Listing a home as for sale by owner (FSBO) allows you to list a property for sale without going through a real estate agent. Instinctively, people believe this will save them time, money, and hassle, but it doesn’t always work out that way.
Is it ever to your advantage to sell a home FSBO? Or should you always list with a real estate agent?
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The Perks of FSBO
We’ll start by covering some of the advantages of selling FSBO. There are some perks to enjoy in this approach. For example:
- Fewer costs. The real estate agent commission you’ll pay for a typical home sale is usually 5 to 6 percent of the home’s final sale price. In other words, if you’re selling your home for $200,000, you can expect to pay between $10,000 and $12,000 in commission costs. Hypothetically, if you sell the home on your own, you can avoid that commission altogether – but as we’ll see, real estate agents are often worth the fees they charge.
- Total control. Listing FSBO also puts you in a position of total control. You’ll be making all the decisions, from where you list the property to which offers you accept. You won’t have to negotiate or compromise; instead, you can do everything yourself.
- Transparency and visibility. In line with this, you’ll have near-total transparency and visibility. You’ll know about everyone who tours the home and you’ll be able to understand who’s bidding and when. Nothing will slip by you, and you’ll potentially have greater trust and confidence in the process.
- Home knowledge. As the homeowner and home seller, you’ll have intimate knowledge about the property. You’ll know what its best and worst features are and, to a degree, you’ll instinctively know how to market it to others like you.
The Downsides of FSBO
However, there are some major downsides of listing a home FSBO, including:
- Extra time and effort. According to CoMax Properties, it takes a lot of time and effort to list and market a property. If you’re listing a home yourself, you’re the only person responsible for scheduling appointments, guiding prospective buyers through the home, showing the property over and over, setting up open houses, and detailing the property on listing platforms. Unless you have a lot of spare time on your hands or genuinely like this process, this is a major disadvantage.
- Lower offers. Generally speaking, properties listed as FSBO tend to receive lower offers than their competitors. Real estate agents know the importance of marketing and have dozens of little tactics they can use to attract better offers and negotiate. Homeowners, by contrast, tend to be emotionally attached to the home they’re selling and have far less experience in the field. Buyers often understand this and will bid lower accordingly.
- Failure rates (and holding costs). Many people who try to sell a home FSBO end up failing for one reason or another. Either the home remains listed indefinitely, forcing the seller to either dramatically lower the asking price and/or hire a real estate agent, or the home takes a long, long time to sell. If the home takes too long to sell, you’ll have to deal with holding costs, eating into your potential proceeds and compromising the value of the deal.
- Legal complexities. On top of all that, you’ll also have legal complexities and paperwork to deal with. If you’re not a qualified real estate agent or a real estate lawyer, you may not know about the importance of proper disclosures, or tax laws, or any of the other legal hiccups that might stand in your way. In some cases, this means you’ll have to spend extra money hiring lawyers and advisors to help you out. In other cases, it means facing a major lawsuit because you broke a law you didn’t realize existed.
Are There Other Options?
If you don’t like the downsides of FSBO listings but you also don’t like the idea of hiring a real estate agent, there is another option: you could sell the home as-is. If you find the right buyer, you might be able to get an all-cash offer immediately for your home, regardless of its condition. This offer probably won’t be as high as the one you could get on the open market with a real estate agent on your side, but you’ll skip all the extra fees, save time, and eliminate the “effort” side of the equation entirely.
When Is FSBO the Right Choice?
In some situations, FSBO may be the ideal choice. For example:
- You have real estate experience. If you have significant experience in the real estate industry, you may be in a better position to list a home FSBO. For example, if you worked for ten years as a real estate agent and you’re selling your main property, you should know whether or not FSBO is a good move for you. Similarly, if you’re a real estate lawyer with familiarity with real estate law, you’ll be in a much better position to list a home FSBO than an average seller.
- The market is favorable. In favorable market conditions for sellers, FSBO is a more realistic possibility. When buyers are eager for homes and prices are high, you’ll end up getting more offers and a higher sale price – not to mention a faster sale.
- FSBO is only Plan A. Perhaps most importantly, FSBO is ideal when it’s only your “Plan A.” It’s a good idea to remain as flexible and adaptable as possible – and be ready to switch to Plan B if your FSBO listing doesn’t pan out the way you originally imagined. There’s no shame in hiring a real estate agent later on in the process.
There are clearly pros and cons to any decision you make related to selling your home. There isn’t a single “right” answer that works for everybody. But for many people, the potential appeal of FSBO listings is outweighed by the sheer number of disadvantages. Make sure you do your research before making a major financial decision.