Sellers’ Series: Pitfalls of the “For Sale by Owner” Route

Alyssa Dotson
May 22, 2015

The term For Sale by Owner (FSBO) is quite self-explanatory. It describes the process in which an owner has made the decision to sell their own home. Homeowners usually decide to pursue this route in the hope of saving thousands of dollars in real estate commission. But is this initial commission saving actually a saving? There are myths and misconceptions about selling your own home.

Although it is possible to sell your own home and save on real estate commissions, there can be obstacles associated with this personal undertaking.

  • Pricing/savings. Can the initial attraction of saving on commission mean underselling your home? Absolutely. I’ve seen it happen where the FSBO seller decides to price their home and negotiate an offer that is less than the amount they could have received by using a Real Estate Agent, and that’s after commission. Equipped with the Multiple Listing Service, a Real Estate Agent is able to accurately evaluate the fair market price and negotiate close to it.
  • Hidden expenses. Unexpected costs may arise after the buyer’s home inspection. There may be deficiencies that need to be addressed immediately. These could be very expensive fixes that the FSBO seller may believe is their entire responsibility in order to complete the sale. Additional “out of pocket” expenses include marketing and higher legal fees. Although the FSBO seller is not paying any commission to a Real Estate Agent to sell their property, if a Real Estate Agent brings a buyer, that Real Estate Agent will expect to be paid the buyer’s agent’s commission, or negotiate a flat fee arrangement.
  • Screening and prequalifying potential purchasers. The inability to accurately determine whether a buyer can afford to purchase your home can cause the FSBO seller huge headaches. When a Real Estate Agent is involved with a sale, they are required to prequalify their buyers ensuring that they are viewing a home they can ultimately purchase.
  • Bringing strangers into your home. This can be a major safety concern. When you are selling your home and using FSBO websites, you are extending an invitation not only to potential buyers but also to people that may have no intention of buying.
  • Exposure. FSBO websites are available when selling your own home however most purchasers are unaware that these sites exist and when made aware can be fearful of them. The majority of buyers search MLS®-based websites like Real Estate or
  • Legal liability. Selling your home can be very complicated. Real Estate Agents are insured in the event that a lawsuit arises due to buyer’s dissatisfaction usually caused by misrepresentation and/or non-disclosure. If such issues come up, the FSBO seller would be personally liable. Fact: Even Real Estate Agents are not advised to sell their own properties as they are not protected by their insurance.

Flat-Fee/Mere Listings

FSBO sellers that would like to save on commissions while maximizing exposure might want to consider a flat-fee listing, otherwise called a mere listing. This is a listing on the MLS® system in which the Real Estate Agent member has chosen or agreed to NOT provide real estate services to the seller other than submitting the listing to be posted on the board’s MLS® system. It is listed for a flat fee and is free of standard Real Estate Agent commissions. However, some larger brokerages do not allow their Real Estate Agents to offer such services.

A mere listing can be as low as $99 and increase in value depending on the services provided. If a seller is looking to acquire additional services such as advertising, marketing and open houses, a Real Estate Agent may offer a “package” in addition to the posting, and the fee is usually negotiated on a case-by-case basis between the seller and the Real Estate Agent.

In any case, the seller is still responsible for pricing, showings, follow-up, negotiations and dealing with all aspects of the transaction. The seller also still assumes full legal liability for the sale. So it would still be significantly cheaper than going the traditional commission-based route, but it’s a case of getting what you pay for.

Alyssa Dotson
Alyssa Dotson of Alyssa Dotson Real Estate Team is a top-sales-award-winning REALTOR® for Sutton Group, West Coast Realty. With 13 years of experience as a Realtor, Alyssa has proudly served many sellers and home buyers in the Greater Vancouver and Fraser Valley regions.