Real Estate Agent and Trainer, Robert Rico, explains what a FSBO (For Sale by Owner) property is, and the possible problems that are associated with going that route. Do you want to see more video blogs? Subscribe here!


A number of things can go wrong during a FSBO (For Sale By Owner) home, thus we want to give you some tips and tricks to help you avoid some of the pitfalls that agents often encounter.

First, let’s explain – a FSBO is when the homeowners do not want to list their home with an agent, so they list it themselves on the internet, but not on the MLS. Because they are not bound by the rules of the MLS, the information about their house can often be inaccurate and misleading. As a buyer’s agent, the last thing you want to do is waste your clients’ time (and your time!) showing a house that is completely unsuited for your clients’ needs.

For Sale By Owner (FSBO) Sign

People without real estate knowledge can also vastly undervalue their home. Not only is this a headache, but it can cost the owners thousands of dollars. A real estate agent’s expert knowledge of the market should help the seller/owner assign a realistic listing price, rather than the owners “guess-timating” the value and ending up making a huge, costly mistake.

Another huge pitfall could be a scam property – for example, someone pretending to own a property and sell it, even though they have no interest in the title. Also be wary of fraudulent appraisals, falsified loan documentation, or foreign sellers. Without an agent, chances are decent that an attorney will become involved, and who wants that?

For Sale By Owner (FSBO) Paperwork

It is important to remember that sellers are liable for everything that they list about their house, so their untrained eye might not be as sharp on the details that an agent would have caught. For example, if they list granite countertops when it’s really silestone, they might be responsible for the difference in value between the two! If you, as the buyer’s agent, are relying on their unprofessional description, you might also disappoint your clients when you all walk through the door.

FSBO property tend to be marketed terribly as well – since they are not listed on the MLS or on the realtor’s caravan, they are not very visible to agents and therefore it can be hard to reach the general public. Just a yard sign and a personal Facebook post are often not enough for an owner to reach the number of people necessary to find an interested buyer.

For Sale By Owner (FSBO)

Once the FSBO seller finds a buyer, though, many FSBO’s also sell for lower amounts than they would have if sold by an agent – and not just by the amount of commission! This means less money in their pocket, which doesn’t make anyone happy. If you are the buyer’s agent, the seller may ask you to reduce your commission. But why should you accept less money for the same amount of work, if not more? You might end up doing more work just to accommodate for the seller’s mistakes, and still be nickel-and-dimed for less commission and asked to pay for multiple things normally covered by the sellers’ agent.

Another option is to have your buyers offer to pay more money for the house – netting you your full commission (and the sellers the take-home they were looking for). You may have to represent both sides of the deal, which really gives you the opportunity to show how valuable you are to the buyers (and sellers, possibly!). Giving up commission is a slippery slope. It will always lead to further negotiation and, some agents argue, cheapens the field.

Negotiating The Sale

Its best to steer clear of FSBO’s if possible – unless using them as an opportunity to convert into listings. With all the potential drawbacks listed above, you can have too many things go wrong for the amount of payoff involved. If you and your buyers do decide to go the FSBO route, make sure you have armed yourself against all the pitfalls and issues that can arise.


Never Miss a New Post

Sign-up for our email newsletter to get notified when we publish new content to help you become the best real estate agent you can be

You have Successfully Subscribed!