Selling your home is a big job, and it's one usually reserved for professionals. However, in some cases, homeowners opt to list and sell their own properties, eliminating the need for a real estate agent.
“FSBO refers to a property being sold directly by its owner,” says Bryson Taggart, Opendoor agent partner and realtor. "Homeowners generally choose to sell their property this way to avoid additional fees and agent commissions and to maintain direct control over the transaction, including setting the sale price and negotiating with potential buyers.”
When a property is for sale by owner (FSBO), the buying and selling process changes. This article looks at how a property being sold by its owner might affect the transaction and whether you should consider listing and selling your property yourself.
What Is FSBO?
FSBO is an acronym for “For Sale By Owner.” In this scenario, a homeowner does not retain the services of a real estate agent, though they will likely have to work with a lender or broker to complete the deal. In some cases, those selling their own homes also work with a lawyer who assists with the paperwork.
“Typically, the primary reason a homeowner would want to sell the property themselves is to avoid paying a commission to a real estate agent,” says Andrew Pasquella, a realtor at Sotheby’s International Realty. “The homeowner may know they wouldn’t work well with a real estate agent and wants to retain complete control for all decisions without having an agent to bounce ideas off of.”
In this scenario, the seller does the work from listing the property to placing For Sale signs.
“The process and steps involved with FSBO will be similar to a traditional broker model,” Pasquella says. “On the highest level, the homeowner will need to market their home, schedule showings and open houses, negotiate with potential buyers, most likely enter the escrow process, open their house to buyer inspections, and pay close attention to all legal necessary disclosures and agreements.”
In short, the seller will do a host of tasks otherwise reserved for the real estate agent, many of which are in some way required for the sale of the home.
Benefits of FSBO
The main benefit for most homeowners looking to sell their own property is saving money on commissions paid to real estate agents.
“The benefits of choosing FSBO depend on the needs and priorities of the seller. If the seller is prioritizing control over the selling process, like scheduling open houses on their timeline and handling their own negotiations, that is a benefit of FSBO. If a seller is primarily looking to save on agent commissions, that could be a key benefit,” Taggart says.
Real estate agents might be biased, but many say it’s a difficult job that many sellers underestimate. “Beyond complete autonomy and control of the entire selling process, if the homeowner wants to go it alone, there are very few benefits," says Pasquella.
Drawbacks of FSBO
Selling your home can be complicated—with legal ramifications and tens of thousands of dollars at stake. For these reasons, most homeowners hire a professional to handle the intricacies of the process. The drawbacks of an FSBO are numerous.
Amount of Work
There are real drawbacks to consider when listing your own home, beginning with the amount of work you must do. “While FSBO saves commission fees and yields more control to the seller, selling a home can take 90+ days and be filled with hassles and uncertainty,” Taggart says.
Legal Learning Curve
Aside from the amount of work, Micah Fouskey, an associate broker with Better Homes and Gardens Real Estate Metro Brokers, finds many sellers face a legal learning curve. “You might not have access to the [necessary] forms if you’re selling yourself,” he says.
In addition, you can be liable for certain problems with the home if you fail to disclose them adequately to a buyer. “It’s a risk even for lawyers or past agents,” Fouskey adds.
Not Knowing the Home’s Actual Value
Fouskey finds that many sellers list too low or too high when selling their homes. “We go through a competitive analysis of the home and know what it sells for,” he says. “When you do an FSBO, you’re not getting an accurate picture. A lot of agents are from that particular area and can compare how much your house should be listed for.”
No MLS Listings
“One of the biggest challenges with FSBO, though, might be the lack of access to the Multiple Listing Service (MLS), a powerful tool that markets homes to a broad audience, including other agents searching for homes for their buyers,” Taggart says.
The drawbacks can be so immense that Fouskey finds many sellers change their minds. “Most end up transferring over to get an agent,” he says.
What to Consider
If you’re considering selling your own home, you need some backup help waiting in the wings. Experts recommend contacting a real estate lawyer who can help you draw up contacts and interpret offers and other paperwork you might receive.
If you have experience selling real estate, you could have a leg up, but even real estate agents are known to hire other agents when selling because there’s an emotional attachment to a home that can muddy the waters when the owner opts for an FSBO.
“The only instance I see when FSBO makes sense is if it’s a real estate attorney who understands the home selling and buying transaction or a real estate agent who is selling their home. Even then, some agents won’t sell their own home because there may be more liability associated with that transaction,” Pasquella cautions.
Keep in mind that even if you’re up to the task and ready to make tough decisions, you’ll be creating a significant workload for yourself on top of what you have to do to move.
The benefits of hiring a real estate agent are immense. Not only is someone working on your behalf to sell your home and handle all the work that comes with it, but they also have a ton of expertise in negotiations, tapping into their network to find the right seller and leveraging deals that ensure smooth closings.
If you see that a home you’re interested in purchasing is listed as FSBO, keep in mind that the process could be drawn out. “It might be more drawn out and difficult because [the owners] don’t understand certain things,” Fouskey says. “It can slow it down.”
A hired agent will be up to the challenge. “I recommend working with a skilled real estate agent who is willing to work with FSBOs or hiring a real estate attorney,” Pasquella says. “You will want someone in your corner who can help guide you and with important decision-making moments.”
