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Why Most For Sale by Owners (FSBO) Fail?


While the wealth of "For Sale by Owner" signs dotting the landscape can seem like proof positive that this is the only way to sell a home, the truth is quite different. The truth is that most for sale by owners (FSBOs) fail. If your situation is to be different, it is important to know what makes them fail, and to avoid making the same mistakes.

One problem many sellers make when selling their own home is trying to copy everything the real estate agent would do. The real estate agent puts a sign in the yard, so the homeowner puts a sign in the yard. The real estate agent puts an ad in the newspaper, so the FSBO does the same thing. The real estate agent would hold an open house, so the seller copies that as well.

While this may seem like a winning strategy, the truth is that it results in a successful sale only about 10% of the time. With this kind of failure rate it is obvious that this is not the best way to go about selling your own home. Besides, it seems that in their desire to save the 5 percent to 7 percent fee that real estate brokers charge for their services, For-Sale-By-Owner homes earn 16 percent less than comparable homes that are listed with an experienced agent, according to a survey by the National Association of Realtors.

Listing agents have better networks

Most FSBO do not realize that very few home buyers buy the house they see on a newspaper ad. More often than not, most of the home buyers buy another house that his/her agent knows about. The fact is that agents do far more than FSBO actually see. Unlike FSBO who is trying to sell directly to a home buyer, the listing agent is not trying to sell your home, at least not directly.

Most of them will network and attempt to convince many other agents who have interested customers looking to buy. Listing agents held 'open' house, not to the general public, but to other agents. Moreover, the agent will print up flyers, not directly to buyers, but to every single agent in the local Multiple Listing Association who have interested buyers looking to buy a house. The ability to network many other agents is the secret to the successful of agent transaction. Unfortunately, FSBO sellers lack this kind of competitive advantage.

FSBO seller lack of real estate knowledge

FSBO seller needs to be ready to answer various questions the potential buyers may have. "How does your home compare with others in the same area?", "How did you come out the market value of your house?", "Do you do seller financing? Can you help?", "Who will come up the paperwork if I make an offer?"... etc.

It is important that anyone selling a home on their own be able to honestly answer questions on the state of the local housing market, how their home compares to other similar properties and what techniques were used to determine the asking price of the home.

It is also important for the FSBO seller to determine how to handle things like financing of the home. Some sellers will be comfortable doing seller financing, while others will not. If you do not want to finance the purchase of the home, you will need to know how to determine whether or not the buyer can afford to buy your home.

In addition, many buyers of FSBO properties attempt to negotiate a lower selling price on the fact that the seller is not paying an agent fee. Therefore, FSBO seller has to be ready for this technique and to know how to counter it. Many FSBO sellers are uncomfortable negotiating directly on the sale of their homes and fail to answer these common questions, are some reasons why almost 90% of FSBO transactions fail to result in a sale.

The sale of a home is an important financial transaction, and it is vital that it be treated with the respect and seriousness which it deserves. It is important for the seller to protect themselves and not to take unnecessary risks. If you think you need a Realtor, you can find and compare a good agent here!


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