For Sale by Owner Pros and Cons

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Selling your home in today’s market, where home prices continue to set records, might feel like an opportunity for a big payday.

And in some ways, it is — especially if your home has appreciated rapidly in the last few years. But there’s no such thing as a free lunch, as they say. Selling your home also involves lots of expenses, chief among them the 5% or 6% commission owed to your real estate agent. 

The good news is, you might be able to avoid that cost altogether if you have the time and skills to do it yourself. Some homeowners opt to do a FSBO (for sale by owner) listing, which cuts out the real estate agent entirely, and therefore eliminates that commission. But doing a FSBO isn’t without its challenges. 

Before jumping into a FSBO situation, make sure you understand what you’re getting yourself into, and whether you’re cut out to do it.

What Is FSBO and How Does It Work?

A “for sale by owner” or FSBO, is exactly what it sounds like: The owner of a home decides to list and sell their property without the assistance of a real estate agent. In the most basic terms, it means the owner puts a sign in their yard, takes the phone calls, conducts the showings and eventually writes the contract to sell.

“[It’s] the sale of a home, just completely bypassing the role of an agent altogether,” said Ryan David, the owner and lead investor at We Buy Houses In Pennsylvania.

That doesn’t mean there’s absolutely no one else involved: FSBOs can (and should) still involve a real estate lawyer, inspector, and other professionals, but they do not involve a seller’s agent.

What Are the Advantages of For Sale By Owner (FSBO)?

Experts agree that the main motivation, and biggest pro, of doing a FSBO is to save money. “The biggest advantage of a seller doing this is, if they don’t mind putting in the work themselves, [is that] they can save the agent’s fees, and that can really add up,” said David. 

Here are two examples:

  • A 5% agent fee for a $250,000 home sale is $12,500. 
  • A 5% agent fee for a $500,000 home sale is $25,000.

That is a lot of money potentially saved by the seller. But there can be other benefits, too. Here’s what to consider:

  • Saving on agent’s fees: When you sell your home with a real estate agent, you have to pay them a commission, typically 5% to 6% of the sale price. Going the FSBO route avoids this cost entirely, which can save you thousands of dollars. 
  • Full control over the process: Selling your home involves a lot of decisions: How much to list it for, how to market the home and how to set up the contract, just to name a few. When you do a FSBO, you get to set all of those terms yourself. 
  • Direct negotiation: If you have a strong business background, or you love the art of negotiation, you may prefer to negotiate directly with potential buyers, without having to go through an agent, by doing a FSBO.

What Are the Drawbacks of For Sale By Owner (FSBO)?

Saving money always sounds great, but comes with other costs to your time and emotional well-being.

“I hope that the seller would have a lot of time on their hands, because their phone could explode,” advised David. In other words: FSBO means taking all of the calls from interested buyers, and can quickly turn into a full-time job.

Pro Tip

Make sure you have the time to effectively manage the sale of your home in today’s intense real estate market.

Here is what else to consider:

  • The amount of work involved: Sellers often don’t realize how much work goes into selling a home. FSBO involves doing all of your own marketing, taking all of the calls, conducting all of the showings, and handling all of the negotiations. David says that amount of work can be overwhelming for some sellers.
  • Limiting the pool of potential buyers: Some buyers, and buyers’ agents, avoid FSBO listings. Many buyers like the safety of the traditional agent process, and might be hesitant to consider a FSBO property.
  • Risk of writing your own contract: Selling a home is one of the most important transactions of your life. You want to protect yourself through the process with a strong contract, which can be hard to do if you’re not a legal expert. “[The real estate agent] really acts as a safeguard for you to understand the contracts,” said Christian Ross, managing broker at Engel & Völkers.

Is Selling Your Own Home (FSBO) Right For You?

Going with a FSBO can be the right move for a very specific type of person: Someone with lots of experience in business and real estate, who also has the time to effectively manage the entire process.

David, whose company works with a lot of FSBO listings, recently purchased a FSBO home for himself, but felt comfortable doing so because he intimately understands the process. He’s also preparing to list his previous home soon via FSBO.

“With my experience, I thought I could save the real estate agents fees,” David said. Plus, his recent experience buying through FSBO allayed some of his fears. “In working directly with the owner buying our house, I saw how he drafted up the contract, and actually it was quite simple,” he said.

However, David’s case is unique in that he is someone who works in real estate for a living. Most people don’t have the skills and experience to do the same.

“If you’re a person who needs a little hand holding … that is definitely when the expertise of a Realtor or a real estate agent will come in,” advised Ross.

Plus, having generic business experience doesn’t always translate to selling a home. “There’s a much bigger emotional factor on this side than any contract you negotiate at work,” Ross said.

How to Find an Agent to Sell Your Home

If you’ve decided that a FSBO isn’t right for you, your next step is to find a good real estate agent. Here’s how to do that:

  1. Start with a search: Fire up Google and look for agents in your area. Check out their reviews and past experience. Narrow it down to a list of agents you like.
  2. Schedule a conversation: You can do a free “consultation” with potential agents to interview them and make sure they’re a good fit for you and your home.
  3. Ask for recommendations: If all else fails, talk to your friends and family to see if they can refer you to a great agent.