Pros and Cons of Selling Your Home on Your Own
FSBO (pronounced fizzbo) is real estate lingo for For Sale by Owner, and it’s a term that you’ve probably heard before.
Most people who seek to sell their home without a real estate agent do so because they want to save on 6-7% of the closing sale, which is usually the amount divided equally between the buying and selling agents and can amount to a considerable chunk of change!
However, sometimes the extra money saved by going the FSBO route is simply not worth the extra stress and insecurity for a first-time home seller. In this article, we will help you determine if FSBO is right for you by clarifying the following questions:
- What do real estate agents actually do in a home sale?
- What are the requirements to sell your home without a realtor?
- Do the benefits of selling your home without a realtor outweigh the costs?
What Do Real Estate Agents Do?
In other words, why do you pay 6-7% of the final closing price to agents? Here is what real estate agents do to earn their commission:
- Make a comparative market analysis (or CMA) to help you determine your property value
- List your property on the Multiple Listing Service (or MLS)
- Market your home via advertisements, web listings, and fliers
- Execute open houses and events to showcase your property
- Represent you during negotiations and closing
So the next logical questions are:
It is possible to carry out realtor duties on my own? and Is it really worth it?
Yes, it is possible to carry out real estate duties on your own, but you must consider the intangible value of the resources and expertise that comes with the realtor. Agents make the process of buying and selling much less stressful. When weighing your options, don’t forget to include the price of your own peace of mind in their commission!
Still hesitant about using an agent? Keep reading below to discover the steps of how to sell a property without an agent so you can decide for yourself if it is worth your time and effort!
How Do I Sell My Own Home Without a Realtor?
In this section, we detail how you would carry out the duties of a real estate agent on your own.
1. Find an Accurate Price Point for Your Home
This is a lot harder than it seems. An accurate price point can make or break your FSBO experience. Homeowners tend to overvalue their own properties, only realizing they’ve done so after months go by with no offers.
Real estate agents will look at comps (or comparable properties) to determine the actual value of your property. This can be tricky because even two properties in the same neighborhood can have different values. Make sure to objectively consider market conditions, financing conditions, locational comparability, physical dimensions, and features of your home. Click here to learn more about comparative market analyses!
Your best bet may be to hire a certified appraiser to do this part.
2. List Your House on MLS Without a Realtor by Paying a Flat Fee
The Multiple Listing Service (MLS) is the most comprehensive listing of properties in the U.S. Usually, your agent would do this for you, but for a flat fee of a few hundred dollars, you can list it on your own.
Your prospective buyer’s agent will most likely be searching for your property through the MLS. Click here to learn more about flat fee MLS!
3. Market Your Property Through Advertisements and Fliers
Before starting your marketing campaign, make sure you are familiar with your property’s selling points and emphasize these!
Your advertising copy should go beyond the normal details (location, dimensions, bed/bath count) to include specific features that entice buyers (for example, granite countertops or kitchen islands).
Once you have a list of all your most valuable features, make sure they are clearly stated in your ads and accompanied by top-notch photography.
For ads, you can go old school with fliers and For Sale yard signs, or go the more modern route by creating a website, advertising on local FSBO Facebook groups, or signing up for a FSBO listing campaign. We suggest a combination of all of these techniques to reach the largest pool or prospective buyers.
4. Stage an Open House Without An Agent
Staging an open house requires a lot of work. Before picking a date for your open house, make sure your spring cleaning is up to date (deep clean every surface, scrub counters and grout, shampoo carpets, detail air vents, etc.) Every detail counts and could make or break a sale.
Additionally, make sure to take the necessary safety precautions by stashing away all valuables, loose gadgets and paperwork with personal information. You may also want to install video cameras or keep a sign-in list of all the people who tour your home. Read all about how to stay safe during a real estate transaction here!
Alternatively, if you don’t like the prospect of hosting an open house, you can provide a small lockbox with the key to your house outside to allow agents to take prospective buyers on personalized tours whenever it fits in their schedules. This option is more convenient and does not require your physical presence. It does, however, require you to maintain your home spotless at all times.
5. Negotiate the Buyers Agent’s Commission
Even if you didn’t hire a real estate agent, odds are your prospective buyer has an agent representing him/her. Their agent will be expecting 3-3.5% of the closing sale for commission.
Your unwillingness to cover this fee may deter many realtors and thus many potential buyers. Basically, you have two options. You can either:
- Pay for the buyer’s agent’s commission and enjoy the perks that come with using an agent (aka the smoothness of the negotiation and sale).
- Or decide to negotiate this fee into the final price of the home sale.
Either way, it will be very hard to sell a home without getting a third party involved, especially when it comes to conforming to contractual laws. This brings me to my next point…
6. Make Sure Your Contract is Legitimate and Compliant with All Laws
To finalize a sale, the buyer will propose a contract to you (the seller), which you can either accept or revise until both parties are satisfied.
Most states have standard real estate contracts. If you are not familiar with this contract, make sure to have the contract revised by an attorney.
Don’t forget that your contract must also be compliant with federal laws like the Fair Housing Act that forbids the discrimination of buyers based on race, religion, and sex.
7. Make Sure To Financially Shield Yourself From Liability
Let’s face it- real estate escrow can be complicated. Another advantage of working with a licensed real estate agent is that they often carry with them Errors & Omissions (E&O) Insurance policies that shield them from possible mistakes that could be made in the highly complex process of financial negotiations.
To avoid being held financially liable as a FSBO seller, you can hedge your risk and opt to take out an E&O Insurance policy.
We, for instance, offer a 6-month exclusive E&O policy for FSBO sellers that covers you for up to $25,000 in the event of a lawsuit or a major disclosure violation. We also offer a mobile escrow app that allows you to track the progress of your escrow right from your phone and makes a stressful process crystal clear!
FSBO: Is it Realistic to Sell My Home Without A Realtor?
To evaluate if FSBO is right for you, you have to weigh the potential costs outlined above you may inquire against the potential profit you gain from not having a real estate agent representing you.
These are tangible costs that don’t include your time spent researching, advertising, or negotiating, not to mention the emotional costs of stress and uncertainty. But if you are a go-getter, self-determined, and have some wiggle room in your schedule, selling FSBO could be right for you!