If you're planning to sell your house, you might consider listing it for sale by owner, or “FSBO.” Selling FSBO means not using a real estate agent to market your home and negotiate on your behalf. Although you can save money this way, FSBO might be trickier than you expect. In this guide, we'll go over everything you need to know.
When you sell your home by owner, you're in charge of everything from setting the price and marketing the property to filling out the paperwork and negotiating with the buyer. You'll have to do practically all of the heavy lifting of the sale yourself, but in return, you won’t have to pay a listing agent.
Done correctly, selling your house for sale by owner can save you thousands of dollars and be a rewarding experience. Done incorrectly, going the FSBO route could actually lose you money and cause you a great deal of frustration.
In this comprehensive guide to selling your house by owner in 2020, we'll take a look at what FSBO entails, point out what paperwork you'll need to complete, and give you tips for making the process as smooth and potentially profitable as possible.
JUMP TO SECTION
In a typical home sale, there are two agents involved: the “listing agent” who helps you list and market your home for sale, and a “buyer’s agent” who brings one of their clients to purchase the home.
When you sell your house FSBO, you do the work of a listing agent yourself — cutting one agent (and their associated fees!) out of the process.
Selling FSBO can help you save thousands of dollars on the listing agent commission. Based on the nationwide average commission rate of 2.79%, if you sold a home for $200,000, you would have to pay your agent $5,580.
However, most FSBO sellers are still on the hook to pay a buyer’s agent commission.
According to the National Association of Realtors, 89% of buyers used an agent in 2018. If you don’t offer a buyer’s agent commission, those buyers will have to pay their agent out of pocket — limiting their ability to buy your home.
If you don’t offer a buyer’s agent commission, you may also see less foot traffic to your listing. That commission is an incentive for buyer’s agents to bring their clients to see your home, and you don’t want to be at the bottom of the list when they’re filling up their schedule with showings.
Buyer’s agent commission isn’t set in stone — it’s completely negotiable. But when planning your sale by owner, it’s a good idea to research the typical commission rates in your area and consider advertising a competitive buyer’s agent commission in your listing to get as much foot traffic as possible.
Selling your home by owner is more complicated than just sticking a "For Sale" sign in your front yard. Since you'll basically be competing with professional listing agents for prospective buyers' attention and money, you need to start thinking like a pro.
Here's what you'll have to do to sell your house the right way. Remember, although FSBO means you'll save thousands of dollars on commission costs, errors can cost you time and money — and your savings can be completely erased if your home sells for less than its full fair market value.
A key to getting the best price for your home is making it look as perfect as possible. Here are some tips.
Start with a thorough decluttering.
There are two goals for decluttering:
- Help buyers imagine themselves at home. That means removing personal items like your own knickknacks, family photographs, and anything else that would remind them they're in someone else's house.
- Show off the home's storage potential. Get the attic, basement, closets, and cabinets as empty as possible. And don't forget the garage — according to Kiplinger, 85% of homebuyers have a garage storage space on their wishlist.
Once you've decluttered, you must give the house a thorough cleaning. A little elbow grease can go a long way, and a spotless house can make up for the lack of brand-new appliances and fixtures. Shampoo the carpets, scrub the kitchen, and replace the grody bathtub caulk. It's also essential to make sure the windows are sparkling clean, so they let in lots of natural light.
Get started on that honey-do list as soon as possible. Cracked tile, peeling paint, a broken garbage disposal — these are all things that can diminish the appeal and value of your house. You want buyers to feel like your home is move-in ready.
Also, keep in mind that a home inspection will reveal any flaws in the house. Take care of them now, before they hinder the sale.
But before you roll up your sleeves, it’s a good idea to find a few licensed contractors and get bids on the repairs. Then you can decide which repairs are most cost-effective to handle yourself.
You want buyers to see the potential of every room. Make your home feel spacious and comfortable, but try to subdue your specific decorating taste. The best way to do this is by hiring a professional home stager.
A stager will design a look for your interiors and lend you the furniture and decorations to achieve it. However, they don't come cheap. According to HomeAdvisor, the national average cost — including the design consultation and furniture rental — is $1,121.
Instead of hiring a professional stager, you can try staging your house yourself. Go online to find interior decorating ideas that are neutral and suit your home. A fresh coat of paint can go a long way here, too.
Boost your home's curb appeal. Clean up the yard and consider planting some flowers. You want to impress buyers from the moment they pull up to your home.
The trees in your yard need some love, too. Research by the Vibrant Cities Lab found that well-maintained front-yard landscaping involving trees boosted a home's sale price by 3-5%, on average.
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Everyone wants to sell their home for the most money possible. However, when you sell a house for sale by owner, you run the risk of either over- or underpricing.
A house that is priced too high will sit on the market for a long time. You'll lose money in carrying costs such as utility bills and property taxes while waiting for it to sell. Even worse, when buyers see a home sitting on the market too long, they assume something’s wrong with it. You may have a hard time regaining foot traffic even if you cut the price.
On the flip side, FSBOs can also be prone to underpricing. Recent studies show that homes sold by owner typically sell for about 6% less than those listed with licensed real estate agents — meaning that these sellers came out at a loss even after saving on agent fees. This price difference isn’t because FSBO homes are inherently worth less. It’s because many sellers just don’t price their homes high enough.
Licensed real estate agents have the training and experience to market your home at the right price to the right buyers.
If you want to sell your home by owner, you need to know how to price it correctly and fairly. That means finding a listing price that is neither too high nor too low for your market.
When sellers hire a real estate agent to sell your home, they’ll complete what’s known as a comparative market analysis, or CMA. This analysis examines comparable sales — sales of houses similar to yours and in the same neighborhood.
If you’re selling your home FSBO, you will probably be able to find an agent who will run a CMA for you without listing your house. In fact, it’s a good idea to request CMAs from a couple of different agents and see where they differ. Agents will be happy to offer a CMA in the hopes of winning your business if you ultimately don’t sell FSBO.
Another simple way you can get an idea of a fair price yourself is by looking at comparable listings in your neighborhood. A good rule of thumb is to look on websites like Zillow for active listings priced within $50,000 of what you think your house is worth. Then compare how your home’s features stack up.
- Does your house have the same number of bedrooms and bathrooms?
- Do you have less or more square footage?
- Has your house had any major updates or renovations in recent years?
- Is your home in a better or worse school district?
Honestly answering these questions will give you an idea of what you should charge.
Still, trouble with pricing is one of the biggest reasons why people switch from FSBO to an agent, according to Clever CEO Ben Mizes. "FSBO sellers often overprice their home and need an agent to help price it correctly."
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CMA vs. Appraisal: What's the Difference?
CMAs and appraisals are both professional estimates of a home’s value, but they fulfill very different functions in the home selling process.
A licensed real estate agent performs a CMA to recommend the best price at which a homeowner should list their property. To prepare a CMA, the agent takes into account both active and closed sales (and sometimes even pending and expired listings, too) for a holistic picture of the local market.
Usually, realtors perform CMAs free of charge.
On the other hand, an appraisal is typically conducted by a licensed appraiser to help a bank determine how much to lend for a mortgage. It's concerned mostly with the condition of the property and the final prices for sold homes in the area.
Banks won’t lend a mortgage for more than the appraised amount. This can cause your sale to fall through unless you adjust your price accordingly or the buyer agrees to cover the difference out of pocket.
Licensed and/or certified appraisers carry out appraisals, and they’re not free. Expect to pay $250-$450 for this service.
If you're selling FSBO, you can hire an appraiser, but keep in mind that it won't give you as complete a pricing picture as a CMA. It might also lead you to underprice your home.
Once you have your house ready to sell, you need to attract buyers.
Remember, you’re competing with professional real estate agents who have lots of experience and marketing resources. Don’t expect a yard sign and a Craigslist ad to cut it!
In fact, the NAR found that, in 2018, 52% of buyers found their homes via the internet, compared to 6% who were attracted by a yard sign.
To successfully reach prospective buyers, you'll need to work hard and spend some money to market your home on the internet. Here are some ideas to consider.
Use a professional photographer
Attractive photos are key to selling your house. Most buyers begin their home search online. And according to the National Association of Realtors, 87% of buyers who used the internet found photos about properties for sale very useful.
Your safest bet is to hire a professional photographer (typically $150-$500) to take photos of your house and yard. Look specifically for someone with experience taking photos for real estate — they’ll know how to do proper lighting and avoid beginner mistakes like leaving a cabinet open in the background.
Write an effective listing description
After photographs, homebuyers rely on listing descriptions when shopping around. The National Association of Realtors found that 85% of people who used the internet to find a home in 2018 relied on detailed information about properties.
To write a compelling listing description, focus on information that the buyer could get only from the owner or a neighborhood local. Does your home have beautiful views? Are the neighbors friendly, and is the street safe for kids? Do you live in an area with great schools or great restaurants?
Write with a buyer in mind — try to picture the buyers who would be interested in your home, and highlight features you think they will find exciting.
Last, you need to decide whether or not to offer a buyer’s agent commission. If you include a commission offering in your listing description, you’ll likely see more foot traffic from interested buyers — but of course, that foot traffic may come at a price!
List your home for sale
One of the most effective marketing strategies for selling a home is by listing it online. You can use a site such as Zillow or Trulia, both of which allow FSBO sellers to post listings free of charge. You can also advertise for free on Craigslist or any of the many FSBO listing websites on the internet.
Before listing your home on any of these sites, make sure that you carefully read their rules. Each site has different regulations as to how many photos you can upload and how long a listing will remain live, for example.
Do You Need to Hold an Open House?
The jury's out on whether or not open houses are worth the effort. Proponents argue that they're good for letting buyers who have already had a private showing take a second look. Opponents say they just attract nosy neighbors.
If you do decide to hold an open house, make sure the home is staged and spotlessly clean beforehand. Keep all valuables locked and out of sight, too. It can be helpful to station a friend or family member on each floor to answer questions and keep an eye on visitors.
It's also important to gather the names and contact information of the people who come in. You just might strike up a conversation with someone who'd love to buy your home.
Many FSBO sellers will tell you that the worst part of the sale process is handling the massive amount of phone calls they inevitably receive. As soon as you list your home, your phone will start ringing — and not just from prospective buyers.
Along with calls from realtors representing folks looking to buy property, you’ll also get calls (potentially hundreds, in a larger market) from real estate agents trying to persuade you to hire them to list and sell your house.
Filtering out these agents — and the tire-kickers who aren’t serious about buying your home — can become a job in itself.
Politely turn down prospecting agents (unless you decide going with a licensed realtor is a better idea for you), and make sure you qualify the buyers who call.
Ask prospective buyers questions to determine:
- Are they serious about buying your property?
- Have they been pre-approved for financing if they’re planning to use a mortgage?
- Will the buyers be able to close the deal themselves? Or are they wholesalers who will transfer the sale contract to someone else for more money?
Once you've found a serious buyer, now comes the fun part: negotiation. If you're conducting the home sale directly with a buyer, you'll have to negotiate with them. If your buyer uses an agent, you'll be dealing with the agent.
Remember that price isn’t everything. When negotiating an offer, you’ll also need to consider contingencies — conditions under which the buyer can renegotiate the sale or back out altogether. These conditions might include the buyer failing to qualify for a mortgage, the results of an appraisal or home inspection, or whether the buyer is able to sell their current home in time.
As a seller, you can also request earnest money, also known as “good faith money” — a deposit the buyer pays upfront (usually to a third party, such as their title company) to show they’re serious about the deal. If the buyer backs out of the sale under a condition not covered by a contingency, you’re entitled to keep their earnest money.
The closing date is also another matter up for negotiation. This is the date at which you’ll legally transfer your property to the buyer. All parties must agree to the intended closing date, although it can change due to holdups with the buyer’s mortgage lender, etc.
When deciding on the terms of the sale, a good rule of thumb is to avoid more than three rounds of negotiations — you don’t want your buyer to get burnt out.
Another useful strategy: any time you concede to something the buyer wants, ask for something in exchange, even if it’s something small. Your buyer will quickly learn not to make small asks!
Above all, it's essential to keep your emotions out of it. This is where FSBO becomes particularly tricky; after all, it's your home, and you have strong feelings about its value! Realtors know the best strategies for making counteroffers and how to handle concession requests. Also, keep in mind that, if you hire a realtor, they want to get the highest possible price, too, since they're working on commission.
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However, if you want agents to bring buyers in, you should strongly consider listing on the local MLS (multiple listing service). Real estate websites pull listings from the MLS, so it's the best way to get your home to show up on the internet.
But there's the catch: only licensed real estate agents can post listings on the MLS. You can get around this by paying a listing service a flat fee to post your listing on the MLS.
Here’s some key information about flat-fee MLS services:
- Expect to pay anywhere between $99 and $500 for a package.
- The terms of how long your property will be listed will vary per service and package.
- Packages can include features such as photo uploads, downloadable legal forms, pricing assistance, etc.
Keep in mind that MLSs are regional. Make sure that the service you’re using includes your area.
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A house sale requires a ton of paperwork. When you're selling your home FSBO, you're in charge of it all!
The specific paperwork you need to fill out varies by state. At the very least, you'll need a written purchase and sale agreement. This document contains every detail of the deal. You'll need to list not only the purchase price and the buyer's financing details but also exactly what fixtures and appliances you’re including in the sale.
You'll also have to fill out and sign a disclosure statement that contains all of the known flaws of the property.
If you're not using a realtor, we strongly recommend consulting a real estate attorney to help you make sure your paperwork is error-free. Inaccuracies can result in potential legal and financial repercussions.
However, keep in mind that attorney fees can add up to $500-$1,500. For potentially just $3,000, you can use a discount real estate agent who will handle not only all of the complicated paperwork but also all the marketing and negotiations on your behalf as well.
The Clever team has put together in-depth guides to selling houses FSBO in each of the 50 states and Washington, D.C. Consult the guide appropriate for you to find out precisely what paperwork you must complete.
As you can probably tell, selling your home FSBO is no easy task. In fact, it's probably more expensive than you think when you consider all of the marketing costs, attorney fees, and agent commissions you'd have to pay anyway. That's not to mention all of the hours you'll have to put in preparing your house for the market and negotiating a sale.
If the main reason you're considering FSBO is to save money, there are a few other home-selling approaches you may want to consider as well.
One option is to use a discount real estate broker such as Clever. Clever is a free service that has negotiated discount rates with pre-vetted full-service realtors. For a fraction of the typical listing agent's fee, you can get the same services you'd expect from a top realtor, including help with pricing, marketing, contracts, negotiations, and closing.
Clever Partner Agents charge a flat fee of only $3,000. Consider that FSBO sellers can expect to pay as much as $2,800 for marketing and legal services. For only $200 more, an agent could take care of all of that work for you.
Here's how much you can save using Clever, versus a traditional agent:
Sell for more than FSBO, while saving thousands on fees.
Get in touch for a no-obligation consultation.
Selling a home by owner requires a lot of time, skill, and patience. It also requires a great deal of attention to detail because a small mistake could end up costing you big time.
If you want to try FSBO, there are a few things to keep in mind:
- Don't cut corners: Don't try to race through all of the steps required to sell a house the right way and for the best price. Make sure to do all of your due diligence and homework and that you’ve correctly completed all of the required paperwork.
- Think like a realtor: When you sell a house FSBO, you're competing with all of the top agents on the market. Start thinking like one! Map out a marketing strategy that includes a dynamic listing description and amazing photographs. Deal with prospective buyers and their agents in a professional manner. And be prepared to negotiate.
- Invest in an MLS listing: If you want buyers to find your home, don't skimp on the MLS listing. For a flat fee, you can hire an agent to handle this for you. Also, don't forget to offer incentivization for buyer's agents to show your home to their clients.
- Call a pro: Even if you're determined to try FSBO, that doesn't mean you can't solicit some upfront advice from a real estate professional. Clever can connect you with local, experienced realtors, so you can compare marketing plans — no obligation.
Should I sell my house for sale by owner?
Selling a house by owner is a good fit for many homeowners who are looking to save money on realtor commissions. You should consider the FSBO route if you:
- Understand and are comfortable with the home-selling process
- Have time to properly market and show your house
- Are familiar with the required legal paperwork (or have an attorney to help you)
In addition, selling a house by owner can be a good idea if you already have a buyer lined up, are selling a manufactured/mobile home, are in a hot seller's market where you can dictate your terms of sale, or have no time constraints for selling your home.
Is for sale by owner worth it?
If you don't have a buyer already lined up, FSBO can be time-consuming and challenging. After all, you'll be doing all the work of a licensed real estate agent -- including marketing and negotiating. However, if you make all of the right moves, you may find that selling your home for sale by owner can save you thousands of dollars and be a rewarding experience.
Are there closing costs on homes for sale by owner?
Although you'll save on a listing agent's commission, you still may need to pay closing costs such as the buyer's agent's commission, attorney and escrow fees, and taxes. However, typically, these costs will come out of the sale price, so there's no need to bring a checkbook to closing.
What paperwork do you need to sell a house?
Every state has different paperwork requirements for home sellers. At the very least, you'll need to complete a written purchase and sale agreement.