It's a well known fact that you could save a good deal of money by selling your home by owner (FSBO). However, you may wonder why less than 20% of homeowners try this approach and why even less are successful. Many of those who attempt to sell their home by owner will eventually end up listing with a real estate agent but only after wasting valuable time and money trying to sell it themselves.

for sale by owner advantages

Savings. You do not have to pay any commissions or fees to a real estate agent

for sale by owner disadvantages

Security. You will be allowing total strangers to come into your home and look through all your belongings. The risk to which you potentially expose your family hardly seems worth the savings of a Realtor's commission.

Cost. Selling homes is expensive. The cost of marketing brochures, signs, flyers, open houses, ads in the weekly paper, "Just Listed" postcards and other advertising costs can be substantial.

False Savings. Most people try FSBO with the intent of saving money on commissions. However, most buyers also hope to share in this commission savings. As a result, the FSBO strategy often results in little or no financial gain while also resulting in a lengthier marketing period along with all the other negative points mentioned here.

More False Savings. Over 85% of "ready to buy" buyers work with a real estate agent to find their home. Therefore many FSBO's will frequently offer a 3% commission to the agent that brings them a buyer. Assuming a hypothetical 6% commission paid by the seller, the owner of the home is only saving 3% after paying a Buyer's Agent. The amount of work required of the seller for only 3% will usually negate any possible savings.

Pricing. Without the services of a Realtor or a costly appraisal, one is merely guessing as to the actual fair market value of their home. FSBO's frequently sell their home too far above market because they do not know how to accurately price their home. A house priced to low will cost you money. A house priced to high will sit on the market for a long time and will also cost you money.

Exposure. Realtors use a variety of methods to gain exposure for their client's property. Many of the most effective methods are not available to FSBO sellers. Some of these include postings in the Multiple Listing Service (MLS), Realtor open-houses, relocation arrangements with large companies and postings on Internet sites such as Realtor.com. If you cannot market your home via these methods, you stand to alienate yourself from as many as 85% of the buyers in the marketplace.

Showings. Without access to a Realtor or showing service, you will not be able to show your home to prospective buyers when you are unavailable. If you are at work, out of town or out with your family, your home will be unable to be shown to prospective buyers.

Qualified Buyers. Most people inquiring on FSBO properties are looking for "killer deals" or special terms such as owner financing. FSBO's can waste a lot of time negotiating with a buyer who doesn't even have the ability to close.

Negotiations. If you are not skilled in the area of negotiations or writing binding business contracts you may end up actually selling for less, having your transaction fail, or worse yet ending up with a legal or financial liability because you made a mistake. Furthermore, if the buyer brings their own representation and you have none, you stand a good chance of getting the worst side of the deal.

Legal Issues. You must become very knowledgeable of buyer's contingencies, seller disclosure laws, lead based paint issues, civil rights laws, financing options, title and deed requirements and local ordinances to be effective and successful in the home marketing and selling process.

Closing. Preparing the proper paperwork, legal forms, disclosures etc. are your responsibility. You must also know qualified inspectors, appraisers, title companies and other related real estate professions.