For Sale by Owner: The Pros and Cons for the Seller - Quicken Loans Zing BlogEarly spring is a popular time for buying (and consequently selling) homes, so, now’s the time to get your home on the market. If you’re thinking about listing your home as for sale by owner (FSBO), there are some definite positives and negatives you need to understand before selling your home yourself. While having to pay a 5-7% commission to your realtor can make selling the home yourself seem like a no-brainer, it’s really not that cut-and-dried.

One basic thing to keep in mind is to focus on the appraised value of your home and not the tax assessment, what you want/hope/need to get out of it or what you paid for it. That last number, especially, just isn’t relevant at this point.

The Pros

No commission fee. A 6% commission on the average selling price of $256,000 is about $15,000.

You’re in control. You get to pick the price, the appointment times and when/how you negotiate with the buyer. If a realtor is selling your home he/she is going to be walking people through at any time throughout the day so you’ll always have to be ready for buyers to traipse through your home.

You know your home better than any agent so you can point out all of its amenities. A realtor is going to try to remember all the features of your home along with all the other houses he/she is currently selling. There are lots of networks and venues for you to list your home. You can put a sign on your lawn with attractive flyers, put up an ad on Craig’s List, list it in local papers and on websites like ForSaleByOwner.com.

The Cons

There’s the risk of selling your home for a lot less than it’s worth. Statistics have shown that the average FSBO home sells for about 15% less than homes sold through a realtor. Sometimes, though, a realtor will do a free market analysis for you, hoping to gain your business in the process.

Your home will have less visibility. While there are lots of venues to for you to promote your home, only realtors can list homes on the Multiple Listing Service, which is one of the biggest online tools real estate agents use. Realtors have more experience, and sometimes more drive, in promoting your home through ads, signs and other methods.

Preparing all of the legal forms, disclosures etc. is your responsibility, and if you’re unfamiliar with the guidelines and requirements, which most of us are, you take the risk of financial and legal liability.

You’ll have to spend a lot of time educating yourself on the process of selling a home, the current market, advertising methods and working with potential buyers.

It might be harder to weed out unqualified/uninterested buyers without prior experience. Unfortunately, people who may not be able to get the proper financing will seek out homes that are for sale by owner because they know most private sellers are pretty inexperienced. You’ll also get some “just curious” folks who aren’t serious about buying a home but like to look around. These types of inquiries will waste a lot of your time and can distract you from serious buyers.

If you’re interested in listing your home as for sale by owner, don’t be discouraged by these negative aspects. You just need to go into the process informed and educated. Do your research, prepare for the pitfalls and roadblocks and don’t spend dollars to save pennies.

I’ve collected a lot of tips for you here, but please share any comments, suggestions or information you have with us! If you’re in the process of selling, then you’re probably in the market for a new mortgage. Talk to a Home Loan Expert today!

 

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This Post Has 28 Comments

  1. I sold 4 town houses/Condos , 3 high end building lots, over the years and never hired an attorney in the process. All the papers were prepared by the Title Company and money exchanged by them. When I bought my first house and investment town houses . I had an attorney just flipped over the pages in “ROCKET” speed succession because I was naive and went along with the convention of “Vested Parties”. Each and every business and professional organization in this country has vested interest in each others business and preserve each others interest at the expense of consumers. It is the title co. who guarantees the certificate of title is liable. So they make sure every piece of paper is right. You never need an attorney to sell. The buyer’s attorney knows that Title Co does the paper work right and flips over the pages without reading a word. So the buyer do not need an attorney either. Say something goes wrong such as buyer did not disclose any defect properly then you have to sue the buyer to recover and the attorney will make big money from you and will not take any responsibility for the negligence of the seller or his own negligence or ignorance. Consumers be aware of all the ploys ingrained in this system.

  2. Just buy the package on FSBO and nothing more. Warning what happens. FSBO calls you about upgrading your package to MLS when your house hasn’t sold within 2 weeks. They will tell you about the selling guarantee. FSBO is now currently charging a listing commission when you advertise on MLS. Although it is not as much as 3-3.5% of listing side, FSBO requires you to go thru their agent when you list on the MLS. The problem is he is so slow at getting back to you and the buying agent, too much goes by and everyone gets frustrated. Yes, the buyer’s agent was frustrated. The refund guarantee is only refunded IF you use their agent. If you are not impressed with them, then that is the only way you will get your fees refunded. So don’t go that route unless you don’t want your fees refunded. If you want to use a particular agent in your area, you can’t because it is only the agents who have signed up under their network. To become a preferred agent on FSBO, all you have to do is join their network. To get maximum coverage, $199 per year. Good luck with selling. I did not sell my home thru FSBO. Tried but it did not work for me. So I used an experienced agent and got it sold. Yeah.

    1. Hi Leigh:

      Thanks for the comment. To be clear, in this article we’re talking about the overall process of selling your house on your own and not the website. I just want to make sure there’s no confusion.

      Thanks,
      Kevin Graham

    2. Thank you so much for taking the time to share your experiences. This review has aided me in making my decision. Congratulations on getting your home sold.

  3. Thank you for your helpful comments. I am a contructor and I am getting ready to sell my flip property. Should be taking pictures today and will post the advertisement on different sites today or tomorrow.
    I do think that hiring an attorney for the sale paperwork is not a bad idea. Paying your realtor such a huge money for his/her assistance in my opinion is a waste. Usually, I make my flip properties nice and shiny with a lot of custom tile and granite work and these properties are being sold within 2-3 days or a week. So, if I work on the house for 12-14 hours everyday during 2-3 months and that realtor wants his 6% for a few days…. I don’t think that it is fare! I can do the showing and advertisement with pics and video for the web, I can hire that attorney…… Why do I need that realtor?:)

  4. How would I know if my agent is commiting fraud? Several people came to see the house with their agent; they said they love the house and price but I haven’t seen any offer, when I ask my agent he states that he’ll do open house, in some ocasions he forgets to do open house.

    1. Hi Lui:

      I don’t know if he’s committing fraud, but if he’s forgetting to do the open house, he’s certainly not a very good real estate agent. I’m going to have someone from In-House Realty reach out to you and see if we can help you find someone better.

      Thanks,
      Kevin Graham

  5. I’m confused on the legal paperwork part of this article…why can’t you simply have the buyer’s realtor handle all the legal paperwork for the sale? If you find a buyer that truly wants the house, they will negotiate with their own realtor to get the paperwork done for the sale, correct? Why should the seller worry about the paperwork then?

    1. Hi Curt:

      You could do that, but then you’re putting your complete faith and trust in someone who has a responsibility to the buyer to get them the best deal. I would read that paperwork very carefully. You also want to make sure they know what they’re doing. If anything is messed up, you’re on the hook. Hope this helps answer your question.

      Thanks,
      Kevin Graham

    2. Hi Curt. My husband & I will be using FSBO when we get ready to sell our house within the next couple of weeks. We have also retained a real estate attorney who will be there to guide us along in the process. He will review offers with us, and write up any counter offers we may have. He will also handle any paperwork needed for the closing, and will be there to represent us. The fees will vary, but it is usually around $500-$1000, depending on where you live. Spending a few hundred dollars for peace of mind is well worth the money.

    3. Curt, you definitely want to have someone in your corner who prioritizes you and that is not going to happen with the buyers attorney. I humbly recommend that you have a real estate attorney who you trust that works to protect you. Mr. Graham has written a very good article.

  6. We CAN list on the MLS for an additional fee on For Sale By Owner.com.

    If a buyer comes with an agent, how much commission do they expect to get?

    1. Good morning, Karen. That depends on the commission that is negotiated. You should be speaking with the buyer’s agent about that. You’re looking at up to 6%, though. I’d definitely shoot for lower.

      1. So you’re saying that we go through all the hassle of selling the place on our own to avoid paying an agent commission only to have to pay the buyers agent a commission anyways if they have one?

        1. Hi Dave:

          it’s definitely not for everyone and if the buyer has an agent you could end up having to pay something to them. It’s definitely a counterpoint and something to think about.

          Thanks,
          Kevin Graham

        2. My attorney has advised us that we are not obligated to pay for a buyer’s broker since we didn’t hire them. It would be the responsibility of the buyers. If they don’t have extra cash on hand, you can add the fee into the sale of the home and pay the broker at closing. For example: You sell your house for 300,000 and the broker’s fee is 3,000. The selling price would change to 303,000, and the broker will get his/her 3,000 at closing.

          1. No agent will sell your home if they have to charge the buyer, why do it? There are thousands of homes in the MLS where the commission of the realtor is guaranteed to have to go through a price increase in order to get paid. The main issue with for sale by owners is that besides the fact that they don’t want to pay the commission to the listing agent, they don’t want to pay to the buyer’s agent either or they want to pay very little. If you handle your sale this way, you will not succeed.

          2. Angela:

            I can understand not wanting to do for sale by owner and it’s still more common to go through an agent, but some of the assertions you’re making are sweeping generalizations. Not everyone is going to have a problem paying the buyer’s agent. They did find and show the house to their clients after all.

  7. It is good to see the pros and cons for the seller in your post.If you are planning to sell your property then it is necessary you should aware of owner and whom you are selling the property.

  8. Some Realtors are willing to offer counsel with the paperwork aspect of selling by owner. They charge a fee, of course, but it’s often less than the commission you would be paying to them if they had listed your home and handled selling it on their own.

    Not sure how hard it is to fine Realtors like this, though – I’ve never actually experienced this, only heard it a number of times through the grapevine, if you will. 🙂

  9. One way to have success selling For Sale By Owner is to try and find a strong local FSBO platform (most markets don’t have one). It’s is a great way to obtain the benefits of a For Sale By Owner listing and also getting true local market knowledge, expertise and connections that usually you need an agent for.

  10. One major thing I’d like to point out about this article- Realtors almost always use showing services that allow sellers to approve, deny, or reschedule showings and to set time frame limits. If you truly want to sell your home, you need to be as accommodating as possible for showings, because if you decline one, they may see and put in an offer on one around the corner during that timeframe. However, this does not mean you should allow showings at times that are just not convenient for you. For example, if an older child is home alone after school between 4 and 5, you can have this time blocked off so that showings are not allowed at all.

    1. Hi Maggie, that’s a good point. You need to strike a balance between being available and still living your life as you try to sell your home. Thanks for the comment!

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