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Should I Do For Sale by Owner?

Should I Do For Sale by Owner?

Selling your stuff has come a long way from posting an ad in the local paper, thanks to the internet.  

But what about selling your house by yourself? Is For Sale by Owner (FSBO) really as easy as planting a sign in your yard and waiting for buyers to stroll in?

Hint: When you’re selling the most expensive thing you own (your home), it’s one time when you should always have a professional on board!

Let’s find out why.

What Is For Sale by Owner?

For Sale by Owner is when the owner of a house sells it on their own—without any representation from a real estate agent. You may have even seen yard signs with those exact words: "For Sale by Owner.”

Now, let’s get straight to the numbers about FSBO and key takeaways from the National Association of Realtors (NAR) 2018 Profile of Home Buyers and Sellers.

  • Sellers using the FSBO option sold their homes for less than the median selling price of other homes. In 2018, FSBO homes sold at a median of $200,000.1 That’s a lot lower than the median price of $264,900 for agent-assisted home sales.2

  • In 2018, 93% of home sellers worked with a real estate agent.3 That means only 7% of all home sales were FSBO. This was also a decrease in FSBO from 2017, and the lowest FSBO total recorded since the NAR started reporting the numbers in 1981.4

Let’s think about these stats for a moment. The median price of a house sold with the help of an agent in 2018 was around 25% higher than the price of a For Sale by Owner home! That means FSBO sellers either priced their homes incorrectly or they settled for way less than their homes are worth due to a lack of expertise.

Sellers using the FSBO option sold their homes for less than the median selling price of other homes.

Why Do People Choose For Sale by Owner?

If you’re wondering why people choose FSBO, there are a few reasons. Here are some of them:

Reason 1: To Cut Out the Agent’s Commission

You might think you can save money by removing the commission you’d pay to an agent—which is typically about 2.5% of the sale price.5 That’s thousands of dollars, right?

Find expert agents to help you sell your home.

The catch: As the NAR report shows, you won’t get as much compared to an agent-assisted sale. And let’s not forget that you’re still required to pay the buyer’s agent commission!

Reason 2: You Already Have a Buyer Lined Up

You could think you have a buyer already lined up before you talk to an agent. Maybe you’ve agreed upon the purchase price and think you’ve just got the inspections, appraisals and paperwork to complete. (That’s still a lot of stuff left to do!)

The catch: Things can and do go wrong when you’re buying and selling a house—even if you think the paperwork part will be a breeze. With no agent to safeguard your legal liabilities, you’re on your own if the deal falls through.

Reason 3: To Speed Up the House Sale

FSBO means a quick sale, right? By cutting out the agent, you can get straight to putting your house on the market ASAP, right? Not so fast.

The catch: Being tempted by a quick sale is still going to leave you with less of a profit. And, at the start of 2019, houses were on the market for an average of just 49 days. So, how much time do you really save by choosing FSBO? Not much! You’re actually just losing money.

Reason 4: You Think It’s an Easy Job

You might believe the real estate business looks pretty easy. You feel confident about pricing your home, taking a few pictures, getting it on the market, and finding a buyer.

The catch: The truth is that you don’t know as much about real estate as an agent who does this day in and day out. You could price your home so low that you’re giving it away, or price it so high that nobody shows any interest. It’s an agent’s job to know about movements and buyer interest in your local housing market. They’ll also be able to expose your home to many more buyers through a Multiple Listing Service (MLS), which is difficult for FSBO sellers to get access to—if they can do it at all.6

FSBO vs. Using a Real Estate Agent

There’s a reason FSBO is the exception and not the rule when it comes to selling homes. It’s because it’s practically a full-time job to do it right!

There’s a reason FSBO is the exception and not the rule when it comes to selling homes. It’s because it’s practically a full-time job to do it right!

From all the work involved in getting a house on the market, finding a buyer, and getting into the contract stage all the way to closing day, there’s a lot to do before and after the sale. Here are some things an agent will do for you when they sell your house:

  • They’ll price your home competitively. This involves looking over all aspects of the property and taking accurate square footage readings. (It’s not as easy as it sounds!)

  • They’ll advise you of any improvements to make to your home before putting it on the market.

  • They’ll take photographs, make videos for virtual tours, and put together other materials to market your home.

  • They’ll organize the staging of your home to make it more appealing online and for viewings.

  • They’ll put your home on a Multiple Listing Service database.

  • They’ll arrange and supervise viewings and open house events on your behalf, which allows you to go to work and avoid taking days off.

  • They’ll work as a liaison between you and the buyer’s agent.

  • They’ll ensure you’re legally compliant by submitting all the required disclosures about your home (like disclosures about lead paint or asbestos).

  • They’ll negotiate the price on your behalf and try to get you the best sale price.

  • They’ll keep track of all the paperwork and let you know when things are due or missing.

  • They’ll arrange and supervise the home inspection and advise you of any repairs you should make or those you can negotiate with the buyer.

  • They’ll help arrange a home warranty if you’re buying one to sweeten the deal.  

  • They’ll check the legitimacy of the buyer’s credit report and mortgage preapproval letter.  

  • They’ll draw up the purchase agreement or contract with all the specifics you and the buyer agree upon at the start of the deal.  

  • They’ll act as the liaison between you and the title attorneys in the run-up to closing day.

Why You Should Use a Real Estate Agent

If you’re selling your home, you should use a real estate agent for a few simple reasons. Here are just some of them:

  1. You won’t have to take on the full-time job of being an agent on top of your regular day job.

  2. You can feel secure about your legal standing with an agent on board to dot those I’s and cross those T’s.

  3. Your home listing will reach a much larger market.

And what’s the most important reason to use an agent? Because your house will probably sell for more if you do! Let’s pretend you’re selling your home and look at the example below.

What’s the most important reason to use an agent? Because your house will probably sell for more if you do!

Using an Agent

  • Your house is on the market for an asking price of $200,000.

  • Your agent finds a buyer who offers $200,000.

  • As the seller, you pay about 5% of the sale price in commissions split between the buyer’s agent and your agent.7 This totals $10,000.

  • This leaves you with $190,000.

Using For Sale by Owner

  • If you go FSBO, the stats show you won’t get your asking price. So, let’s be generous and pretend you accept a buyer’s offer of $190,000.

  • You’ll still need to pay the buyer’s agent commission, which is about 2.5%. That would be $4,750.

  • After paying the commission, that leaves you with $185,250. And don’t forget that you did all the work, you spent money doing the job of a real estate agent, and you’ll still have to pay other seller closing costs.

If you use an agent, you’ll come out of this deal with more money compared to FSBO—even though you’re paying commissions to both the buyer’s agent and your own. It makes financial sense to use an agent, and it saves you a lot of work in the process!

Find the Best Real Estate Agents Right Here

If you’re selling your home, you want potential buyers to take you seriously—especially during those crucial first few weeks when your house is on the market.

Find the best independent real estate agents in the business in our Endorsed Local Provider (ELP) program. You can trust these pros to help you get the most for your home when you decide to sell.   

Find an independent agent today!

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