For Sale By Owner Pitfalls
1. Owners are not permitted to list their home in the MLS.
Owners are not allowed to list their home in the multiple listing service (MLS). Only licensed Agents and Brokers have access to this industry membership organization. Homes sold directly by their owners are also often shut out of many home search engines and Web sites. An aggressive owner can put a for-sale sign in his or her front yard and run an advertisement in the local newspaper, but the home won't receive a fraction of the exposure as it would through the MLS.
2. Agents don’t often show homes being sold by the owner.
For one thing, because of the limited marketing, agents aren’t usually aware of your home. If by chance an agent does become aware of your home, they are likely to avoid showing the home. Generally the buyer’s agent gets a percentage the commission that the seller pays a listing agent. Without a listing agreement there is no guarantee that the buyer’s agent will be compensated for the services that are provided to a buyer of a For Sale By Owner home. Even if a FSBO offers to pay the buyer’s agents commission they are hesitant to go through that process without the seller being represented. This means the potential buyers for FSBO often are unrepresented and unqualified.
3. Owners tend to inaccurately price their home.
Owners often use poor methods to determine their home's value and accurate sales price. Sometimes, to avoid paying a Real Estate commission they decide to sell their home For Sale By Owner. In many instances, they put their house well below market value sometimes selling it for tens of thousands below 
a fair asking price. In the long run, it could cost much more to sell For Sale By Owner, than to hire a competent real estate agent. On the flip side, some owners list their market much higher than it is actually worth. When your property is perceived as overpriced, it is often overlooked and later can lead to a price reduction. Homes that have been on the market longer than normal and are Price Reduced can lead buyers to negotiate more because they see the sellers as desperate. Often times over priced homes sell for less than they would had they been priced accurately from the beginning.
4. Buyers Can Feel Intimidated.
Buyers tend to spend less time in a home if the owner is present during the showing. They don’t feel comfortable discussing their likes and dislikes if the owner can hear their discussion. They also are hesitant to make an offer directly to an owner. Having an agent on both side creates a comfortable buffer between the seller and buyer.
5. FSBOs are likely to stumble into legal trouble.
Real estate transactions are fraught with potential liability for unwary sellers, particularly in states that have extensive disclosure requirements. An owner who overlooks even one required form or legally mandated disclosure could face a protracted and expensive buyer lawsuit after the transaction closes.
