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- For sale by owner (FSBO) is when a house is being sold without the involvement of a listing agent or broker.
- Most sellers who list their homes as FSBO do so to avoid paying a real estate commission on the sale.
- Buyers who are considering a home that's listed FSBO can work with a buyer's agent, but they may be on the hook for the agent's commission.
Selling a home doesn't come for free. The typical real estate commission runs 5% to 6% of a home's final sale price, which sellers are traditionally on the hook for.
So, if a home sells for $350,000, the commission would be $17,500 to $21,000 — no small chunk of change for most homeowners.
With fees like this, it's no surprise that some homeowners opt for a DIY approach. A for sale by owner (FSBO) — pronounced fizz-bo — is a way to sell a home without hiring a real estate agent or broker (or paying the traditional commission. But how does the process of selling your own home work? Here's what you need to know.
What is FSBO?
An FSBO listing means the homeowner has listed their property without the help of a real estate agent or broker. A common reason homeowners go this route is to avoid paying the real estate commission in hopes of maximizing their sale profits. Sellers might also choose FSBO if they already have a buyer lined up — say, a friend or a relative — and don't need a real estate agent's help marketing the home.
While FSBO sellers don't hire a real estate professional, buyers can — and generally do — work with a buyer's agent when purchasing a FSBO home. If the buyer has an agent, the FSBO seller may be willing to cover the "buy" side of the commission since an agent can help ensure the transaction goes smoothly.
"Just because the seller is declining the expertise, support, and know-how of an agent doesn't mean the buyer has to," says Tabitha Mazzara, director of operations at Mortgage Bank of California, a lender geared toward self-employed borrowers and investors.
The benefits of FSBO
FSBOs can be advantageous, giving sellers more control over the process and potentially increasing their sales proceeds. Learn more about these benefits below.
Potential savings on commission fees
The biggest perk to selling your own home is the savings you'll net on agent commissions. With most sellers paying 5 to 6% of the sale price in commissions, even a modestly priced house can result in serious savings.
On a $300,000 home, for example, skipping the agent could save you around $18,000. If your home were at the current national median (about $418,000), it'd come to over $25,000 in savings.
Complete control over the selling process
Another benefit is how much control a FSBO gives you. You have say over who can tour your home, when to schedule showings, how much you'll negotiate, and every other aspect of your home sale. There's no answering to an agent (or their broker), and you can manage the sale in a way that fits your household's needs and time line best.
Challenges of FSBO
FSBOs can be smart for some homeowners, but they're not right for everyone. In some cases, they could make it harder to sell your home or pose other issues.
Marketing and exposure limitations
While real estate commissions can seem expensive, good agents and brokers will earn that money. After all, most homeowners don't have the time, interest, or expertise to market a property or manage the finer details of a large-scale transaction.
"At the beginning, the biggest challenge is getting your listing seen, and at the end, it's correctly completing all of the paperwork," says Mazzara. "An FSBO home won't be in the multiple listing service, meaning it won't be as widely seen. "
Ultimately, this could mean your home sale takes longer. It could also mean lowering your home price to get noticed by buyers.
Navigating legal and procedural aspects
Real estate transactions are no small task. They require iron-clad legal contracts and involve hundreds of thousands of dollars in most cases. These just aren't items the typical homeowner is experienced in.
As Mazzara explains, "Getting the paperwork right is a challenge for someone without the proper training."
There are also potential legal consequences.
"A mistake could lead to a lawsuit," says Mazzara. "Anything you saved from not hiring an agent might be more than canceled out by the expense of hiring a lawyer.
Steps to a successful FSBO sale
An FSBO transaction works the same way as a traditional real estate sale, except the seller isn't represented by a real estate listing agent. Instead, the seller is responsible for a fairly long list of tasks that an agent traditionally handles. FSBOs can work well for sellers who have the time and experience to list on their own.
Here's a quick rundown of seller tasks in an FSBO listing:
Preparing your home for sale
Start by staging the home for sale. Good staging makes your home stand out and helps potential buyers picture themselves in the space.
Be sure to clean, declutter, stash personal items, tidy the landscaping, and make the house look bright. Also, tackle minor repairs, update worn hardware, and hide valuables or irreplaceable heirlooms.
Setting the right price
Next, determine your asking price. Setting the right asking price is essential: too high, and you won't attract buyers; too low, and you leave money on the table. "Most FSBOs overprice their home," says Kristina Morales, Realtor at eXp Realty. "As a result, the property will sit on the market and likely sell at a price much lower than it would have had it been priced properly at the start."
To set a reasonable asking price, sellers can research recently sold homes in the area using public records, ask a real estate friend for a comparative market analysis, hire an appraiser, or check out real estate websites for estimates.
Marketing your property effectively
Next, it's time to advertise and market the home. Most buyers look for houses online, so having professional photos taken of your home, writing an engaging listing description, and making a video tour of the home are some of the best marketing strategies for FSBO properties you can focus on. Several FSBO websites also exist, and real estate aggregators like Zillow and Trulia allow sellers to list their homes for free. You can also get the word out with street signs, Craigslist ads, Facebook posts, local magazines, and newspapers.
Another part of the process that FSBO sellers will be responsible for is scheduling viewings of the home. And showings can be tricky, especially if pets or small children are at home. Virtual tours are an option, but serious buyers (and inspectors) will eventually need to see the house in person. Try to be as accommodating as possible: the more people who view the home, the better the odds of finding a buyer.
Legal considerations
Aside from the logistical and financial considerations that come with FSBO sales, you'll also need to think about the legal side of things, such as:
Understanding contracts and disclosures
FSBO sellers have to prepare paperwork, such as the sales contract and residential property disclosure form. Depending on the complexity of the sale, it might make sense to work with an attorney.
"Unless a seller is a licensed agent or broker, an FSBO seller may not be aware of all the disclosures that are required to provide a buyer nor be aware of the local rules and regulations," says Morales. "This may open a seller to litigation risk."
The seller also prepares the deed (e.g., warranty or quitclaim), signs it, and has it notarized in front of witnesses. The deed is the legal document that transfers ownership of the property to the buyer.
Finally, you'll have to close the sale and sign documents transferring property ownership, too.
Compliance with real estate laws
Along the way, you'll need to be sure you're adhering to real estate laws in your state. Fair Housing laws come into play as well, and these will impact how you can market your home, as well as how you can interact with buyers and other interested parties. Failing to follow these laws could mean facing litigation.
If anything, you may want to contact an attorney who can offer some legal tips for FSBO sellers. This can help you brush up on what laws and regulations you'll need to comply with before starting your FSBO journey.
Tips for FSBO sellers
FSBOs can be challenging, but there are strategies that can help ease the burden. Consider the following tips if you're selling your home without an agent.
Utilizing online FSBO platforms
You might not be able to list your home on the Multiple Listing Service without an agent, but there are FSBO-dedicated websites you can use to market and sell your home. Many of these also include features that help you schedule and manage showings, as well as walk you through various steps of the transaction.
Hiring professionals for specific tasks
Just because you're not using an agent doesn't mean you can't use other professional services for FSBO transactions.
A professional stager can be a good way to get your home looking marketable, while an attorney can help dot all the I's and cross all the T's, legally speaking. A real estate attorney can also help you in navigating FSBO challenges effectively as they crop up.
When to consider hiring a real estate agent
Real estate agents come with a fee, but there may still be scenarios when using a pro's service is the smart way to go. To determine if you should, take the following two steps.
Evaluating your ability to manage the sale
Be honest with yourself about what you are and aren't capable of when it comes to your home sale. Are you well-versed enough in real estate law to draw up the contract and ensure you're in compliance with Fair Housing rules? Do you feel comfortable negotiating with buyers? Do you have the time and mental bandwidth to market the property, set up showings, and field calls from buyers and their agents?
If you're tight on time, energy, or knowledge, you may be best served by calling in an agent. They'll cost you in commissions, of course, but they could also lighten the loan and help you sell your home faster and for more cash.
Recognizing the value of professional expertise
You might be saving on commission with FSBO sales, but real estate agents know the ins and outs of these transactions and have the benefit of experience on their side. They can use prior deals to help guide yours, and they have the tools, strategies, and connections to market a property and maximize your profits.
While it can be hard to stomach the hefty commissions these professionals come with, they can be worth it for some homeowners — especially those without much time or real-estate know-how on their hands.
You should also keep in mind: There are flat-fee agents and those who offer reduced commissions, particularly for sellers. Some even offer a la carte services. These may be ways to get professional help without paying too much cash.
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FAQs
Can I save money by selling my home FSBO?
Yes, one of the main advantages of FSBO is saving on real estate agent commission fees, which can significantly reduce the cost of selling your home.
What are the main challenges I might face selling FSBO?
Sellers often have a hard time marketing their properties, negotiating with buyers, and navigating the legal and financial aspects of these transactions without professional assistance.
How do I determine the right price for my FSBO property?
Conducting a comparative market analysis (CMA) of similar properties and recent home sales in your area to get an idea of what would make a competitive price. Online tools and local real estate listings are useful resources for this research.
Should I hire a real estate lawyer for my FSBO sale?
While not always mandatory, consulting with a real estate lawyer can help ensure that all legal documents are correctly handled and that the sale complies with local laws and regulations.
What resources can help me market my FSBO property?
Online FSBO listing sites, social media platforms, and local advertising can be effective ways to reach potential buyers. High-quality photos, video tours, and detailed property descriptions are also essential.
Jean Folger has 15+ years of experience as a financial writer covering real estate, investing, active trading, retirement planning, and retiring abroad. She is co-founder of PowerZone Trading, a company that has provided programming, consulting, and strategy development services to active traders and investors since 2004. Previously, Jean was a real estate broker, an English teacher, and a trip leader for an adventure travel company.
Aly J. Yale is a writer and editor with more than 10 years of experience covering personal finance topics including mortgages and real estate. She contributes to Personal Finance Insider’s mortgages and loans coverage.ExperienceAly began her journalism career as reporter, and later an editor, for several neighborhood sections of the Dallas Morning News.Her work has been published in several national publications, including Bankrate, CBS, Forbes, Fortune, Money, Newsweek, US News and World Report, the Wall Street Journal, and Yahoo Finance. She’s also contributed to a variety of mortgage and real-estate publications, such as The Balance, Builder Magazine, Housingwire, MReport, and The Mortgage Reports.Her favorite personal finance tip is to schedule regular check-ins to make sure your credit cards, savings accounts, and other financial vehicles still align with your budget and financial goals. She is a member of the National Association of Real Estate Editors (NAREE).ExpertiseAly’s areas of personal finance expertise include:
- Mortgages
- Loans
- Real estate
- Insurance
EducationAly is a graduate of Texas Christian University, where she received a bachelor’s degree in radio/TV/film and news-editorial journalism.
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