John W David.com
For Sale by Owner ( FSBO )

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For Sale by Owner is, understandably, most common during hot markets where there is too little supply of homes for very high demand. It seems, that during this shortage, people feel they can save the real estate commission if they just do it themselves. 

That would make a lot of sense, if that's all the real estate people and their system did to earn those commissions. And, actually for quite a while, the marketing system and tons of experience in maximizing those systems were what really separated the entrepreneur from the real estate professional. 

But, not any more. 

Why I mostly refuse to get drawn into a FSBO (pronounced: Fizz-Bo) is the third of three reasons why people buy and sell through real estate professionals. 

"With the fewest number of problems" in completing the sale. 

When I have put in offers on FSBOs, my buyers were astute enough to know that an offer to purchase is a legal document created and designed from decades of court challenges won and lost due to simple ignorance that can result in litigation. 

Similarly, a listing agreement includes dozens of disclosures most often missing from a FSBO selling document which, when challenged, often ends up in court.  

FSBOs are legal minefields that can and too often do carry too much risk of major financial damage and lifestyle hardship not to mention the buyer paying too much or the seller getting too little for the property. And, there's no redress.  

When even sales professionals even after hundred or even thousands of these transactions often make serious errors and omissions on either or both of these documents that end up in court, the one time, part-time home owner expert could end up spending more in court than what s/he saved in real estate sales commissions. 

When working with FSBOs, I don't have the opportunity of seeing properly, legally prepared paperwork including all the appropriate disclosures which, in turn, leaves me and my buyers very vulnerable. And, this also leaves the seller vulnerable to a sharp buyer. 

Furthermore, since we deal with only pre-approved buyers and since we deal with only properly priced properties, it is possible that a FSBO deal can fall through at closing simply because the lender's appraiser wouldn't support the price of the property. That hurts the property and future sale.

It is also possible that a buyer could fear losing his deposit in a private sale where in a brokerage sale the deposit is in a safe trust account mandated by the state or provincial real estate authority. This kind of thing occurs when the paperwork defies the reality or perception of the sale and purchase.... even just for second thoughts. 

All the other reasons that you hear about are true: 

For the most part, bargain hunters know what the seller is trying to do. So, they jump in to help them even more. The FSBO is trying to save the commission. So is the bargain hunter. As a result, most (the vast majority) of FSBO sales are lower than our selling price less the commission. 

Bargain hunters generally don't come to us simply because we are trained and are legally accountable for getting the right priced for any given property. They are not going to get a bargain from a professionally listed property.!

Furthermore, FSBO buyers don't care about the time of day or night. And, they don't care about bothering you with making an appointment. They just drop in! They want to buy (maybe). And, you want to sell. So, you're always open. They most often don't even know the price, their price range, and are rarely ever pre-approved... especially for the home they want to see. 

We screen these people out of our clients' lives. 

In the end, with very rare exception, even real estate lawyers and real estate professionals use the services of the real estate system (as I have done twice on my own homes) when selling their own homes. They know it's not their expertise. 

And, when I see the vast majority of FSBOs who someone has told them to call me, it's all about frustration... massive frustration. And, the corrections we have to make... believe me, we earn our money! 

What is the expression that lawyers use: He who represents himself has an idiot for a lawyer and a fool for a client. Nowadays, with the legal fall out of a badly executed sale of anything, including a home, I personally think buying a FSBO has too much potential for disaster for the buyer and a huge potential for disaster for the seller if s/he gets the wrong buyer. 

Do your own thing. But, that's my best advice. I wouldn't try to sell my own home privately. And, I would not personally buy a FSBO. There's just too much potential for massive cost, upset, and disappointment.