Real estate agents charge around 6 percent commission on a home’s sale price. So when you want to make more money on a sale, the idea to sell your house FSBO (for sale by owner) may sound like a good plan.
When you do the math, that means you would save around $24,000 on the sale of a $400,000 home. So even if you spent around $1000 for placing your own ads, printing your own brochures, and putting up your own lawn signs, you’d still end up with a substantial amount of savings by doing all the work yourself. That alone can serve as a strong motivating factor for selling your house yourself.
While the prospect of getting the commission amount for yourself sounds enticing, you should also know what you’re getting into. Doing things on your own entails challenges of its own, and here are a few things you should expect:
1) To sell your house FSBO takes A LOT of work
Selling a house takes a lot of work. That’s exactly why people make actual careers out of it. You will need more than just exerting time and effort; you’ll also need different kinds of skills ranging from selling and negotiating, to interior decorating and staging your home for visitors to see. You’ll also need to write your own listing, take your own photos, reply to inquiries and give your own tours to prospects.
If this is your first time to sell your house FSBO, you’ll need to learn the ropes and familiarize yourself with the process of selling.
2) You won’t have access to as many buyers
Serious home buyers usually work with real estate agents to help them find a home. In scenarios like this, the commission normally gets split between the agents of the seller and the buyer. This relationship means that many seller’s agents and buyer’s agents work closely together, providing an automatic pool of buyers for individuals who work with agents. Not having any commission on the table reduces your chances of tapping into this potential pool.
If this is the case, you can consider a compromise solution. You can indicate in your online ads that you’re willing to work with buyer’s agents, and are willing to pay half of the commission. You might still shell out money in the end, but at least only half of the entire amount allotted for commission.
3) You’ll have to deal with bargain hunters (and not so serious buyers)
One trouble when you sell your house FSBO is that buyers are more likely to seek a substantial discount on the listing price. The knowledge that no agents are involved will make them more inclined to feel that they should benefit from the situation also.
How you can handle this will depend on you. If you think your home is already a good deal for its price – then stick to your original amount. However, if your house has been on the market for some time and you’re just delighted to have an offer – you may want to compromise and make a deal by splitting the commissions savings.
On top of this, you’ll also have to weed out unqualified and uninterested buyers yourself. Agents have a knack at determining between individuals who are just curious and those who are actually interested and qualified. Without someone to do this, you may waste end up wasting your time or even get distracted from actual serious buyers.
4) You won’t have access to advice… and tools
A real estate agent brings many benefits to the table – the most important of which is their expertise in the selling process. If you sell your house FSBO, you may miss out on important inputs, such as setting your listing price right.
While online price calculators are helpful, they may not give you the accurate amount. Algorithms are fine, but they don’t take into account aspects like recent renovations, curb appeal, landscaping and the like. In fact, even with the presence of software and applications – studies still show that those who sell their homes by themselves are more likely to under-price their property – often by as much as 15%!
The good thing is that you can still work your way around this by hiring an appraiser to value your house. You’ll most likely spend around $250 to $500 for their service, but you’ll at least have a better idea that you’ll price your house correctly.
Aside from getting your price right, you’ll also need to deal with paperwork. There are many templates for contracts available online, but you will want a contract that’s drafted to suit your specific agreements. Hiring a lawyer can set you back about $1000 to $3000, depending on where you live.
To sell your house FSBO does have its own pros and cons. The upside – you’ll save a substantial amount of money, even after taking out expenses incurred during the selling process. The downside, there are many challenges that come along with selling FSBO, and you may end up wasting your time without closing a real deal.
The reality is – you can sell your house FSBO, but – it is not for everyone.
If you feel that the challenges mentioned above are things you can deal with, go ahead and give it a try. If you are really serious about selling and have the time and skill for it, I suggest that you try to sell your house FSBO for the first six months. If after that amount of time you feel that you aren’t progressing or are facing difficulties, then you might want to reconsider and talk to a real estate agent or selling your house to a cash buyer.