For Sale by Owner (FSBO)

In a 2006 National Association of Realtors survey, only 7% of sellers sell their homes without a licensed broker. Owners attempting to sell their own homes, also known as FSBOs (For Sale by Owners), will have many tasks to accomplish with which they may not be familiar. The valuation of the property is just the beginning; timing, marketing, preparing the home, negotiations, and so many other things are hurdles the owner must research and tackle to be successful.

Benefits

First and foremost, when an owner sells the home the realtor commission fees are nonexistent. These fees can add up to 6% of the selling price of the home; this amounts to $12,000 on a $200,000 house. Another benefit is the vested interest the owner has in the sale of the home. It is often the case that realtors work to secure a quick sell without so much worry about the price or conditions on the contract. The owner can set their own schedule for showings and can openly negotiate with a potential buyer without the hassle of sending paperwork back and forth.

Multiple Listing Service

The Multiple Listing Service (MLS) is a national marketing tool that all licensed agents use to share listings and match buyers. Previously, sellers not using an agent had no access to the MLS. Now FSBOs can list their home on the MLS using one of many websites that offer this fee-based service.

Advertising

There are many new real estate services online that cater specifically to the FSBO market. For a reasonable fee, the property is posted online with photographs and virtual tours. Zillow.com, ForSalebyOwner.com, and homesbyowner.com are just a few such sites. Along with this, open houses, full-color brochures, ads in newspapers and real estate circulars, and personal networking are all advertising tools that can lead to the sale of a home.

Challenges

The owner that hopes to sell a home without the help of a broker will face more work than he or she might think. In order to price the home correctly, the owner must research recent sales and home prices in the area. The owner must also know the state laws and regulations of fair housing, home disclosure, sales contracts, and sales negotiations. Financing can also be a confusing category, so the owner should know how to tackle this subject with a buyer.

Warnings

Buyer’s agents are often reluctant to work with owners trying to sell their own homes, even if the home is listed in the MLS. Also, buyers tend to submit lower offers to FSBO homes because they know the owner is saving money on sales commissions. The National Association of Realtors reports that the majority of owners attempting to sell their own home eventually hire a realtor, mostly because buyers typically use agents.