How Does For Sale By Owner Work in Real Estate? | FSBO
Most people have seen “For Sale By Owner” signs as they drive around town. These are home sales where the listing, negotiations, and closing costs are controlled by the owner, without a Realtor® to help. At first, this may seem like a good idea. You get control over the sale and don’t have to pay commission, right? However, the decision is more complex than that. Check out these pros and cons for listing your home as FSBO (for sale by owner).
5 For Sale By Owner Pros
There are some significant benefits to listing your home yourself. Many people choose for sale by owner each year and handle the sale successfully.
1) You Have More Control Over the Sale
A Realtor® also serves as an advisor, but they may suggest something that isn’t necessarily what you want. For example, they may suggest accepting an offer that you aren’t happy with or lowering your price if you aren’t getting any bids. When you are selling the house yourself, you make all the shots for the price, bids, and negotiations.
2) There Are No Realtor® Fees
One of the main reasons why people pursue the FSBO option is to save money. By not paying a Realtor®, you can cut back on the fees you owe at the end of the transaction.
3) You Aren’t Competing for Realtor® Time
Your Realtor® likely works with several clients at a time, which means you have to share their schedule. This means that they might only be available to market your house for a few hours per week, limiting your exposure. When you choose FSBO, you can spend all the time you need on the home selling process.
4) You Can Tap Into Existing Demand
If you live in a house facing the street or are in a very in-demand neighborhood, you may be able to attract buyers as they drive by. You may not need to spend time marketing your home as potential buyers find you on their own.
5) You Don’t Need to Trust an Outside Source
One of the hardest parts of hiring a Realtor® is trusting them. You are putting your trust that they are getting you the best deal and working hard to sell your space. This is a challenge for many people, who may not want to rely on someone else.
6 For Sale By Owner Cons
Many of the benefits of choosing for sale by owner also have drawbacks. There are a lot of things that can go wrong when listing and selling your space.
1) You are Not an Objective Source
Whether you realize it or not, selling a home is an incredibly emotional experience. You are more likely to value your home higher than you should and overlook problems with the decor, infrastructure, and necessary repairs. A good Realtor® will see your home with professional eyes and be realistic about what needs to be changed.
2) You Need to be an Expert on Everything
A benefit of using a Realtor® is that they have experience and understand the entire home selling process. They know how to stage a home, how to price it, what paperwork is needed, and how to close the deal. If you want to handle a FSBO sale effectively, then you need to become an expert as well. With so many moving pieces, that’s no easy feat.
3) You Need to Invest Time to Market Your Space
Listing a home isn’t a “set it and forget it” process. You need to actively market your home to get in front of potential buyers. You need to make sure it is listed and featured online, shared on social media, and easy for people to find. This takes time and a skill set that you might not have.
4) You Need to be Available to Show Your Space
If your marketing is successful, then you will have several potential buyers calling for showings. One of the biggest problems FSBO homes have is showing availability. While a Realtor® can use a key to open and present your house, you have to be there to show the space to buyers.
5) You Need to Qualify the Buyer
Once bids start coming in, it is up to you to make sure that each buyer is actually qualified. You can’t accept an offer from someone who can’t actually pay. Knowing how to qualify a buyer and taking the steps to qualify each bidder is one of the biggest assets to hiring a Realtor®.
6) People Will Try to Take Advantage of You
As you move through the FSBO process, you are more likely to be approached by scammers who think they can take advantage of your inexperience and qualified buyers who want to lowball you or who expect you to make dramatic changes to the space.
What Is the Verdict?
Every home seller will need to decide whether or not the for sale by owner option is right for them. However, many sellers decide to go with a professional Realtor® once they realize the time and financial investment that comes with them. While the seller might save on agent fees, they often end up losing money because of the wrong pricing or poor negotiations. If you want to try FSBO purely to make the most money, make sure you really crunch the numbers before you list.
Find the Right Realtor to Sell Your Home
If you are ready to sell your house and want to find a good Realtor® nearby to work with, check out Effective Agents. Our data-driven algorithm uses your criteria to sort through dozens of Realtors® in your area to find a professional who is a good fit for you and your home.