Are you looking to sell your own house in order to keep more of the profit? While it is rather uncommon, only 8% of homes sold in 2017 were “for sale by owner,” without a realtor. For Sale By Owner (FSBO) normally isn’t easier than enlisting an agent, but enough people do it every year to show that it can be done successfully.
For Sale By Owner vs Using A Realtor
There are differing opinions on whether it is better to list your house FSBO (For Sale By Owner) or to use a real estate agent. With any decision in life, there are tradeoffs with either option.
Reasons To Sell For Sale By Owner
Pay No or Little Commission
- By listing with a realtor, the seller typically pays 6% of the selling price which is split between the buying and selling agents and brokers. Ideally, an FSBO home will be purchased without the assistance of a buying agent. But, this isn’t always the case & the buying agent will be looking for a cut.
- Here is an FSBO calculator, to compare how much more money you can make by selling your house yourself.
Easier To Advertise With The Internet
- The internet has made it easier for DIYers to sell just about anything, including houses. Not only can owners list their houses on FSBO internet websites, but also on major sites like Trulia and Zillow can be helpful. You will have to pay a listing fee at most sites, but it can still be cheaper in the long run than hiring an agent. Of course, you can always advertise for free on Craigslist or the old-fashioned route with the classic “For Sale By Owner” sign in the front yard.
A Great Option For House-Flippers
- Sellers that might make a living or a respectable side income from buying fixer-uppers and selling for a profit might be natural fits for FSBO. It helps to increase the profit of each house. Having a background in real estate can help make the negotiation and closing process easier than inexperienced FSBO sellers.
Already Have A Buyer Lined Up
- Statistics show that FSBO homes tend to sell quicker than agency-listed homes on average because the seller already has a buyer in mind. If that is the case, forgo the “middle man” and save some money.
Reasons Not To Sell For Sale By Owner
Homes Sold By an Agent Typically Sell For More Money
- It’s often said that real estate agents and brokers can more accurately price a house and can negotiate a higher price because of their experience. After all, negotiating with buyers and sellers on a daily basis is their profession.
- According to the 2017 annual report from the National Association of Realtors, the typical FSBO home sold for $190,000 while the average realtor-listed home sold for $250,000.
- Note that statistic is a huge difference and needs to be taken with a grain of salt. The average FSBO probably won’t sell at a 16% discount to avoid realtor fees. Home prices vary from region to region and owners of high-end homes most likely will not go through the process of selling their own home. The tradeoff of the additional work required for a sale by owner house isn’t worth the potential lost income or time by having to advertise, show, and close the sale.
FSBO Is Hard Work
- Selling your own house is a lot of work and can be time-consuming. You are the person needing to advertise, answer all the phone calls from prospective buyers, need to be present to show the house, and also complete most of the paperwork when the house sells. This is everything a real estate agent handles, allowing the seller to continue their normal daily activities as much as possible.
Paperwork Can Be Confusing
- Potentially the hardest part of any home sale, for buyers and sellers, is understanding and completing all the paperwork involved with a home sale. The paperwork and mortgage application process can be stressful. This is true even if real estate agents assist both parties. For people who work with it on a daily basis, it is just another day at the office. Some states also require all home sales to be completed by a real estate attorney. Even if there aren’t any agents involved in the sale, sellers may have to pay a fee if they live in a state with this requirement.
For Sale By Owner Statistics
Here are a couple statistics gathered in the 2017 annual report from the National Association of Realtors regarding the average profile of a for sale by owner seller.
- The median age of FSBO sellers was 55 years of age.
- The average FSBO house was only listed for two weeks before selling.
- 68% of FSBO sellers reported they were satisfied with the selling process.
For reasons listed above, certain people have more concrete reasons to sell their house without an agent. They have prior experience with selling a house, already have a buyer lined up, or are looking for a quick sale without giving any equity to a selling or buying agent. The report doesn’t provide the reasons why FSBO sellers were happy with the process. A 68% satisfaction rating means that almost 3/4 would consider listing their next house for sale by owner again.
How To Sell A House By Owner
There are certain actions a FSBO seller needs to take that a real estate agent normally takes care of when they list a house.
Here is a quick checklist to help you prepare for a sale:
Make The House Immaculate
The first item of business, agent or no agent, is to make your house look like something from the “Parade of Homes.” Have a trusted friend or family member do a walkthrough to identify any potential spots that might need upgraded or repaired. The house will also need to be neat and clean. This isn’t the 2005 or 2006 housing boom when houses were selling at record pace. A dirty house means disinterested buyers and potentially lower prices.
Take Quality Photos
Agents and brokers might hire a professional to take quality photographs to help make the house look more inviting to potential buyers. Take pictures of every room with plenty of light and show special features of your home. Research tutorials to help with this process.
Price Competitively and List on MLS
Accurately pricing your house might be difficult and you might have to ask a realtor to help with this part of the process. You will need to find the market value and compare the recent sales prices of similar homes.
Once the house has a price, list it on MLS (Multiple Listing Service). It is the go-to listing platform for realtors and potential buyers. You should also consider listing on the local Craigslist board, FSBO.com, and place physical signs in your yard and in high-traffic areas nearby. A flat-fee listing on the MLS currently goes for $299.00.
Research The Paperwork Process
You never know how soon your house will sell. You should be familiar with the paperwork process that comes with selling your house. As you show the house to potential buyers, they may ask you questions. You can seek advice from a real estate agent or attorney, if unfamiliar with the process. Or you can always hire an expert to complete this part of the sale. You should still save plenty of money, even if you have to hire somebody.
For Sale By Owner is a possibility if you do not mind working a little harder to make the sale. It is similar to deciding to sell a used vehicle or accept the trade-in value of a car.
With a car trade-in, you know you will get the reduced sale price but it is less hassle. There are more opportunities to earn money by selling a car yourself, but it also requires more work and time. Selling a house is more complex than selling a car in several aspects, but the concept is similar. If you are willing to sell your own car, then selling your own house might not be such a daunting task.