Selling a house can be a stressful undertaking. A lot has to go right to end up with that perfect buyer, especially if you are trying to sell fast. It is also an expensive endeavor, with sellers responsible for most of fees once the deal is done, including commission for both real estate agents involved with the sale.

Total closing costs for sellers can range from 6 percent to 10 percent of the home’s sale price, and that does not even factor in additional costs like staging the property and moving after it is sold. In an effort to cut costs and pocket as much of the sale price as possible, many homeowners opt for a For Sale by Owner (also referred to as FSBO).

At face value, selling your own home seems like a cheaper route than having to pay agent commissions. But in actuality, selling a home is not exactly a simple process that everyone can do on their own successfully. For many sellers, For Sale by Owner can end up being a waste of both time and money, and it can even have legal consequences.


What Is For Sale By Owner?

For Sale By Owner, often abbreviated as FSBO, is when a homeowner lists their home without the assistance of a professional real estate agent. While it is mostly self-explanatory, there are a few nuances to For Sale by Owner that any seller needs to know before pursuing it. If you are selling your home on your own, that means that you are bypassing the commission fees but also taking on the process from start to finish, including pricing, staging, listing, negotiating, drawing up paperwork and closing.

Selling by owner is a huge commitment. You will be responsible for researching comps in your neighborhood and coming up with a marketable price for your property, as well as all of the marketing, paperwork, and legal compliance that goes in to selling a home. Making a mistake in any of these areas can lead to both financial and legal repercussions that could have been avoided with the help of a licensed and experienced agent.

While most FSBO sellers are trying to keep more of their profit in their pocket, it is important to note that a local real estate agent likely has more expertise in pricing strategy, so it is possible that the net profit you earn from a FSBO could end up being lower than if you had listed with an agent.


Benefits of For Sale By Owner


Thanks to emerging disruptive companies and a new type of property-listing platform, the notion that you can be your own real estate agent is fast becoming a viable option for someone selling or renting a house.


1. Avoid Paying Listing Agent Commission

The most common reason to FSBO is to avoid paying commissions, which are fees paid to agents based on the final selling price of the home. Commissions average between 4% to 6% of the home’s purchase price and are usually paid by the seller from the proceeds of the sale. Since there is no listing agent, the commission paid out is usually half of the traditional six percent commission because there is only one agent involved. If a for sale by owner wishes to avoid paying the commission directly, the buyer will be required to pay the agent out of pocket.


2. You Have Complete Control Over the Listing Price

Without an agent, you are the sole decision maker when it comes to your listing price. You will need to make sure you put your emotional connection to your home aside and look at your home as an asset. Do your research to see how your property stacks up against other similar homes nearby. You might want to hire an appraiser to give you a real market value that includes comps.


3. Manage the Schedule of Showings and Open Houses

When you are at the showing phase of your sale, you will be asked to leave your house for last minute showings and all-day weekend open houses. Not to mention having to keep your home pristine all day, every day. This is a lot of work and stress. When you are selling your own home, you get to decide when you want to show your home. And, you will not have to wait for your agent to be available to do a showing for you.


4. You Are Motivated to Sell for Top Dollar

Since your finances are on the line, you are more likely to invest the time and energy to advertise your home in the best way possible. FSBO sellers can advertise online using sites dedicated just to real estate sold by owners. There are also some online services that can get your home listed on the MLS, usually for a flat fee under $1,000. Do not forget to get professional photos, signage, and print ads. And use your social media accounts to advertise your home.


5. You Know the Neighborhood

An agent can speak to potential buyers about the home itself, but what it is like to live in the community will be better portrayed by an actual resident. After all, you know your neighborhood best. Sharing that knowledge can be a huge selling point with buyers.


Challenges of For Sale By Owner


For Sale By Owner websites and advertisements make selling your own home sound easy but there are some very real challenges to consider. Understanding how FSBO listings work plus the advantages and disadvantages of selling FSBO versus listing with a real estate agent assures you select the right choice for your individual situation.

The most often cited advantage of listing a house for sale by owner is saving the real estate commission, but a closer look at how real estate commissions work deserves attention. A typical real estate commission is usually 4-6% of the selling price of the home. One of the challenges of listing your home for sale is enticing other real estate agents to show your home to their clients.

When listing FSBO, it can also be challenging to set aside your attachment to your home and focus on the process of selling. When dealing with real estate sold by owners, objectivity and acceptance of feedback from potential buyers are incredibly important. To help move your negotiations forward in a productive manner, make sure you know ahead of time what your bottom-line price is and what concessions you are open to making. This can help make negotiations more logical and less emotional.


1. Getting the Right Price

When selling a home yourself, pricing the property correctly and then getting that asking price, was the top problem for most FSBOs. In general, by-owner sellers tend to be price sensitive. They are typically selling their home themselves in order to save money by avoiding real estate commissions.

Since real estate agents have access to a variety of tools for determining market price and home value, as well as industry knowledge and insights on value-added improvements and enhancements that pay, a real estate agent’s home valuation will be more accurate than the average FSBO’s.


2. Understanding and Performing Paperwork

Selling a home is about more than a standard sales contract. Contingencies, addenda, disclosures and a variety of other documents are required to be properly completed and signed by both parties. For FSBOs, one undisclosed fact or missing document can result in a sale that never reaches the closing table or worse than that, can be open to civil penalties if it is found that a material fact was not properly disclosed. Real estate agents and attorneys are trained and experienced with this sensitive paperwork and can better handle the nuances of the law.


3. Selling Within the Planned Length of Time

Due to the lack of marketing and depending solely on a yard sign is no way to compete with professionally marketed and represented properties. For homeowners in a true time-crunch, an FSBO sale can upset even the best-laid plans. Make sure to utilize the time-saving benefits of proper marketing, including the online platforms and resources you can offer. While you cannot guarantee a quick sale, you can certainly improve the odds.


4. Preparing/Fixing Up Home For Sale

Since FSBO sellers are not as versed as to what current buyers are looking for, they oftentimes spend thousands on home improvements and upgrades that just do not provide adequate return on investment. That is money that would be better spent on professional representation.

Conversely, FSBO sellers are coming from an emotional place and may end up in denial about needed repairs. Decisions about updates and upgrades made out of desperation are almost inevitably bad and expensive ones.


5. Having Enough Time to Devote to All Aspects of the Sale

Most sellers do not have the time or experience to take on a FSBO sale. Between dealing with contractors, preparing paperwork, setting up showings, marketing the property, and conducting every stage of the transaction, all while packing up the house and preparing to move is a monumental undertaking that most people simply do not have the time to do properly.


Why Choose Citrus Heritage Escrow?

Choosing FSBO vs. real estate agent depends on your situation and how motivated you are to take on the process yourself. It’s nice to know there are options and plenty of information on choosing an agent or FSBO. With Citrus Heritage Escrow by your side, you can rest assured that our professional team will walk you through every step of your home sale or purchase.

Whether escrow is required for your mortgage or you have the option to waive it, your personal situation and financial needs will determine whether it will be best to pay your property taxes and homeowners insurance directly or through your lender.

When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you’ve gained the maximum benefit from your home sale or purchase.

Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200