Why Are There So Few FSBOs?


A lot of home sellers naively think that the way to save money when selling their home is to sell it themselves. What most do not understand is that when they try to sell their home themselves the entire real estate industry actively tries to see to it that they fail. They are trying to find a buyer for their home and all the agents in the area are trying like hell to keep their buyers from buying it. They want the For Sale By Owner (FSBO) to fail so they can swoop in, sell the home, look like a hero and pick up the commission. But the home will not sell because of the agent’s knowledge and skill, it will sell because all of the other agents will start cooperating and bringing their buyers to see the home. And if the FSBO home seller does not have a strategy to combat the industry’s efforts, they are likely to be disappointed in the results.

So, why do some FSBOs actually sell in spite of the industry’s effort to thwart them? Because intelligent home sellers understand the three things that have to happen to sell a FSBO for top dollar: a desirable home, a seller’s market and proper pricing. If you have a desirable home in a seller’s market AND you price it right, someone will buy your FSBO home, in spite of any effort to keep buyers away. My sister and brother-in-law did just that years ago when they bought their home. They wanted to see a FSBO home and their agent did not want to show it to them. So, when they were done with their agent, they went back to the home and negotiated with the seller directly. Desirable home, seller’s market, proper pricing. And of the three, proper pricing is by far the most important.

No buyer wants to view an overpriced home, and they sure as heck do not want to view an overpriced FSBO. When you sell your home yourself you cannot give ANY reason why a buyer would not want to visit your home. In fact, you have to make it so enticing that even buyers who are uncomfortable with FSBOs will summon the courage to see your tempting (and properly-priced) home. Because in the end, most buyers care more about buying a home they love at a fair price than making their agent happy.

I have often thought the missing piece to the FSBO puzzle was a professional home showing service that FSBOs could hire in place of a real estate agent. A professional home shower would provide some of the services of a real estate agent, but without being a real estate agent. They could hold the Open House, pre-screen buyers, give buyers tours of the home and answer any questions they may have about the home. In that manner the home showing service would solve the biggest problem facing FSBOs: letting buyers view the home without the home owner being there. And more importantly for the owner, the home showing service would simply charge a nominal fee for their service, rather than take a 3% cut of the sale price. Home showing services would be especially valuable in high priced neighborhoods and would probably provide a more responsive service, since that is all they would do.

I have no doubt that at some point in the future a majority of homes will be sold FSBO. In the age of the Internet, wherever there is an over-priced middleman, eventually that middleman goes away (or is extremely marginalized). It will be interesting to see how things unfold, and if some enterprising new company steps up, offers a home showing service and accelerates the process of making For Sale By Owner the new norm.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

How Much Would a Buyer’s Agent Cost if the Buyer Had to Pay?

$950 according to a new web service called SoloPro, who connects home buyers with buyer’s agents. You think about that the next time you are told you MUST pay a buyer’s agent $15,000 to help a buyer buy your $500,000 home.


To use their service, SoloPro attracts home buyers by promising to give them a 3% rebate on the purchase of their home. And where does that 3% rebate come from? The home seller of course. So, the home seller puts aside thousands of dollars of their hard earned equity to pay for the buyer’s agent and instead the money goes directly to the buyer, effectively lowering the selling price of their home by 3%. At a time when most sellers overprice their home in the hope of selling it for top dollar, why would they voluntarily lower their selling price by 3%?

SoloPro is just the latest in a line of new companies that promise to give some or all of the buyer’s agent’s commission to the buyer, proving once and for all there is no need to offer 3% commission to the buyer’s agent. They don’t need it; they don’t keep it; they’re willing to do it for less. Why would any seller offer 3%?

It is time to put an end to the outdated custom of having the seller pay for the buyer’s agent. It is economically wasteful and leads to needless conflicts of interest. Every other country on the planet, besides the US and Canada, does not ask the seller to pay for a service that benefits someone else, and they manage to buy and sell homes just fine. Let’s join with the rest of the world and subscribe to the crazy notion that the person receiving the service should pay for the service. Of course if that happens, companies like SoloPro will cease to exist. Oh well.



To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

It’s Not For Sale By Owner – It’s Just For Sale

When it comes to selling your home, if you choose to do it without the help of a real estate broker, it is customary to let everyone know that you are doing so by putting up a sign that says “For Sale By Owner.” I have news for you. EVERY home is For Sale By Owner, because no one else is legally allowed to sell it.


If, on the other hand, you choose to hire a broker, your sign will probably just read “For Sale,” when it really should say “For Sale With Broker,” because they are helping you sell your home. But, so too is the title company, the escrow company and probably a real estate attorney. So, technically the sign should read “For Sale With Broker, Title, Escrow and Legal.” Maybe you should add the termite inspector too. A lot of professionals help a home owner sell their home, not just brokers.

I think the biggest mistake home owners make when selling their home without the help of a broker is to put up a sign that says “For Sale By Owner.” Who cares? It is not For Sale With Broker, why should it be For Sale By Owner? It’s just For Sale. If you want a tour of our home, here is a phone number. Give us a call.

Why bother differentiating? I think I know why.

In countries like the UK, where the average sales commission to a broker to help sell a home is only 1%, there not much difference financially between hiring a broker and not, so I suspect most parties do not give the commission a second thought. The same way most people do not give the escrow fee or title fee much thought. But in the US, where sellers are expected to pay a whopping 6% commission, which can be tens of thousands of dollars, everybody wants a piece of that: buyers, sellers and brokers.

By putting up a For Sale By Owner sign, the home seller is advertising who has the initial claim on that commission. And, more importantly, who the other parties should go after to get a piece of it. Brokers try to get their piece of it by attempting to convince the owner they would be better off hiring them. Buyers try to get a piece of it by submitting lowball offers on the order of, you guessed it, 6%.

I doubt any of this money grab takes place in the UK. The fee to a broker to help sell a home is so nominal, I doubt many people try to sell their own homes and also I doubt that buyers give that commission a second thought when it comes time to making an offer.

So, here is to doing away with For Sale By Owner signs and replacing them with simple, but elegant, For Sale signs. Here’s the home; here’s the price. If you want it, make an offer. If not, someone else will. It really shouldn’t matter who is or isn’t helping the owner sell it. Simple.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Can The Intelligent Home Seller Movement Change the Real Estate Industry?

Home sellers, who are fed up with the outdated customs of the residential real estate industry in the United States, are starting to band together in a movement called The Intelligent Home Seller movement.


These intelligent home sellers are not advocates of For Sale By Owner and are not anti-real estate agent. In fact, they see real estate agents just as much of victims as home sellers in the way the real estate industry currently functions.

They do not believe that some new “ap” or legislation will fix the problem. They understand the only thing that will change the industry is changing buyer and seller behavior, and they are leading the charge to do so. How are they doing that? By refusing to follow the industry’s outdated customs.

In simplest terms, The Intelligent Home Seller movement believes the real estate industry should start behaving like every other home service industry. In this regard, they advocate the industry adopt the following three fundamental changes.

Do away with percentage-based commissions. It does not cost twice as much or take twice the effort to sell a home for twice price, so why should home sellers pay twice as much? It is a custom that is unfair for all but a small number of home sellers and intelligent home sellers are putting down their collective feet by refusing to compensate agents in that manner. What do they suggest replace the percentage-based commission? Fee-for-service or flat fee, both of which are more in line with compensating agents based on their expertise and level of effort.

Those receiving the service should pay for the service. The US and Canada are the only countries where, by custom, the seller is expected to pay for the buyer’s agent. This not only results in commission rates up to five times higher than in other countries, but creates needless conflicts of interest between agents, buyers and sellers. These intelligent home sellers would like to see buyers start to pay for the real estate services they use because they understand the only way buyers will ever receive expertise they can truly trust is by paying for it themselves.

Stop working for free. Of all the customs that create conflicts of interest between seller and agent, perhaps the worst is that of the commission which is contingent on the sale of the home. Intelligent home sellers believe that real estate agents should never be put in a position where they can render their valuable services for free. And whether that means putting up a small, non-refundable deposit, or paying them as they go, intelligent home sellers see this as benefiting everyone. Agents will never have to risk working for free and home sellers will get better advice from their agent who is not put in an all-or-nothing situation.

The real estate industry may have adopted some unfair customs, but that does not mean home sellers have to follow them. And that is exactly what these intelligent home sellers have come to understand. And if enough home sellers become intelligent home sellers, the industry will change. It will have no other choice.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

It’s Not the First Home I Would Show

That one statement tells you everything you need to know about what is wrong with the real estate industry.


When I went to sell my home in Southern California last year, I decided to offer less than the customary commission to the buyer’s agent. I had several reasons for doing so. First, unlike most home sellers, I understand that you do not have to offer the customary commission (2.5% in this case). Just like everything else in real estate, what you offer to a cooperating agent is negotiable.

Second, it was an extreme seller’s market when I went to sell, which means there would be a lot of buyers interested in buying my home (over 40 families came to the Open House). I was simply taking advantage of market conditions, as any intelligent home seller would do.

My final reason for doing so was the amount of money. The customary commission to the buyer’s agent would have been in excess of $18,000, and there was no way in hell I was paying two months of my salary to someone for about 20 hours of work unless they were curing me of cancer.

Before I offered such a commission to the buyer’s agent though, I wanted to make sure my listing agent and his broker were okay with it. Why would they care? Because when a home seller offers less-than-customary commission, it tends to tick off all the other agents and brokers in the area who can retaliate against them for taking such a listing. I just wanted to make sure my agent and his broker were prepared for the blowback. My agent was fine with it, but his broker’s reaction is what floored me. What did his broker say?

Re-read the title of this blog post. Those are the exact words my agent’s broker said to my agent when told of the less-than-customary commission. She was referring to the fact that were she representing a buyer, my home is not the first one she would show because other homes offered more commission.

She confirmed in those few words every reason why 67% of consumers do not trust real estate agents. By saying what she said she admitted that what is most important to her is her commission and what is least important to her are her clients. You cannot really trust what she says because she puts her own self-interest—in direct violation of her code of ethics—above yours.

You depend on a real estate agent for their expertise and you cannot trust it because of misguided incentives. What is the bottom line? When it comes time to buy or sell, if you want real estate expertise you can trust, get yourself an education.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.