Thinking about entering the FSBO (For Sale By Owner) waters? In a tough real estate market, some homeowners look to cut costs by selling a home without the help of a real estate agent. Going the FSBO route can save you thousands of dollars if you can say yes to the question: “Should you FSBO?”
Should You FSBO? Some Questions To Consider
Are you willing to get your hands dirty? The FSBO process requires the seller to assume the workload of a seller’s agent. This includes researching the right price, tracking down (and filling out) all of the proper forms and dealing with the constant phone calls and communications required to sell your home. Make no mistake: a FSBO effort will take a lot of time and effort on your part with no guarantee of success.
Will you settle for the right price—or less? The biggest hurdle to selling your home on your own is setting a realistic and competitive price. Your FSBO project will have the best success if you price your home close to comparable homes (called comps) in your area. You can find comps online at sites like Zillow.com or by scouring public sales records. As an alternative, you could pay for a professional appraisal. Once you’ve established a competitive price, be prepared to receive offers below that price as most buyers equate FSBO with a bargain or distressed property.
Are you comfortable with still paying a commission? Even though you don’t have an agent, you may still end up paying a commission. Traditionally, the 6% or 7% commission on a home sale is split between the seller and buyer’s agents. You may not have an agent, but your buyer might. If this is the case, you’ll still be expected to honor the commission for the buyer’s agent. Refusing to pay this commission will deplete you pool of prospective buyers.
Ready to sell, Sell, SELL? A large part of an agent’s commission goes toward marketing your home. As you walk the FSBO path, you’ll need to assume the mantle of property promoter. This includes taking quality photos of your home, producing signs, listing your home in print ads and online and keeping your home in a “show ready” state at all times. Although FSBO sellers can’t directly list their homes in the realtor’s Multiple Listing Service (MLS) database, there are firms that will place your listing for a flat fee.
Can you gather a posse? FSBO doesn’t mean going it completely alone. You’ll need to hire (and manage) a real estate attorney, a home inspector and contractors for repairs. This means you’ll have to add personnel manager to your list of FSBO job skills.
Will you separate the wheat from the chaff? You’ll need to screen potential buyers to be sure that they are capable of getting a mortgage before you enter into negations or sign a contract. Don’t think of it as pushy, think of it as prudent and your FSBO effort will be less frustrating. Be sure to insist on a pre-approval letter from a recognized lender before you take your home off the market or proceed with any contract discussions.