Is the FSBO Process Right for You?

Jun 25, 2011
Susan Barton

For Sale By Owner - 123RF

Many home sellers are forgoing realtor's services when listing their homes. While it can be confusing, saving thousands may be worth the FSBO listing.

In a previous article I stated that home sellers should leave the selling to professional real estate agents. However, I realized some homeowners might still be interested in learning how to save the realtor’s commission fee by listing their own homes. The major benefit of listing your home FSBO, or “For Sale By Owner”, is that it can save you thousands of dollars. This alone might just be enough motivation for a homeowner to consider going it alone.

Listing your house yourself can save thousands

As mentioned above, the primary reason you may wish to list your house as FSBO is because real estate brokers usually charge a commission rate of between 2% and 10%, with 6% being about average. This could potentially amount to thousands of your precious home equity dollars.

Hiring a home inspector

FSBOs still need to be inspected, since buyers will be doing an inspection anyway and you’ll want to be prepared for whatever they find. The inspector’s findings are also helpful when it comes time to fill out a property disclosure statement. A home inspector will thoroughly check the condition of your home and make suggestions for possible repairs. Hiring a home inspector who belongs to a professional organization such as NACHI, ASHI or NIBI is not necessary, but is highly advised. A home inspector does not estimate the value of a house.

Photographing your home

After you’ve cleaned, de-cluttered and completed any necessary repairs and painting in and around your home you will need to take some good quality pictures. You could hire a professional real estate photographer, but since you’re trying to save money, you can do this yourself. Take plenty of digital pictures of the interior and exterior of your home at different angles. Staging your home is important also. Arrange furniture, etc. in a pleasing composition. After you’ve uploaded your photos to your computer you can pick the most flattering and attractive pictures.

Determine your selling price

Many homeowners have a difficult time taking the emotional factor out of their pricing and for this reason, some FSBO homes do not sell easily. You can hire a real estate appraiser. The cost for this service depends on square footage, location and construction, but will usually run between $300 and $600 for an average-sized home. If you’re having a difficult time being objective about the true value of your home, this is money well spent. If you price your house too high it won’t sell, if you price it too low you’ll be losing money. But again, if you’re trying to save money you can estimate your home’s value by researching what homes in your area are selling for and by checking with your county assessor’s office. Take in to consideration any improvements you’ve made, but be realistic. Unfortunately many improvements are not recouped when a home is sold. List your home at a competitive price, but leave some room for negotiation.

MLS listings

MLS or “Multiple Listing Services” are used by real estate brokers to locate properties for their clients. Having your home listed on a MLS service greatly increases your home’s visibility. The process is fairly easy. You fill out an online form, provide some property information and upload your photos. However, it’s not free. Most of these listing services charge a flat fee, but can still be quite a bit less than paying a realtor’s commission.

Other types of advertising

If you don’t want to spend the money to list your house with a MLS service you can advertise your home on free classifieds websites, or in newspapers. There are many free home listings sites to choose from. It’s easy to submit your home on these sites and is similar to listing with an MLS service. There are also literally hundreds of online free classifieds websites available. Submitting your ad to these websites can greatly increase your chances of selling your home.

Still more work to be done

You may think all the hard work is done but you’re far from finished. You’ll most likely be showing your house at odd hours and on weekends in order to accommodate the buyer’s schedule. And you’ll need to be available on short notice. Unfortunately, there’s no real way to weed out the lookie-loos from the serious buyers.

Legal responsibilities

When you’ve found a buyer, the law states you must supply a disclosure notice which details all problems and defects you are aware of. Here is a sample copy of what a disclosure statement looks like. When filling out your disclosure you should refer to your home inspector’s findings. Remember that your disclosure must include all known issues with your house. A savvy buyer will have their own inspector who will undoubtedly find problems if they exist. Failing to disclose issues will reflect poorly on you as a seller.

In most states the closing is handled by the seller's attorney, in others, the lender's attorney takes care of the closing. A growing number of states specify that an escrow agent or title company must manage the closing. The seller and buyer rarely have their own attorneys when an escrow agent or title company officer acts as the closing attorney.

Hard work can pay off

As you can see, selling your own home can be complicated and confusing for the first time seller. But if you’re determined to do so it can be done. With some hard work and determination it’s possible to go from homeowner to home seller in a reasonable amount of time.