You are ready to sell your house and want to know if selling your home on your own is the best solution. The
truth to this question can come with a bias, so I will provide both sides.
If you do sell your own home (known as a FSBO – for sale by owner), you’re incurring a lot of responsibility,
but can save a fair amount of money. Generally, the seller pays between 5-8 percent of the sale, to the agents.
Selling your home without an agent will save you that 5-8 percent. And since the majority of buyers have an
agent, you will have to cover the 2-3 percent for the buyer’s agent, meaning you save around 2-3 percent on
average. This is around $4,000 – $6,000 dollars on a $200,000 home. You can only speak to buyers that do
not have an agent, but then you are quickly limiting your potential customer base. If you do find an
unrepresented buyer though, immediately your savings rise dramatically! This is the juicy part of being a
FSBO. But let’s examine the reality of selling your own home.
First and foremost, let’s stand in the corner of common sense. Being an FSBO can save you money. But, if
this approach saves significant cash, why do only a small percentage of FSBO’s exist? There are many
reasons.
If you sell your home, you’re responsible for learning everything. However, learning is only the first stage; you
also have to do everything, including taking the responsibility for marketing your home. The marketing classes
you took in college will now pay off. The downside, as you may have guessed, are cost options of advertising
funds. Plus, your competition consists of experienced agents who are adept at catching the attention of
buyers. To get around this issue, I suggest you mimic ads that catch your eye – and learn from their
experience. Depending on the market, you could easily spend anywhere between $100- $200 advertising per
week.
*A note to remember – when advertising, you have to abide by certain state laws. Be sure to speak with an
attorney or an experienced agent who is willing to give you free assistance.
Lets not jump the gun here, though. First, you need to price your home. You can do this with a pre-appraisal or
by paying for a Comparative Market Analysis, called a CMA. Although the CMA will not provide the exact
amount you should charge, it will give you a ballpark price. We always suggest starting slightly above your
ideal target, because the buyer will try to negotiate and get you to lower your asking price.
Here is where agents can practically pay for themselves. Agents have access to key data for identifying
market trends and experience in pricing your home properly. Over or under pricing can have a devastating
affect on your result as a FSBO. This is why most people use an agent. Those who fail to properly price may
end up getting less than possible (even after commissions) if they had used an agent.
As a FSBO, though, you’ll find that you will get less traffic walking through your home, especially if you have
not paid to be included in your local MLS (multiple listing service). You can do this for an inclusion fee, which
varies with MLS. The fee will range between $300-$500.
If you fail to get good results from the MLS and advertising, the risk of lack of potential buyers looms. This
means your odds of getting a strong asking price are reduced. If you have an agent, the agent will do the
majority of negotiating for you. This is where their experience shines: They know how to deal with the other
buyer’s agent, as well as any concerns arising from the transaction. If you are a FSBO, you have to deal with
this process and we warn you, a seasoned agent might take advantage of your lack of knowledge and
pressure you into doing more than you need too.
To combat this, we suggest hiring an attorney. Let him or her look over the paperwork and ask for his/her
presence at the closing. Without an attorney, you’re really taking the risk of missing something. Therefore, if
you sidestep an agent, make sure your attorney becomes your friend. Depending on their involvement, their
cost will run a couple hundred dollars (to look over the contract), to a thousand dollars (being involved during each step to the closing). If you take the FSBO approach, be careful to find an attorney that peruses the
documents.
Another aspect you will need (as a FSBO) is flexible time. When someone wants to look at your home, you
need to be ready to show it and be there! This means you have to meet the buyer’s needs. Whereas working
with an agent, he or she will take care of this and will work with the buyer’s agent, reducing your involvement
dramatically.
Once again, we run into another legal issue. When you work and show your home with the buyer, by law you
are required to take certain steps and provide the buyer with specific disclosers. Again, we recommend that
you find a good real estate attorney to tell you what things, by law, have to be disclosed to the buyer prior to a
sale. It’s imperative that they read any contracts, and ensure you do not inadvertently discriminate against
potential buyers.
These are some plus and minuses in entering the FSBO world. Although we are obviously biased to using an
agent, there have been many successful FSBO’s transactions. Therefore, if you take this approach, just be
sure to hire legal advice to keep you on the right track.
If you are going to sell your own home, still feel free to contact my office. I can assist you in some areas. Here
are some other facts about FSBO’s to take into consideration.
For Sale By Owner (FSBO) Statistics
Did you know?
The typical FSBO home sold for $145,000, compared to $175,000 for agent-assisted home sales.
FSBO Methods Used to Market Home
Yard sign 72%
Friends/neighbors 27%
Newspaper ad 61%
Open House 41%
Internet 20%
Most Difficult Tasks for FSBO Sellers
Getting the right price 19%
Understanding paperwork 30%
Preparing / fixing up home for sale 26%
Attracting potential buyers 7%
Having enough time to devote to all aspects of the sale