For Sale By Owner (FSBO) is a term used in the real estate world that is the epitome of independence in the process of selling a home.
Why? This is due to the fact that 89% of home sellers work with a real estate agent to sell their home.
What if we told you that it doesn’t take an expert to sell your house?
That’s right! Selling your home following the best practices of FSBO can put more money in your pocket, rather than hiring someone else to do it for you.
We're talking about thousands of dollars potentially saved on the sale of your home. Who doesn't like saving money? But, you need to know what you're doing.
Now that we have your attention, we'd like to present: What Is FSBO? - The Ultimate Guide! Use the menu below to view different sections within the article:
In the real estate industry, FSBO (pronounced “fiz-bo”) stands for “For Sale By Owner.” This means that the homeowner has not hired a real estate agent or real estate broker to help sell their house.
Is this a bad thing? Absolutely not. The main reason why homeowners decide to go the FSBO route is because they want to save money.
Homeowners save thousands of dollars by not having to pay a commission to a real estate agent for helping them sell their own house.
A typical real estate agent sales commission runs at around 5-6% of the home’s final sales price. So, let’s say that you sell your house for $600,000 with the help of an agent. They’d be earning roughly $36,000 for their commission, which comes out of your bottom line.
If this sounds excessive or if you're in a hot real estate market, then maybe it’s time to start considering listing your house for sale by owner.
FSBO homes are simply houses that are sold by the homeowner without the use of a real estate agent or real estate broker.
Luckily, it isn’t difficult for investors to find properties that are listed for sale by owner. It’s common for home buyers to use websites that feature FSBO listings or to find seller-held open houses in their neighborhood, for example.
In any case, FSBO homes are not hard to come by, even though they only consist of a small fraction of the homes sold in the market.
Selling a house for sale by owner is an effective way that a savvy seller can maximize profits when offloading a property.
In order to do so, sellers should be prepared to spend some money upfront to inflate the sale price while attempting to minimize other expenses.
That being said, let's dive in to the 8 Steps To Sell A House For Sale By Owner:
First and foremost, you need to figure out if selling FSBO is something that makes sense for your situation.
Are you up for the challenge? There are many aspects in selling your home that you'll need to undertake as the primary seller. This includes preparing, marketing, and showing your property to other people.
Not to mention all the legal requirements, contracts, disclosures and paperwork that could leave you overwhelmed. However, you can always hire a real estate attorney or transaction coordinator to help you stay on track.
The bottom line is that you should prepare a game plan that maps out every step in the process of selling your home.
Determining the listing price for your property is an important step that has a big impact on the entire sales process.
Trying to determine the fair market value of your home for could be very tricky. Real estate agents specialize in this by providing a comparative market analysis (CMA) to compare information about similar houses have sold nearby. This process is also called "running the comps."
This is where you step in and do your homework. Online data aggregators such as PropStream, Zillow, and Redfin can help you conduct a market analysis, along with viewing tax records of recent sales in your area. Your goal is to determine a price that your property should sell for.
Price your FSBO listing too high, and you won't get any attention. Price your FSBO home too low, and you might end up leaving money on the table, though a bidding war could drive the price up.
Next up comes getting your house ready to be photographed and shown to potential buyers. This consists of clearing out excess items and completing cosmetic repairs to make your property look presentable to prospective buyers.
Professional services such as a general contractor, real estate photography, and home staging, are available to make your house look at its best. Though, hiring these vendors is completely optional since you can always do these on your own.
Besides, the main point in selling FSBO is saving money, right?
Here comes the fun part of advertising your FSBO listing! As a for sale by owner, you have options such as paid Facebook ads, FSBO listing websites, bandit signs (for sale signs & open house signs) in your yard, placing newspaper ads, and Craigslist ads to advertise your property listing.
Here's a video tutorial on how to list your FSBO home on Facebook Marketplace for FREE:
Real Estate Skills Tip: It's in the best interest of any seller (FSBO or not) to use the Multiple Listing Service (MLS). The MLS is a database of all the real estate transactions that have sold in your area. Listing property on the MLS is the secret marketing weapon of real estate agents.
Most sellers don't realize that they can advertise their property on the MLS without having a real estate license by using a Flat Fee MLS Listing service. While this method will give your FSBO listing the most exposure, be prepared to put in work and pay a real estate commission to a buyer’s agent for bringing you a winning offer.
This step requires a degree of professionalism, as this is where you must put the most time and attention into selling your FSBO property.
Whether it's promptly answering calls, quickly responding to emails, or providing specific answers to buyers' questions, FSBO sellers must maintain professionalism while marketing their property.
Home buyers could eventually lose interest in your house and move on to find another one if you don’t answer their concerns quickly enough. Make sure to stay organized and attentive or your perfect buyer could slip through the cracks!
You knew this step was coming. As a home seller, you must always expect the possibility of buyers submitting lowball offers and haggling over price.
However, if you have the support of a real estate attorney or an experienced business partner, they’ll be able to help you throughout the negotiating process.
As previously mentioned, having a real estate attorney oversee everything in the selling process is essential.
Experienced real estate attorneys are also consultants who can back you up and answer legal questions over the course of the FSBO home selling process. Depending on your state, a real estate attorney, escrow or title company will close the transaction for you.
Finally, this step examines one of the newer options for a homeowner to consider when selling FSBO - selling your house to an iBuyer.
What exactly is an iBuyer? iBuyers are large, well-funded companies that use technology to make sight unseen cash offers on homes, generally within a day or two.
iBuyer companies such as Offerpad and Opendoor allow homeowners to submit information about their home to receive an offer from cash buyers within 24 hours. All of this without listing the property, holding open houses, and best of all - no real estate commissions!
However, iBuyers charge an average service fee of 9%, so it comes at a heavy cost that's often more than a real estate agent's commission.
Once an offer is accepted, the iBuyer conducts an assessment to see if any repairs need to be completed. These repairs would either be completed by the homeowner themselves or a price reduction may be requested.
FSBO sellers will likely get a lowball offer from these iBuyers. However, it's a solid last resort option if the home is not otherwise selling.
All in all, selling FSBO could result in saving a lot of money as long as you dedicate enough time into making sure your listing is as professional as can be. Spending money on a real estate attorney can also help put your mind at ease and smooth along the process.
Yes, you absolutely can list a FSBO property on the MLS. However, since you'll be engaging with a real estate broker, it's no longer purely a for sale by owner listing.
As mentioned earlier, MLS stands for multiple listing service and is most effective marketing platform for buyers and sellers.
The MLS is so powerful because it's the primary channel real estate agents use to buy and sell houses for their clients. All the main real estate listing websites (Zillow, Redfin, etc.) pull property data directly from multiple listing services across the country.
The only catch is that you cannot list FSBO homes on the multiple listing service without a real estate license. As a seller, you'll need to have a licensed real estate broker list it on the MLS.
Typically, real estate brokers end up charging a commission of 5% to 6% for running the entire transaction. However, by using a flat-fee MLS broker, sellers can list their FSBO homes for a nominal fee instead of paying thousands of dollars in broker commissions.
However when listing a FSBO home on the MLS, sellers must do everything from talking to potential buyers, to showings and negotiations. In a nutshell, a flat-fee MLS services allow sellers to list their homes on the MLS for a flat fee, around a few hundred dollars. It's significantly less than what they'd be paying a real estate agent for their listing commission.
This video goes over the concept of a flat-fee MLS and how it works:
Whether you sell your home for sale by owner or with an agent, it’s going to end up costing you money in the end.
Even if FSBO is the cheaper route, don't think it won’t put a dent in your pocketbook. There are many costs associated with selling a house, only a few of which would normally be covered by the real estate agent's commission.
The costs to sell a FSBO home may include:
On the bright side, these costs aren’t all mandatory. Though, some are highly recommended if you wish to sell your house quickly.
Getting items like inspection reports, repairs, and title work out of the way ahead of time makes it easier for buyers and could save you thousands of dollars in the long run.
Some of these costs can be eliminated by simply hiring a real estate agent. However if you do it right, you'll end up saving thousands of dollars by knowing where to spend it and how to sell your FSBO home quickly.
Going the route of FSBO vs Realtor in selling your property has some key differences.
The biggest difference that makes FSBO real estate so attractive is the 3-6% saved in commission by forgoing a Realtor. When you hire a Realtor, you gain the benefit of fiduciary representation from a licensed, experienced real estate professional. This means the agent has a duty to keep your best interest in mind.
Realtors typically have a strong opinion against FSBO homes, as they will fight to the death to justify their sales commissions. There's certainly a case to be made that the results an exceptional Realtor can provide will more than pay for the commission they earn.
Unfortunately, many Realtors do a lousy job and put forth most of their efforts at the time of winning your business! Sellers won't know how the Realtor will perform until they're hired for the job and it's too late to back out of the listing agreement.
Here are 5 Key Differences Between FSBO Vs Realtor in the home sales process:
The National Association of Realtors (NAR) states that sellers generally earn more money when they sell their homes with real estate agents. This stems from a Realtor's potential to market, network, negotiate and sell your home for the highest price possible. While that may be true, it's at the expense of the seller paying 6% of the final sales price.
In a for sale by owner or FSBO situation, sellers wouldn't pay any listing agent commissions. So, ask yourself: How much is my time, effort, and energy worth? Can I can sell my house for as much money as a real estate agent would be able to?
Realtors feel strongly about their ability to generate interest and generate offers from potential home buyers. They do so by holding open houses, creating a custom real estate website, attending broker caravans, listing on the multiple listing service, direct mail marketing, and other techniques.
Marketing your own home as a seller can be pretty tough if you don't know what you're doing. However, if you utilize the FSBO websites and resources detailed in this guide, the only thing holding you back is your time, effort, and hustle to get the job done.
Real estate agents' full time job is selling homes, holding open houses and connecting buyers and sellers. Getting your home sold is second nature and much more efficient due to their refined systems and processes.
Whereas with FSBO home sellers, the home selling process may be brand new could take way more time. One out of five FSBO listings had to get renewed through MLS websites from not selling, according to the National Association of Realtors (NAR).
Home sales are complex transactions that are handled between a buyer and seller.
Real estate agents go through the negotiation process for the seller, whereas FSBO sellers must undertake all negotiations by themselves. This includes negotiating with the buyer as well as their real estate attorneys, agents, and other team members.
Home sales are legal transactions with serious consequences. Experienced real estate agents are familiar with legal requirements throughout the real estate transaction.
FSBO sellers, on the other hand, are unfamiliar with these. Therefore, they must be very careful with legal documents and disclosures in order to avoid being sued.
Absolutely! Zillow is one of the most popular websites to find FSBO real estate listings.
Here’s a screen shot of the FSBO section on Zillow, from the home buyer’s point of view:
Home shoppers can filter the properties displayed in their selected area by clicking on the "For Sale" drop-down menu and selecting the "By Owner" option. Click on any Zillow FSBO home listing and look for the owner's contact information.
Congrats, now you know how to find FSBO homes on Zillow!
Aside from Zillow, real estate investors can utilize a number of for sale by owner websites to source properties that meet their criteria. Whether they plan to live in the home, fix and flip, wholesale or hold as a rental property.
The following are FSBO listing websites that should be on your radar:
An honorable mention among the list of best FSBO sites is Craigslist, since many homeowners use this platform to advertise and sell a house.
A typical FSBO listing contains a listing description, property photos, a list of basic information, interior and exterior details, and features of the HOA community (if applicable).
The following is an example of a FSBO listing. The website in the below FSBO listing, homecoin, provides sellers with flat-fee MLS listings.
Also known as a purchase agreement, a FSBO contract outlines the conditions of the sale of a house. It’s an agreement between a buyer and seller that details the price and terms of sale. It becomes legally binding once both parties sign and all the conditions are met.
The for sale by owner contract covers the rights and obligations of both the buyer and seller in order for the deal to move forward to completion.
An FSBO contract covers topics within the home selling process including earnest money deposits, home financing, contract contingencies, and the close of escrow date. When escrow closes home buyers may take possession of the property.
Drawing up this contract and using it as a roadmap to closing on the home is essential as the sale may fall apart if certain terms are not met.
The following 3 minute video goes over how to accept an offer as a FSBO seller:
We’ve discussed what a FSBO contract or purchase agreement is. Now comes the question: How do I write a FSBO Contract?
Here are the basic steps in how to effectively write a FSBO contract:
In case you find yourself having trouble with selling FSBO, here are 8 tips to help you sell a house and seal the deal:
Here's a 2 minute video with tips and advice for FSBO sellers:
Going forward from here, a majority of the information discussed is going to be from the home buyer’s point of view.
A FSBO script is used to figure out if a home seller is willing to work with you, the buyer.
FSBO scripts start off with an introduction, in which the home buyer asks about the seller’s property for sale.
"Hello, this is Ryan, a cash buyer. I was calling about your house on 6139 Main Street. Did I catch you at a bad time? Great, can you tell me a bit about the property -- square footage, the number of bedrooms, bathrooms and so on? Just letting you know -- I am not a real estate agent but an actual cash buyer looking to purchase my next investment property."
This then leads into basic, opening questions that end up turning into what are known as qualifying questions. These questions are meant to uncover motivation to make sure the seller is ready to make a deal.
Finally, if the seller is motivated, you should schedule an appointment with the home seller. Run the numbers and let them know you'll prepare an offer to present them at your meeting.
This is the ideal direction your FSBO script should lead into.
Like any other leads, FSBO leads work as the initial customer interest when it comes to selling for sale by owner.
FSBO leads can be found on platforms such as web-based professional services or the old fashioned way (local markets, FSBO listings, local newspaper websites, etc.)
All things considered, FSBO leads yield the best results when you have a great FSBO list with an exceptional closing strategy. This strategy may include conducting thorough research on the listing, cold calling, using scripts and following up with the deal.
Browsing FSBO listings online is the ideal method for finding houses that are for sale by owner near you. Depending on where you're looking to buy, there's nowhere more convenient than hopping on the best FSBO websites listed earlier.
Additionally, find FSBO homes near you on these websites:
All markets across the United States feature FSBO homes. Metro areas in states such as Florida, Texas, and New Jersey are prime examples of where you can find a variety of properties sold FSBO.
Alternatively, if you’re looking to find some in your local real estate market, driving for dollars can yield great rewards. This simply means driving, biking, walking or otherwise exploring your target area in search of a FSBO for sale sign or indication that an owner is looking to sell.
Don't be shy! If you see a bandit sign that says "For Sale" or "For Rent," take down the number, property address, and give the owner a call! Some of the best FSBO deals we've ever found were from calling on a bandit sign or other FSBO advertisement.
Closing costs are a series of fees that a buyer and seller pay at the end of a real estate transaction. The amount paid at the close does not include real estate agent commissions.
Generally, closing costs range from about 1-6% of the house’s sale price. Sellers typically pay 1-3% while home buyers pay anywhere from 2-3% of the price.
Overall, selling or buying a home FSBO can save you thousands of dollars at closing.
Yes, it's much more work as a seller and creates additional liability. Most sellers are not up for the task, and simply won't do a better job than a professional home seller.
As a FSBO investor, you'd also be able to save thousands of dollars on your home investment. Keep in mind you'd be working directly with the seller, which can be a challenge in its own way.
From learning the essentials of how to buy and sell FSBO to understanding the concept of a flat-fee MLS listing, we hope this Ultimate Guide helps you master the for sale by owner real estate strategy.
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