For Sale By Owner Pitfalls


Sometimes homeowners think that they can sell their home as easily as they are selling a car or boat. They think by selling their own home, they can save the typical commission paid to a real estate agent. Unfortunately, selling a home is a little more complicated and can end up costing you more than the commission paid to an agent.

For Sale By Owner Issues

Here are just a few of the problems you may run into if you try to sell your home without the help of an agent:

  • If you try to sell your house on your own, it will sit on the market longer than a house in the same neighborhood listed with a realtor. This is because realtors have the ability to list a home in multiple locations (the NMLS number on realtors’ websites and professional sites stands for National Multiple Listings Service license that allows them to list a house on sites other than the agent’s such as Zillow and other sites). Realtor’s also have a team of marketers, advertisers, and a host of support staff to make sure your home has high visibility.
  • The home owner CAN purchase a MLS license for their home, but the cash will come out of their own pocket instead of free when using an agent. The seller is also going to have additional hidden costs such as paying for signs, flyers, photos, an attorney, home inspection, and home warranty (the last three required in some states when not using an agent).
  • For Sale By Owner Houses sell for less than agent listed homes. This is due to several factors. First, there are a lot of factors that go into calculating market value and the average person not in real estate is not going to understand how to read market reports to select a price. Second, marketing a house is time consuming. Finally, if the seller sells to a friend or family member, they will often accept less for the home than they would from a stranger because they want to “cut a deal”.
  • If the buyer requests an inspection and the seller doesn’t understand codes, he or she could end up paying for repairs that are really the responsibility of the buyer if the inspector lists “code” violations.
  • Real estate agents are less likely to show their clients For Sale By Owner homes because there is no incentive for them to negotiate a deal.
  • Legal paperwork- lots of it! If you sell on your own and do not live in one of the states that requires you to hire a lawyer, you will have to find and fill out the sales contract, property disclosures, occupancy agreements, lead paint records, and more on your own. Although ready-made contracts exist, not all states accept them. Closing is not the time to find out that your contracts are not acceptable.
  • Lawsuits. If you list a feature of your home incorrectly, forget to disclose something (lead paint), or if you renege on a deal that someone has already given you earnest money towards, you could find yourself sued.
  • Other scams can harm the purchaser of a for sale by owner home. Fraudulent papers (appraisals, loan documentation), overpayment in the form of a bad check with a request for a refund, purchases through a fake attorney, or asking for personal information have become more common with advancements in technology.

for sale by owner

All of the above issues boil down to one common theme: liability. If anything goes wrong during the sale process, from showing to closings, you alone are liable for false advertising, inadequate documentation, undervaluing your property, and not having the correct documents.

Selling your home through a Realtor solves all of these problems. They do all of the work for you and have staff, insurance, training, and all the resources needed to protect both you and the buyer. 

Buying a home should not be a game of “what ifs”. You should not have to worry about if the house has hidden dangers, if the owner is going to change their mind because they discover they have undersold themselves, if the documents you sign are legitimate, or if you find a problem with the house after closing.

There is one time when it may be a good idea to sell your home yourself: when you are a licensed real estate agent.