Why It's So Hard to Sell a Home For Sale By Owner (FSBO)

If you had any questions about listing your home For Sale By Owner then here's a reason to give this strategy a second thought 

Colby Sambrotto’s story is a familiar one. Mr. Sambrotto decided to sell his two-bedroom New York condo but wanted to avoid paying the 6% sales commission to a REALTOR® and opted to go the for-sale-by-owner route (commonly known as FSBO pronounced “fizz-bo”), and do it himself. However 6 months later, Mr. Sambrotto's condo still hadn’t sold, he did what  90% of all FSBO sellers end up doing: he hired a real estate agent to list his home. But the true significance of this story, first reported by the  Wall Street Journal  in August of 2011, is that Colby Sambrotto isn’t just your run of the mill FSBO seller; he is a founder and former chief operating officer of ForSaleByOwner.com, a FSBO company that claims to “make selling a home for sale by owner easy”. This didn’t seem to apply to Mr. Sambrotto though, or even most other FSBO sellers for that matter, which would explain why FSBOs only accounted for  9% of overall house sales in 2013.

AGENT-LISTED HOMES SELL FOR 16% MORE THAN FOR SALE BY OWNER LISTINGS 

On the other hand, in return for a standard 6% fee Jesse Buckler, a New York based real estate broker, sold Mr. Sambrotto’s 2,000 square foot condo for $2.15 million, which is $150,000 more than the original asking price. Left in Mr. Buckler’s capable hands, the property quickly received multiple offers, before finally closing at a price that was 7.5% higher than Mr. Sambrotto’s original listing, and thereby more than offsetting the cost of Mr. Buckler’s fee.

INCORRECT PRICING IS THE #1 REASON THAT FSBOs FAIL

Colby Sambrotto’s experience is far from an isolated incident and rather is a reflection of the experience of the majority of FSBO sellers who discover for themselves that trying to do a FSBO  isn’t quite as easy as Mr. Sambrotto and ForSaleByOwner.com would have you believe.
Typical among the problems faced by FSBOs is a tremendous lack of exposure. When signing up with a FSBO company, sellers are usually given an online listing, a yard sign and perhaps a few flyers to hand out; leaving the seller responsible for all other marketing efforts and activities. Many sellers realize too late that it takes more than a sign and an online listing to sell a home!

SOME REASONS WHY REALTORS® SUCCEED WHERE FSBOs FAIL:

• REALTORS® have superior marketing tools and resources
• REALTORS® know how to price properties to sell
• REALTORS® are always up-to-date on the latest trends and market conditions
• REALTORS® work directly with buyers
• REALTORS® get maximum exposure for properties by using their professional networks including other realtors, lenders, title reps, etc. 

What many sellers fail to realize is that over 75% of home sales occur through agent-to-agent cooperation, where REALTORS® work with one another to buy and sell properties. These are known as cooperative sales. REALTORS® market their listings to other real estate professionals as well as to the general public, thus achieving maximum exposure for their client's homes. This is critical and yet it is something that is next to impossible for a FSBO seller to achieve.

One of the first steps for most in their home buying process is to locate a realtor and according to the 2013 Profile of Home Buyers, 88% of home buyers used a Realtor, and 33% found the home they purchased through their agent. Most real estate agents prefer not to show For Sale By Owner Listings and in most instances aren't even aware of their availability as these listings don't typically appear on the Multiple Listing Service (MLS). Consider this, before you purchased your home, how many For Sale By Owner listing did you preview?

4 MOST COMMON REASONS FOR DOING A FSBO:

• Did not want to pay commission fee: 38%
• Sold it to a relative / friend / neighbor: 40%
• Did not want to deal with an agent: 8%
• Buyers contacted seller directly: 6%

While there will always be for-sale-by-owner enthusiasts and individuals who think they can succeed where others have failed, what does it say for the credibility of sites like ForSaleByOwner.com and similar services when a founder of a major FSBO company himself saw the value and benefits of hiring an agent to sell his property?

If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington