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FSBO's - They're B-A-C-K!

Why Real Estate Agents Hate Working With FSBOs

It’s happening again. 

The market is super-hot in almost all areas of the City of Richmond, where I do most of my work.  Bellevue, Church Hill, the Fan, the Museum District – all en fuego

Houses are flying off the market in just a day, sometimes hours.  Bidding wars.  Escalation provisions.  And what happens when the market is super-hot, when people hear how quickly these properties in these desirable neighborhoods are selling? 

Yup.  The hated, dreaded Fizz Bo. 

The For Sale By Owner (“FSBO”).  I’ve seen several in my neighborhood lately. I’m going to explain to you why real estate agents can’t stand dealing with FSBOs.

First, there are a few reasons people decide to sell their house themselves.

  • Category One:  They don’t believe that real estate agents add value to the transaction.  Frankly, they often believe real estate agents are unprofessional idiots;
  • Category Two:  If they do concede that real estate agents have some value, they believe they are grossly overpaid; or
  • Category Three:  They are in some kind of financial straits, and are selling by owner because they can’t afford to pay an agent’s commission.

So either you think I am an idiot, or a shyster, or you are completely stressed out over money and the transaction is going to be emotionally difficult for everyone involved. 


Now don’t get me wrong.  If you want to sell your own house, that’s your business.  FSBO your little heart out.  Just so long as I don’t have to represent the buyer who wants to buy your house, I’m fine with you doing whatever you want with your time and money.  But I don’t want to be on the other side of the FSBO transaction, representing the buyer.  If a buyer I have been working with wants to see a FSBO, I shudder.

Why, you ask?  Well, first of all, see the above-outlined reasons why people sell their own homes.  Why would I want to work with someone who thinks I am an idiot at worst, or not worth their fee, at best?

Second, I am going to end up doing twice the work. To be completely blunt, the FSBO seller doesn’t know what they are doing. 

They don’t know about required disclosures.  They don’t know what terms are standard in the market. They have no experience negotiating a contract, then negotiating an inspection provision, and possibly negotiating over an inadequate appraisal.  They don’t know how and when they need to be communicating with the lender. They have no experience managing a complicated transaction from contract to closing. 

So I am going to end up doing my work representing the buyer, and I am also going to end up doing the seller’s work, so he or she doesn’t screw up the deal.

And please, FSBO advocates, don’t say you are going to work through a lawyer, like that’s going to make it okay. Take it from someone who IS a lawyer, and practiced corporate law at a large downtown law firm:  Lawyers, even real estate lawyers, aren’t experienced at the process of buying and selling homes. 

Maybe it is different in other markets... 

But here in Richmond, Virginia, in the standard residential real estate transaction, lawyers are not involved in negotiating the initial contract terms, or the inspection addendum terms, or any other provisions which come up frequently.  Lawyers in the deal just make it more complicated, because they typically overlawyer to death everything. 

So you, FSBO seller, are going to spend a lot of money on a lawyer who costs more and has less experience negotiating deals to sell a home than any halfway competent real estate agent.  But the FSBO seller who uses a lawyer typically falls into Categories 1 and 2, and thinks agents are idiots and/or overpaid.  Guess paying $300/hour to someone with a law degree just sits better for those folks.

Third, working with a FSBO seller is just plain uncomfortable. One of the often overlooked roles of the agent is to put a buffer between a buyer and a seller. The agents communicate with their respective clients, and then with each other. 

This is a way to take (some of) the emotion out of the transaction. Selling a personal residence is not like selling widgets.  As much as we tell them not to, people get emotionally involved.  The space represents them.  It’s home, it’s a safe space they have created, it’s designed and decorated to the seller’s personal taste.  It’s hard to hear someone criticize something in which you feel so personally invested.  And for the prospective buyer and their agent, having to tippy-toe around a seller’s feelings makes a challenging situation even more difficult. 

  My client should be able to say “what the hell was he THINKING when he painted the kitchen lime green with that pee pee yellow accent wall?”  In a normal transaction, I could tell the listing agent what my client said, and he or she would pass it on to the seller in a more palatable manner. 

For example, “Well, the buyer thought the paint choices in the kitchen were a bit bold for her taste.”  But if you are lurking about during the showing, and the inspection, and the appraisal, and any other time we have to get into the house, my client likely isn’t going to feel comfortable speaking freely to me in front of you.  And it makes it harder for me to tell you what you may need to hear, because you will take it personally.

Lastly, FSBOs often pay LESS than the standard 3% buyer agent commission.  Just looked up a neighborhood FSBO, who has paid a flat fee to be in the MLS, and sure enough, he's offering 2.5% in buyer's agent compensation. 

Why in the world would I want to sell a house when I am going to do at least double the work, for less money?  The short answer:  I don’t want to.

So, that’s the quick and dirty on why real estate agents don’t like working with FSBOs.  There are some agents who just won’t show FSBOs, period.  I do, but I hate doing it.  It’s just all around uncomfortable and unpleasant.  I hope this insight into why is helpful.  And here’s my favorite FSBO story, saw it in a recent blog, even though it was years ago, I still think it’s hysterical. 

Short version:  Founder and CEO of ForSaleByOwner tried and failed to sell his own home, and then hired an agent who sold it right away for more money. Classic.

- Melissa

(804) 986-3993
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