing your house to. How many homes are for sale in your area? What are the chances your house is the perfect match for one of these two buyers? I’ll let you figure out that math.
Oh let’s not forget. Why are those two buyers looking to purchase a FSBO rather than work with a Realtor? Well, they have the same mindset- to save money (commission). When a buyer sees that a house is for sale by owner, do you know what immediately crosses their mind? It’s something like this…”hmmm, well this seller is already saving money by not paying a commission, so I can offer him less than he is asking”. Both parties can’t save on commission.
