Why For Sale By Owners Tend to Lose Money

Saving money is one of the main reasons people sell For Sale By Owner (FSBO).  It makes logical sense.  If a person sells their house for $200,000, they don't have to pay any commissions.  If they use an agent to sell their house for $200,000, they will have to pay the commission. This obviously means less profit.

The biggest thing FSBOs overlook is what they can actually get for their house when they sell by themselves vs. with a Realtor.  The idea that money is being saved is not only appealing to a home seller, it is also appealing to a buyer looking for a bargain.  To analyze this further, let's look at the 4 buyer types and their exposure to FSBO homes. 

1. First Time Home Buyers- First time home buyers generally seek as much help as possible.  They want to make sure that the biggest purchase/investment of their lives goes smoothly.  This is why the majority of first time home owners use a real estate agent.  This agent will be using the MLS to find and show them properties.  
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2. Repeat Home Buyers- The majority of homes are sold with an agent.  Most repeat buyers are not only loyal to the agent who sold them their last home but they are likely using an agent to sell their current home.  This means the majority of repeat home buyers will be using an agent to find and purchase their home.  Again, the agent will be using the MLS to find and show them properties. 

3. Relocation Buyers- Relocation buyers generally use an agent because they want a local expert to help them find their next home in an unfamiliar area.  Furthermore, the moving can be very stressful and the more they can hand off to an agent, the better.  Once more, the agent will be using the MLS to find and show them properties. 

4. Investors- Investors will use agents but they will also do a lot more leg work to find themselves a bargain.  They are not in a rush to buy and readily throw out low offers.  Investors concentrate on areas they can find good deals.  This includes foreclosures, bank owned properties, and FSBO.  This is why the majority of interest FSBOs get is from investors and the offers are generally a lot lower than they had hoped. 

Altogether, the majority of interest a FSBO gets is from investors who are looking to make a profit.  Not only will a real estate agent help expose a house to the maximum amount of buyers, they will use their expertise to analyze  the market to ensure you are getting the most for your house.