When someone wants to sell a home in the U.S., the standard protocol for decades has been to contact a real estate agent and let them handle it. And while this is still a popular and practical strategy for selling your home, don’t think it’s the only way. You have every right – and some would argue every reason – to sell it yourself.
What is FSBO?
As the name suggests, For Sale By Owner (FSBO) is a transaction in which you, the owner, sell your own house without the involvement of a real estate agent on your side. You’re in charge of everything: pricing, marketing, showings, contracts, negotiations, contact with interested buyers, and closing. In return, you don’t have to pay commission to a seller’s agent.
In markets where inventory is moving fast and sellers have all of the leverage, FSBO makes a lot of sense. You have a lot more room for error when it comes to pricing and most of the marketing happens organically. In slower markets, it can also work if you’re willing to be patient and wait for offers. It might take a while, but you should eventually field a competitive offer.
3 Key Benefits and Advantages
FSBO transactions sometimes get a bad rap from people who don’t really understand them, but they actually make a lot of sense in certain scenarios. In order to help you better understand why FSBO is attractive to so many homeowners, let’s explore a few key advantages.
1. Pay Yourself, Not an Agent
The number one benefit of a FSBO transaction is that you don’t have to pay an agent. That, in and of itself, can save you a tremendous amount of money.
“Real estate agents work for a commission of the sale. This percentage can range from 4-7% or more, which means by selling directly (FSBO) you save literally thousands of dollars,” explains beycome, an online platform that helps homeowner’s streamline the FSBO process for free.
“To see this statistic in real numbers, consider a home valued at $250,000. Even a 6% commission fee amounts to $15,000,” beycome continues. “This is money that can be put down on another property, used to cover the costs of moving, or even placed in an emergency fund for you and your family. The commission you would spend on an agent goes right into your pocket!”
2. More Control
While you’re certainly able to tell a real estate agent what you want – and you can always fire someone who doesn’t listen – you’re ultimately giving up some level of control when you hand your home over to a listing agent. When you sell FSBO, you have all of the control over pricing, marketing, showings, and negotiations.
3. Chance to Sell With Low Equity
If you just purchased a home and find yourself in a situation where you need to move after just a few months, you probably don’t have much equity built up in the house. This can prevent you from selling in some scenarios.
For example, let’s say your house is worth $350,000 and you have an outstanding balance of $340,000 on the mortgage. This means you have $10,000 in equity. The only problem is that you’re going to owe commissions of $21,000 (6 percent). Not only do you get zero equity out of the home, but you also end up owing an additional $11,000.
By selling your home yourself, you would have a net gain of $21,000 and end up pulling out $10,000 in equity.
A Couple of Drawbacks
FSBO transactions certainly aren’t perfect. There’s a reason real estate agents exist and their jobs aren’t going to be extinct anytime soon. If you do choose to go the FSBO route, you may experience some drawbacks.
For starters, you don’t have an agent to help you with all of the paperwork, listings, and proper documentation. You also don’t have anyone to deal with showings, negotiations, and contracts – it all comes back to you.
If you’re comfortable doing all of this stuff, no big deal. If you’d rather not be involved, an agent is your best option.
Making the Choice That’s Right for You
It’s ultimately up to you. Thanks to the wealth of information, tools, and platforms available online, FSBO makes a lot more sense now than it did 25 years ago. You can save thousands of dollars on the sale of your home and learn a thing or two along the way. It’s your call, but don’t contact an agent without first thinking about selling it yourself!