When you’re a homeowner, you have every right to sell your residence without the assistance of a real estate agent. But just because you can go the for-sale-by-owner (FSBO) route, that doesn’t mean you should.
How the FSBO Process Works
The FSBO process isn’t necessarily complicated, but it does require the seller to follow a particular set of steps in proper sequential order in order to secure a competitive offer and take it successfully to closing.
Here’s a basic breakdown of just some of the steps involved:
- Price your home accurately.
- Prepare the home to list.
- Take high-quality photographs and compose copy for the listing.
- List your home on all the major sites and/or on the MLS (if you have access).
- Brush up on disclosure requirements so you don’t break any rules.
- Market your home actively through both free and paid venues.
- Field calls from buyers, answer questions, and schedule showings.
- Go back and forth with offers.
- Accept an offer and pursue the due diligence.
- Deal with inspections, repair requests, and possibly additional negotiations.
- Make certain all the financing is in order.
- Complete the closing forms and legal documents.
If that sounds like a lot, well, that’s because it is! Some individuals are equipped to handle it, but many of us just aren’t cut out for the job.
If you’re still curious, here are some of the latest data on FSBO transactions in the U.S. (pulled from the National Association of Realtors):
- FSBO transactions account for roughly 11 percent of all home sales.
- The typical FSBO home sells for $200,000 compared to $280,000 for agent-sold homes.
- The most common methods employed to market an FSBO home: no marketing (36 percent), yard sign (31 percent), open house (24 percent), friends and neighbors (21 percent), and MLS (20 percent).
- The most difficult issues or tasks for FSBO sellers include: getting the price right (19 percent), preparing and fixing up the structure (13 percent), selling quickly (7 percent), possessing or budgeting sufficient time to handle the burdens of selling (5 percent), and understanding and executing the paperwork (3 percent).
Five Reasons to Avoid FSBO
“Many people believe that they can sell their house with a for-sale-by-owner listing, and the truth is, they can,” says Joe Cordes of CoMax Properties in Long Island. “However, the costs, the time spent, and the effort that goes into the whole thing is often much more than they bargained for.”
Here are five good reasons you’re better off giving a FSBO transaction a pass (as a seller):
Selling a house is always going to take a chunk of your precious time. If you choose to go down the FSBO path, it’s guaranteed that you’re going to devote a lot more time to it than you anticipated. From preparing the property for listing to scheduling showings and repairs, your calendar will fill up with all the tasks an agent would typically handle on your behalf.
You might think you’re saving three percent in commissions, but most FSBO sellers pay a lot more in other costs. This might include under-pricing the house, improperly negotiating with buyers, and the aforementioned sacrifice of your time (which could have been used to generate income elsewhere).
3. Legal Risk
Selling a house is serious business. Any mistakes you make could potentially cost you in the form of a lawsuit down the road. (This is why many agents carry what is known as Errors & Omissions Insurance.)
Marketing isn’t necessarily easy. Unless you have the rare house that sells itself (immaculate condition, good price, and great location), you’re going to invest some time and money placing listings in various publications, sharing the information on social media, contacting agents, and finding other methods of attracting potential buyers.
When it comes down to it, selling a house is stressful. Trying to sell it by yourself, if you have little to no experience with the process, is even more stressful. Everything falls on your shoulders and nobody else will field phone calls, schedule showings and repairs, negotiate on your behalf, or answer whatever questions interested parties will hit you with.
Another Option to Consider
Now that we’ve shown you the darker side of FSBO sales, you may be more inclined to ask: Is there any other way to sell my house without listing with an agentpolyethylene tow rope?
The short answer is: Yes. The longer answer is that you’ll have to do some research and explore the options that may be right for you. For example, a local cash home buyer could be an excellent option if you don’t wish to face the hassle of inspections, repairs, and negotiations, etc.
But whatever you do, make sure you research the good and the bad of every option thoroughly so you make a fully informed decision and have adequately addressed your questions, concerns, needs, and objectives.