Is For Sale by Owner Effective?

Although some general real estate primers may suggest otherwise, putting your house up for sale by owner isn't always an advantageous tactic. While it's possible that you might sell your home without having to roll out commission for a real estate agent, you might fall into one of dozens of general real estate pitfalls.

While you can advertise your home through general real estate listing services, if you don't have the experience to write your ad, you may get inappropriate buyers or “lookers” showing up your doorstep at odd hours of the day. In addition, seasoned buyers may suspect that for sale by owner homes are prices are jacked up to some extent. Thus, you may have less room for negotiation.

Experts in general real estate also point to the myriad difficulties that first time sellers have negotiating contracts on their own. This is the reason why real estate professionals exist -- the legalese and contractual obligations contained in general real estate contracts are by and large far too complicated for non-professionals to deal with.

Agents also serve a crucial role in mediating arrangements. If a perspective buyer finds something less than desirable about your home, he or she may not feel comfortable divulging that information to you since you obviously have a personal connection to the home.

And while the Internet may introduce you to interesting sources of buyers or prospects, it can also skew your search. Do you have time to host open houses, deal with the paperwork involved, and negotiate with buyers? Your time is a critical resource. Let's say you earn $50 an hour at your job. If you invest 100 hours extra into your for sale by owner general real estate initiative, you have “wasted” $5,000 worth of earning potential -- on a small home, that may be more money than an agent's fee.

Don't forget about the additional expenses you may have to incur to sell -- everything from newspaper and online ads to sale signs to fees associated with putting together legal contracts. Finally, remember that follow-ups are critical in general real estate deals. If you don't understand the art and nuance of cajoling buyers during the follow up, your house could be on the market for much longer than necessary.