When you sell your house, you can either work with a real estate agent, or ‘FSBO’ (for sale by owner) your house. Most homeowners pay 6% commission to real estate agents to essentially ensure the home sale process goes smoothly. However, there are plenty of ways to sell your house without a real estate agent and without paying commissions.
How does FSBO work?
For sale by owner listings are sold without a realtor or listing agent. As a homeowner, you will list your house and keep the agent commissions to yourself as part of the final profit!
Selling your house FSBO has many similarities to selling your house with a real estate agent. But there are some differences you should note.
An Overview of the for sale by owner process
The for sale by owner process can be intimidating, but with a little know-how and lots of elbow grease, you can sell your own home. Regardless of how much or little help you get from an agent or service, here are all of the steps you’ll need to follow.
Let’s dig into each step a little further.
Make sure your house is ready for the open market
No house is perfect but most home buyers want to feel like they are! The repairs, maintenance, and updates you have been [understandably] putting off will all factor into your home sale.
When showing the house, make sure you’ve cleaned, the lights are on, and the AC/heat has been set to an appropriate temperature. If you have delicate floors, make sure you give people the chance to set their shoes aside somewhere.
Depending on your furniture, you might want to consider staging. This can cost $750 to $2000 but it might be well worth it especially given this current housing market.
Market your FSBO listing
90% of home buyers do their shopping online. That means you are going to have to market your property which will cost money.
You will have to pay to get your house listed on your local MLS. This is where realtors will be able to find your home and bring their buyers. Additionally, you can add your listing to Zillow, Redfin, Trulia, and Craigslist. All of these sites offer free and paid opportunities to harness their platforms.
Lastly, Facebook ads can be a cheap option but make sure you know what you are doing. If you do not set up your ads correctly, you risk accidentally wasting a ton of time and money.
Make sure you are available and flexible to field inquiries and interact with agents and buyers at all hours of the day. Real estate isn’t limited to a 9-5 schedule.
It is definitely important to get good photos of the house that help it stand out on sites like redfin and Zillow. This can cost anywhere from $250-$700 depending on the photographer you hire, the size of your house, and the number of photos you need.
Manage agent commissions, open houses, and home showings
If you intend to work with buyer’s agents, make sure you are able to handle facilitating them their commission. Buyer’s agent commissions are usually as low as 2% but in this market, it pays to go higher. Offering higher commission to buyer’s agents can help facilitate a smoother transaction.
If you host open houses its important you, do it right. There is much more that goes into open houses than just cleaning, photos, and staging. Make sure the event is properly promoted. Make sure agents know where and when it is taking place. Have signage dispersed throughout the neighborhood, and make sure you have the means to collect and manage the information of everyone who attends.
Make sure they know how to reach you as well so they can submit an offer!
Make sure you are working with qualified home buyers
Make sure your buyer is prequalified by a mortgage lender to purchase your home. And require an earnest money deposit to be put into an escrow account. If the buyer doesn’t adhere to the purchase agreement, then they’ll forfeit the deposit.
Avoid contingent offers if you can but in a slower market you might not have a choice. Contingent offers have a higher chance to fall out of escrow and waste your time. This also costs you money.
Manage negotiations and counter offers
Decide what’s most important to you. Do you want an all-cash fast home sale with a quick closing date? Or do you want to maximize every dollar dealing with negotiations, contingencies, repairs, inspections, and commissions? Also, make sure you understand your market. Your decision should vary based on whether it is a seller’s market or buyer’s market
In a perfect world, you will have multiple offers for your house! Just know this also means added workload and time for you! Don’t worry though, that is always a good problem to have!
Learn in advance how to write a counteroffer. During real estate negotiations, you need to work fast. Any delay could cost you when making counteroffers so your buyers’ agent.
Remember that the asking price is just one factor. You can negotiate various seller credits to make the deal more enticing to your buyers. This is all part of the negotiation process when selling your house FSBO.
Negotiate a home inspection
You can either schedule an inspection before listing your home for sale, or after you enter escrow. Most of the time, buyers are going to want to facilitate their own inspection so it makes sense just to wait until entering escrow.
Make sure your sales agreement allows for renegotiation of your sale depending on the outcomes of your inspection. You don’t want to be on the hook for a $20,000 repair just because that safeguard was not in place before entering escrow.
Make sure you have all your FSBO disclosures
Federal and state law mandates certain disclosures to ensure a fair and transparent transaction. You but provide copies of required disclosures and have them reviewed and signed by your buyers.
- Pest reports: This mostly refers to termites. Most of the time, termiting will be requested if recommended during your initial inspection.
- HOA disclosures: This is vital information for your buyers so they can understand if their loans qualify. It is also important so they get a full picture of the final cost of living in your complex (if applicable).
- Title report: Work with a title rep to ensure the title is clean before entering escrow. Unforeseen problems like liens could blow up your FSBO home sale.
- Home warranty: For a few hundred dollars you can buy added peace of mind to ensure your home sale is signed and sealed.
Should you sell your home yourself?
A “for sale by owner” home sale is more than just putting a sign in your yard. Before starting the complicated process of selling your house make sure you have a roadmap for your FSBO.
Do you understand what your property is worth?
There are many factors that go into determining a list price for your FSBO listing. The market trends and active comparables (comps) are the two biggest factors. You’ll also have to consider your needs. How quickly do you want to sell your house and how much hassle are you willing to deal with?
It might pay to pay an appraiser to appraise your house. Alternatively, local cash home buyers will do their own appraisal for free if you decide to sell that way.
Are you willing to manage buyers and real estate agents?
Even if you are FSBO, you will likely have to deal with real estate agents. Most buyers are represented by licensed real estate agents who will be the ones you handle negotiations with. They will also want their own commission as mentioned earlier in this article.
Are you comfortable with sale and marketing?
If handled correctly, the investment you make in marketing your FSBO is well worth it. But if you do not market your “for sale by owner” listing correctly it can cost you a ton of time and money. Some people are more adept with managing and handling their marketing but others are not. Make sure you are honest with yourself before investing marketing dollars.
Can you schedule tours and communicate with buyers?
Between open houses and agent showings, you are going to be very busy. These efforts require a lot of scheduling and coordination and are not bound by the 9-5 schedule. Are you able to field calls at every hour of the day? Are you able to manage scheduling and not miss appointments?
Can you do all of this while juggling other obligations in your personal and professional life? The answer for most FSBO homeowners is yes but its really something to consider. We pay for time savers and convenience in every aspect of our lives. Selling a home is often no different.
Is it worth it to sell your own house?
The biggest benefit of selling your house FSBO is the money you save selling your house with no commissions. On a $600,000 home sale, a listing agent will take $40,000 of your profits. Skipping this cost nets, you more and can help you even lower the price to sell your house faster.
If you like control, then FSBO is also a beneficial process. If you are confident handling the marketing and negotiations for your FSBO listing, then you will enjoy having your hand on the wheel from start to finish!
FSBO mistakes to avoid
Overpricing your FSBO listing
FSBO sellers really need to learn how to price their houses correctly. As the real estate market cools, you need to price your house well or it will sit. Depending on your situation this could cost you’re a lot through holding costs (property taxes, HOAs, and more).
Remember, as an FSBO seller, price can be your advantage. Skipping commissions means you can still net more profit while also pricing your house lower than the market. Don’t cost yourself time and money over a few thousand on your listing price.
“Forgetting” to get a home inspection
Don’t let buyers dictate the inspection process without your input. Make sure you have your hand on the inspection process and have the means to react if necessary, depending on the buyer’s inspection.
Don’t overpay buyers agents
Selling your home without an agent won’t save you the entire 6% commission unless your buyers are also unrepresented.
If you want to attract the attention of buyers who are working with a real estate agent, you’ll have to offer a commission in the traditional range of 2.5% to 3%, and maybe more to compensate the agent for the extra work your FSBO deal implies.
On the other hand, don’t just let the buyer’s agent control the whole process or push you to accept less than you should. If you can’t negotiate comfortably, get your own representation.
Don’t use low quality photos for your FSBO listing
Your real estate listing needs to stand out among a see of listings being browsed on sites like redfin and Zillow. Having professional, eye-catching pictures is non-negotiable.
Make sure your listing photos are eye-catching and highlight the best features of your house that make it unique and appealing. Your listing needs to attract and engage buyer visually and even imaginatively.
Make sure the rooms are clean, clutter-free, and well-lit. No blurry, dark, or messy pictures. Staging can sometimes help bring your photos to life but there is a lot that can go into staging your “for sale by owner” listing.
Not listing on your local MLS (multiple listing service)
This is a must. Your listing will not get discovered by buyer’s agents unless you list your FSBO on the MLS. There are affordable services that can facilitate this for you for a flat simple rate.
Not being reachable or communicative to your buyers
Like we mentioned, managing a listing requires a ton of organization and scheduling. If you cannot make yourself flexible, reachable, and available, don’t even bother with FSBO. Buyers lose attention quickly and missing that call could cost you the showing that could sell your house!
Make sure your email and calendar are monitored diligently. Also, expect to manage a ton of calls from unknown or spam numbers. It might help to also set up a lockbox outside your house if you trust people to host showings while you are not at the house.
Alternatives to FSBO listings
Want to skip the commissions of a traditional home sale and ditch the hassle of managing and FSBO? Consider selling your house for cash with a local home buying company. Cash home buyers have the resources to handle all the steps of a home sale (inspections, appraisals, title, and escrow) without agent commissions to facilitate these steps.
You can sell your house without making any repairs. Cash buyers will make you a cash, as-is offer for your house. There are no closing costs either. Whatever number you agree to is yours to pocket yourself.
This process gives you the control and flexibility of selling your house without a realtor, without the stress and management. From initial inquiry to final sale, you can have your home sold in as little as 14 days!
Want to learn more? Connect with a local homebuying expert today and get your cash home offer.