Two speakers break down costly mistakes people make selling homes without an agent. Pricing wrong, skipping buyer screening, and botching paperwork are the biggest problems. NAR data shows FSBOs leave money on the table compared to agent-listed homes.
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Top FSBO regrets. What for sale by owner sellers wish they knew before selling. Are you thinking about selling your home or land on your own without the assistance of a realtor? Well, before you put up that for sale by owner sign, you need to hear this. Most FSBO sellers start with confidence, but sometime after the deal closes, many are left with regrets.
Some small, but some financially devastating.
In this video, I'll walk you through the top regrets FSBO sellers have backed by real life experiences and industry statistics.
So you can avoid making the same mistakes if you are going to enter into the journey of selling your property yourself. And if you want to go even deeper, make sure you check out my FSBO playlist on this channel.
It's packed with everything you need to know to sell your property yourself. All right, let's get into the regrets. Regret number 1: pricing the property wrong. Here's the reality. According to the National Association of Realtors, FSBO sellers sell for about 18% less than homes listed with an agent. 18% less.
Now that is a massive financial hit.
Most FSBO sellers either price their property too high, which leads to months of sitting on the market with no offers, or too low, leaving thousands and thousands of dollars on the table.
For example, I worked with a seller last year who tried to sell for sale by owner.
They listed their home at $450,000 based on what their neighbor's house sold for. 6 months later, after no serious offers, they came to me. When I ran a proper market analysis, we found that the true market value was probably somewhere around $475,000. After we marketed it correctly, they ended up selling for $485,000, a $35,000 increase from their original FSBO price. So that's one thing I hear a lot, by the way, for our for sale by owner sellers is I sold it on my own. I sold it in 2 days, didn't have to pay real estate commissions. Well, you may have priced it way too low if you sold it very quickly and you got all that you asked for it.
Maybe you weren't asking for enough.
You could have left tens of thousands of dollars on the table. In fact, the number one thing that real estate sharks or bottom feeders or whatever you want to call them, real estate investors that are looking for a deal, the first thing they, they want to know is they want to keep the real estate agents out of it. They want to deal directly with the home seller and leave real estate agents out of it because they know that real estate agents are more in touch with the markets. So what's the solution to this pricing challenge? Well, if you're selling on your own, get a professional home valuation either from an appraiser or from a real estate agent who offers free comparative market analysis. Pricing your home correctly from day one makes all of the difference. If you start too high, by the way, that can lead to your market hit staying on the market way, way too long.
And guess what?
The first question that every buyer asks me when I'm selling or when I'm showing homes, first question the buyer asks me is, is, how long has this been on the market? Why do they ask that? Because they automatically think that the longer it has sat on the market, the more malleable, the more negotiable that price is.
So you want to guard against that. You also, as a for sale by owner, want to be especially guarded about pricing it too low and selling it too fast and leaving lots and lots of money on the table.
Now, one of the things to keep in mind with pricing is it's not just about doing a comparative market analysis or getting an appraisal.
By the way, I've got quite a story. It would have been financially devastating for the seller to follow the pricing given by an appraiser on this property. Check out that video in the video card above. There was a huge hundreds of thousands of dollars difference between what the appraiser valued it at and what that real estate agent was able to get that client.
But anyway, developing a pricing strategy takes into account what the market value of the property is and what the personal circumstance of the seller is, and you combine those two things into developing a pricing strategy going forward. If you're curious about doing a deep dive into pricing strategy, check out the video that I've shot specifically about developing a pricing strategy. All right, Regret number 2, not properly screening the buyers. For sale by owner sellers often assume that any interested buyer is a serious buyer. But here's the problem. Many people browsing FSBO listings aren't pre-approved. They are not financially qualified, or they're not even serious about buying. According to a Zillow study, about 30% of FSBO sales fall apart due to financing issues or the buyers backing out at the last minute. A seller I know accepted an offer from a buyer who said they were getting financing. The home was off the market for 6 weeks before the deal finally collapsed because the buyer's loan was denied. The seller lost time, money, and other potential buyers. So what's the solution? Before you accept an offer, require a pre-approval letter from a lender. If they're offering cash and not using a lender, ask for proof of funds. This one step will save you weeks of frustration. But when it comes to a buyer using a lender, there's an extra step that you need to do in addition to asking for that pre-approval letter, and that is that you need to test the veracity or the quality of that pre-approval letter from that lender. So I recommend calling that lender who signed that letter, that pre-approval letter, and having a conversation with the lender. Now, you probably want to get the buyer's permission first, but this is something that I do when I work with sellers and I'm acting as their listing agent. I need to make sure that this is a true pre-approval. So a lot of these lenders, they spit out these pre-approval letters without a whole lot of due diligence. They don't really know whether their client, in this case the buyer, can actually afford that loan. So you need to have a really good conversation to determine that before you tie up the property and you go under contract. Because remember, once you're under contract, you are under contract, and you can't just— if another offer comes in that's a little bit better, you can't break up with this contract and go over here.
You're stuck here until this contract falls— either falls apart or closes. So you're going to want to make sure that this buyer can actually financially afford to purchase your property.
Okay. Regret number 3: underestimating the legal and paperwork burden. Here's a big one. Handling the legal side of selling a home. Many for sale by owner sellers assume once they have a buyer, it's just a matter of signing a contract. But that's where costly mistakes happen. Did you know that the number one reason FSBO sellers get sued is misrepresenting property details? Whether intentional or not, disclosures, contracts, contingencies, these things are not just paperwork. They protect you. You from major financial and legal risks. So there's a lot involved in contract law. There's a lot involved in these legally binding documents. And if you are a seller, a for sale by owner seller, and especially if you're dealing with a buyer who's an investor who does dozens or more deals a year, or that buyer happens to be an attorney, you are really entering into a situation—
you're entering into a contractual agreement with a party at a severe disadvantage, and you need to be very, very cautious about that.
I've seen FSBO sellers unknowingly fail to disclose foundation issues, septic problems, or easement restrictions. Months after closing, the buyer discovered the issue and sued for damages. That's a nightmare that nobody wants. So what's the solution in helping you stay out of a legal quandary and to keep up with the right kind of paperwork? Make sure you're using state-compliant contracts and fully disclosing everything required by law. Remember, if you're selling a home in the state of Michigan, almost every time— there are a few exceptions—
but almost every time you're going to have to fill out a seller's disclosure statement.
Now, if you want to deep dive into that particular document and how to fill it out, I've shot a separate video on that.
Check out the video card above, and that'll take you through all there is to know about the Michigan seller's disclosure statement. I've also shot a separate video if you happen to—
if the home that you're selling is pre-1978, then you're also going to have to do a lead-based paint disclosure and I've shot a separate video on that.
Check out the video card above. It's either on this side or this side.
All right, but even if you're selling FSBO, consider hiring a real estate attorney to review the paperwork. You need representation, especially because you don't know the level of sophistication on the other side of the table.
You really never know who or what you're up against, and I would be extra, extra cautious if you happen to find out that your buyer is an attorney, um, because you just never know.
And you know, you got to—
everything about life is about calculating risk-reward, cost-benefit, and there's an awful lot of risk involved in the legal side of selling or buying real estate. And the cost of getting advice and representation is relatively little in comparison to the risk.
So kind of like buying yourself insurance. All right, let's move on to regret number 4: losing money in negotiations. Selling a home isn't just about finding a buyer, it's about negotiating the best deal.
FSBO sellers often lack the experience to push back on lowball offers or negotiate inspection repairs.
A 2023 study by HomeLight found that homes sold with an agent tend to get offers 5 to 10% higher than FSBO homes because of better negotiation strategies. So here's a real life example. A FSBO seller I knew accepted an offer at $350,000 because they didn't realize they had additional leverage to negotiate better terms. With some simple strategic counteroffers, they could have walked away with $365,000 or more and could have bought themselves more time after close to move and some other terms that would have been more beneficial to their personal circumstance. Negotiation is a skill. So whether it's, you know, if we're talking about basketball basketball and you want to be a really great shooter, the more you practice shooting, the better shooter you're going to become. The more you practice a skill, and if you practice it the right way, the better you're going to get at that skill. And professional real estate agents just have— most of them, especially active agents that are doing dozens of deals a year, might not be true of agents that are only doing one or two a year. But, um, professional agents that are active in the market doing dozens of deals a year, they just simply are going to have more negotiation experience than most for sale by owner sellers. And with more repetition, more practice, they're able—
they're, they're better skilled and able to drive more value for their sellers.
So what's the solution for you as a for sale by owner seller and you still want to go on your own? Well, first, even if you're selling on your own, consider hiring an agent just for the negotiation support, or at least consult with an expert before making a major decision. Also, you might want to check out my quite lengthy— I mean, it's a good video, it's about 20 minutes long—
related to negotiations specifically for for sale by owner sellers. If you want to do a deep dive into the skill of negotiation as for sale by owner seller, check out my video just dedicated to for sale by owner sellers developing their negotiation skills and the pitfalls that they can fall into. Check out that video on negotiations specifically for FSBO sellers.
All right, in conclusion, if you're thinking about selling FSBO, don't let these regrets become your reality. Pricing mistakes, unqualified buyers, legal pitfalls, and weak negotiation skills can cost you thousands. But the good news, they are completely avoidable when you have the right knowledge. I have an entire playlist, by the way, to help you develop more knowledge and skill as a for sale by owner seller to help you succeed. Check that out in the description below. And if you found this video helpful, don't forget to subscribe to the channel. If you have a question about anything to do with real estate, by the way, you can leave it in the comment of any one of my videos and I will personally answer that. And I may, it may even inspire my next video. Thanks for tuning in and we'll see you in the next video.
