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Why Do For Sale By Owners Fail to Sell by Owner?

Wednesday, October 19, 2005 posted by Tommi Crow

I see homeowners everyday at who decide sell their own home. I presume the reason they decide to sell their own home, instead of listing with a realtor, is to save money. But, do they?

The reality is that many owners need a reality check. Many homeowner’s could easily sell their own home, but they set themselves up to fail. How? They price their home for thousands of dollars more than any agent could sell it for.

For example, one FSBO I watched this month, put their home on the market for $198,000. The 3/2/1 dated, ranch-style home backed to a busy, commercial throughfare. Their asking price of $198,000 translated as $130 per square foot, in a neighborhood averaging $110.00 per square foot.

The house sat on the market, of course. No serious buyers were interested, imagine that. Obviously desperate, they listed the home this week with an agent for $187,000. $187,000? After the 6% commission, this FSBO will net $175,780, with a full-price offer.

What were these seller’s thinking? Why would they list their home for $23,000, or 12% less, than they were attemping to sell it for? The paradox is that in their effort to sell quickly and save money, they they set themselves up to fail. They wasted weeks of their time, and as a result, they will net thousands of dollars less than they could have.

Don’t kid yourself. FSBO is not an ammenity a buyer, or their mortgage company, will pay more for. The reality is that a home will not sell for more than its real market value. If you are putting out the effort and cash to market your own home… don’t set yourself up to fail.