Many sellers’ market their homes “for sale by owner” also known as FSBO. They think that selling without an agent is a great way to save on commission costs and put more money in their pockets at closing, but they really truly are a bad idea!
According to Inman.com, the median selling price for agent-assisted homes in 2015 was $249,000 and those sellers who chose to do a FSBO had only a $210,000 median selling price (almost 16% less!) which was actually more than the commission they would have paid. And, what was even more interesting was if the sellers sold to a “friend” they were found to sell it for 39% less – so I guess buying a FSBO is actually a good idea for the buyer in that case.
I see “For Sale By Owner” signs on some properties for years, so it’s obvious that they do take longer to sell and the sellers have to pay for their own signs, flyers, photography, and I have always wondered how they actually “choose” the new buyers for their homes. I have one right down the street from me and they will not work with an agent if you bring them a buyer and I found out they have been trying to sell it FSBO for over 10 years now! They said they don’t have to sell right now and are waiting for a cash buyer to buy their home and just know it will happen one day.
I have heard of sellers signing agreements they should not have signed and then had to actually pay the buyers to get out of the situation they got themselves into and without using an agent, all the liability for mistakes such as this would land on the seller. Agents are great at being able to point out mistakes and their Errors and Omissions (E&O) insurance can cover anything that may get overlooked.
I recently sold a home here in Flagstaff and then helped them to buy a home in Cottonwood located about 1.5 hours away, but then they decided to buy a FSBO and the seller refused to work with an agent. My happy buyer had to find out the hard way that the roof had leaks that were never disclosed and they wound up having to pay for several other “items” that the FSBO seller never mentioned!
FSBOs simply don’t have the expertise or resources, such as paperwork or forms, that the agents provide. Bottom line, FSBOs come away from a sale, on average, with less money than if they had used an agent while putting up with unnecessary hassles and RISKS.