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For Sale By Owner (FSBO)

(Click below for topics of interest. "Return to Top" will bring you back here.
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| Available to Show Property? | Attracting Potential Buyers |
Finding the Right Buyer | Detriments of FSBO |
| Over pricing Can be Justified | Headaches |
| Handling Objections | | Family Safety |
| Difficulties Making Appointments | Method Used to Purchase |
| Necessity to Sell in Time | Selling Quickly |
| Paperwork | Commission: Who Saves: |
| Obtaining Financing for the Buyer |

Selling and buying a home For Sale By Owner (FSBO) can be a real challenge! The challenges range from pricing right to making sure it will close on time. Review all of the topics in this section before deciding to sell or buy a FSBO.

Are You Available to Show the Property Anytime?

One of the difficulties sellers have when trying to sell their own home is being available at all times. It poses problems in that it interrupts work, family, and social schedules.

When a buyer wants to look at a home, it must be available for them at that time. Most buyers are on some kind of a schedule and they are not flexible enough to look at the home when it is convenient for the Seller.

The concept is similar to having a store open for business. There may be times when there are no customers in the store and other times, when several customers are in the store at one time.

If the home is vacant, it may require you or a family member to drive several miles to show the property. Many times the potential buyer may be late or never even show up to the appointment.

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Attracting Potential Buyers:

Real Estate ProfessionalSeller
  • Multiple Ads in the Paper
  • Internet Web Site
  • Multiple Open Houses
  • Past Customers and Clients
  • Company Contacts & Tours
  • Agents Contacts
  • Realtors Delivery Service
  • Institutional Advertising
  • Referral Organizations
  • Multiple Listing Service
  • Neighborhood Postcard Mailing
  • Cross Selling by Listing Agent
  • E-mailing to Top Producers
  • Lender Sponsored Buyers
  • Color Flyers in Front of the Home
  • Seminar Sessions for Buyers
  • Single ad in the paper
  • Single for sale sign
  • Open House

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Finding the right person for your home in the least amount of time is a matter of creating a high level of exposure.

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Detriments of the "For Sale By Owner" Transaction:
  • Saving the Commission:
    Homeowners often attempt to sell their own home to avoid payment of commission. This generally does not happen. Buyers usually have knowledge of the real estate market and assume that a home being sold by the owner is intentionally overpriced so that if the owner ultimately decides to seek the aid of a professional Realtor, he or she will still net the amount being sought. Therefore, the buyer will make an offer less the commission and the homeowner will net less than if a broker had sold the house in the first place.
  • Under Pricing Danger:
    Homeowners are often not as familiar with the real estate market as professional brokers, and as a result under price their home and net less money than they could have.
  • Justifying the Sale Price:
    Prospects do not buy unless they think that the asking price is in line with that of comparable homes in the area. A broker's sales records can justify the sale price to the prospective buyer.
  • Advertising Exposure:
    While the owner is advertising only one home, a broker is advertising many. Brokers can provide information on a house to buyers looking at other houses, thus increasing advertising exposure.
  • Home Selling Experience:
    A broker is trained and experienced in showing homes, presenting benefits to justify cost, and overcoming the buyer's objections.
  • Qualifying Buyers:
    Brokers ascertain whether or not a prospective buyer is financially able to buy a home before showing it. A homeowner does not typically have access to the resources to qualify buyers.
  • Problem of "Outside Lookers": Having a broker who is familiar with the interior features of a home is of immense benefit, since "drive by" prospective buyers may decide that they are not interested in a home because of its exterior appearance. A broker can urge the buyer to take a second look rather than simply drive away.
  • "Not at Home" Problem: A Realtor can provide access to a home at the buyer's convenience, whereas an owner selling his or her own home can only show the home when they are available to make an appointment.
  • Access by Strangers: The "For Sale by Owner" sign is an invitation to prospective thieves to case a house. Realtors only show homes to qualified buyers.

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Factors That Can Justify What Seems to be Over pricing:
  • A unique home
  • Quality construction
  • Extra features
  • Unique location
  • Quality features (ex: outstanding landscaping)
  • No current direct competition

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For Sale By Owners Headaches:
  • Window-shoppers
  • Lookers stopping at all hours of day & night
  • Pricing home wrong
  • Inability to qualify buyers
  • Letting strangers in the home
  • Buyers don't like to look at homes with owners there
  • Negotiating with buyer
  • Knowing everything that needs to be done
  • Missed opportunities when away from home
  • Buyers wanting the commission savings
  • Buyers who don't like to deal directly with owners
  • Buyers want to open drawers, doors and take their time looking the home and grounds over.
  • Buyers want the comparables from a reliable source and all that are available.

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FSBO's are Inexperienced in Handling Objections:
  • "I want to think it over..."
  • "We' ve decided to rent for a while longer..."
  • "The home is not in good enough condition..."
  • "The price is too high..."
  • "We don't have enough cash for the down payment and closing costs..."
  • "We're not sure we like..."
  • "We are thinking more about buying a brand new..."
  • "The yard is to small..."

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Is Your Family's Safety a Factor?

It may be a sad state of affairs to have to concern yourself with safety in your own home but it is a reality.

There have been situations where criminals have posed as potential buyers in order to "case" the home to find out what personal belongings would be worth stealing. By asking casual questions of the seller, they can find out when the seller will be gone and whether there is a security system.

Even more sinister criminals actually assault sellers in the sanctity of their own home.

While a professional real estate agent is not totally exempt from such tactics, they are better prepared to handle them. Meeting a prospect at the real estate office where others can see the prospect will discourage them because they can be identified. Another common requirement some real estate agents make of prospects is to make a copy of their driver's license and keep it on file.

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Difficulties in Making Appointments to Show Your Home:
  • Time away from work on a frequent basis with short notice
  • Conflicts with your personal and social life
  • Ability to determine lookers from qualified prospects
  • Safety factor from "unknown" prospects
  • Dealing with missed or late appointments

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Method Used to Purchase a Home:

The majority of buyers, four out of five, purchase their home through a professional real estate agent. In fact, less than one out of ten actually purchase directly from an owner.

This means that assuming your marketing exposure is as effective as the entire real estate community, your market will only be 10% of the total.

Attracting potential buyers is the number one problem encountered by owners selling their own home.

Most Realtors have at least one buyer actively searching for a home at any given time. Why shouldn' they use a Realtor? It's not costing them anything to be totally represented by a BUYER's AGENT. This gives them the knowledge of what a home should be selling for and all the things to watch out for in purchasing a home.

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Necessity to Sell in the Length of Time Planned:
  • Buying another home subject to the sale of yours
  • Selling your home before you can buy another
  • Depleting your savings with two house payments
  • Having the additional maintenance of two houses
  • Needing part or all of the equity from your current home to payoff debts
  • Losing your peace of mind with worry and concern
  • Spending work time or leisure time marketing your home

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Selling Your Home Quickly for the Right Price can be a Balancing Act
  • Price your home too high and it doesn't sell.
  • Price your home too low and you lose money.
  • BE SURE! Seek a professional Realtor to assist you in pricing and promoting your home.

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Understanding and Performing Paper Work

Understanding and performing paper work can be as confusing and often overwhelming task.
  • Requesting a title binder and reviewing it once issued
  • Reviewing and providing disclosure documents properly
  • Writing a binding contract
  • Amendments / addendums with proper wording and timing
  • Property inspections and reviewing the results
  • Amendments for property inspections results
  • Depositing and documenting receipt of earnest money
  • Directing a buyer
  • Ordering an appraisal and supplying comparables
  • Developing a closing cost estimate
  • Providing buyer with lead base paint disclosure
  • Providing home warranty plan for buyer

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Who Really Saves the Commission? The Seller or the Buyer?
  • If a buyer has to learn the process of buying on their own, identify the neighborhoods, find the homes, write and negotiate the contract, secure the financing, arrange the inspections, and coordinate the closing, on their own rather than using an agent, don't you think the motivating factor will be to save the commission?
  • It is going to be hard for both the seller and the buyer to save the commission.

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Obtaining Financing for the Buyer:

Most FSBO's are typically not able to assist the buyer in obtaining financing.
  • What different loan programs are available?
  • Where are they found?
  • What are the requirements and limitations?
  • What are the fees charged?
  • How long does it take to get them processed?
  • Is the best loan for the buyer good for the seller?
  • Tracking the financing procedure through to closing?
  • What the hidden cost are to the seller in some loans?
  • How the lenders inspection requirements vary?
  • If they have a home closing, who tracks that one?

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Rich Sieber Photo Smith & Coelho,LLC
Smith & Coelho, LLC
1151 E Iron Eagle Dr
Eagle, Idaho 83616
208-841-4612 OR 208-475-3186

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