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No, it’s not the name of a party clown.
It’s how you pronounce “FSBO,” the acronym of “for sale by owner.”
Maybe you’ve seen a FSBO home listed online and wondered how different the buying process is from buying a home that’s listed the standard way.
Or maybe you’re about to put your house on the market, and you’re wondering if the FSBO route is the way to go.
Either way, it’s important to understand what goes into selling and buying a FSBO home.
What Does for Sale by Owner (FSBO) Mean?
When a home is for sale by owner, it means the owner has decided to sell the home without a listing agent (a real estate agent working for the seller).
Most sellers who go FSBO want to save money, whether they have experience selling a house or not. They’re willing to tackle the responsibilities that come with selling a house, so they can keep a bigger slice of the profit when their house sells. 🎂
Just know that selling a house without a real estate agent can end up costing homeowners a lot more time and money than they expect. Set yourself up for success – understand the process before you get your FSBO party started.
How FSBO Works for Sellers
The same steps and paperwork involved in conventional home sales are involved in FSBO sales.
The only difference is that the owner of the home handles all the traditional listing agent tasks. This includes everything from scheduling (or taking) listing photos, marketing the listing and coordinating open houses and showings to negotiating with buyers and dealing with the mountains of paperwork that typically come with selling a house.
It’s no small feat. Real talk – many FSBO sellers have trouble handling the added responsibilities. Because of this, some buyer’s agents will steer their clients away from FSBO listings, preferring to keep their clients out of potentially disorganized deals.
So, if you’re going FSBO, go strong by preparing for each step.
Steps to selling your house as a FSBO listing
1. Figure out a price for your house: Sell your house without selling yourself short. Research the sale prices of similar homes (called “comps”) in your area. You can use real estate listing sites for this, but going through your county’s public record of real estate transactions is more accurate.
2. Fix what you can: It’s always smart to fix things that could spook buyers. Got a bunch of holes in a wall from old pictures? Probably worth touching up. Got a ground-level window with a broken lock? Consider replacing it.
3. Dress your house for success: Don’t underestimate the power of perception. Separate yourself from your emotions and look at your house through the fresh eyes of a potential buyer. Does your house look clean and tidy enough to make people want to come and look in person, let alone buy it? Stage your house (within budget) to stand out.
4. Make your house Instagram worthy: When buyers are scrolling through houses online, you want them to stop on yours and make it a favorite. Hire a professional real estate photographer who knows how to make your house a scroll stopper. Some sellers even level up to video or a 3D tour.
5. Unveil your FSBO home to the world: You’ll need to list the house yourself. You could use a FSBO website, but to reach a wider audience, use the multiple listing service (MLS) website, which buyers’ agents check daily. It’s also where the most popular sites for buyers pull their listings. FSBO sellers pay a flat fee to list on MLS. It’s less than what real estate agents pay.
6. Schedule showings and host open houses: Once your house is listed, you might get multiple calls a day from real estate agents representing interested buyers. In addition to answering questions and scheduling showings for their clients, you’ll be responsible for hosting any open houses. It’s showtime!
7. Negotiate with a buyer: After a buyer presents you with an offer, you have the option of presenting a counteroffer. Be ready for some back and forth until you and the buyer agree on the sale price as well as on any “contingencies” (special considerations you or the buyer need to take care of before the sale can be completed).
8. Prepare legal documents: A real estate transaction is no joke. One of the most daunting elements of a FSBO sale is the paperwork. Owners of FSBO homes need to draw up important legal documents – like the Seller’s Disclosure, title report and deed – and make sure they’re filled out correctly. Stumbling on this step could result in serious legal consequences.
The good news is many of these documents are easy to track down through local county offices or by using standard forms available online. You just need to be sure you have the right ones and the paperwork is filled out correctly.
9. Get a real estate attorney: Speaking of paperwork, an attorney will make sure your paperwork is on point. Since there’s so much to go over, it helps to have a pro who can direct you through the jargon. In fact, a real estate attorney is required by law in 21 states and Washington, D.C.
Recap: Pros and Cons of Selling Your House FSBO
|FSBO Pros 👍
|FSBO Cons 👎
|Potential cost savings
|Potential cost of underpricing your home
|More control over the process
|More difficulty getting your house looked at
|No competing for attention with a seller’s agent’s other clients
|Legal risk if you lack experience with contracts
What does success look like for someone selling their home FSBO-style?
Simply put, FSBO success is being happy with the amount of profit you get from the sale of your home relative to the amount of extra time and energy you put into it as your own agent.
And more importantly, it’s about avoiding any legal consequences that could cost you as much or more than what you saved selling your home yourself.
How FSBO Works for Buyers
Buying a FSBO home requires the same steps and paperwork involved in a conventional house sale.
But just as there are pros and cons for the seller, there are pros and cons for the buyer.
For example, negotiating directly with a seller can be easier or more difficult than negotiating with a seller’s agent.
Some sellers, when they don’t have an agent encouraging them to push for the best deal, might be more willing to accept a purchase agreement that benefits the buyer. On the other hand, some sellers dig their heels into a sale price that stems more from their emotional attachment to the home than it does from research into local comps.
Will a buyer’s real estate agent work with a FSBO seller?
Yes, they will.
But some FSBO sellers who want to avoid paying any agent commission at all might refuse to work with a buyer who is using an agent. (Remember, sellers usually pay the buyer’s agent commission.) If this happens – and you can’t afford to pay your agent’s commission – your agent could bow out of representing you in the deal.
Risks with buying a FSBO home
Remember that even the most well-intentioned owner of a FSBO home might make mistakes that could cost the buyer:
- Failing to report all the house’s defects or damage in the Seller’s Disclosure
- Making paperwork errors that could put the sale or transfer of the house in jeopardy
It’s always helpful to get the home inspected to uncover any issues that aren’t in the Seller’s Disclosure.
The house’s value can be confirmed by ordering a home appraisal, which is usually required and scheduled by a mortgage lender.
Feeling FOMO Over FSBO? 🤡
Sellers can save money and humble brag about their accomplishment. Buyers can score a good deal if they’re working with a seller who’s eager to make a deal.
Whether you go FSBO or not, having a firm grasp of the process can help you navigate both sides of the process — buying or selling.
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The Short Version
- The owner of a for sale by owner home doesn’t have to pay a seller’s real estate agent’s commission when the home gets sold
- A home buyer can also benefit from purchasing a FSBO home
- For both the seller and the buyer, the FSBO process involves some risks, which can be minimized with research, preparation and help from professionals
National Association of REALTORS®. “Open House Guidance During COVID-19.” Retrieved October 2021 from https://www.nar.realtor/coronavirus/open-house-guidance-during-covid-19