Why it’s Awesome to be a For Sale By Owner
What about being FSBO is easier than working with a realtor, and why should you try it?
In addition to the savings on real estate commissions, there are other benefits to selling your home as a For Sale By Owner. Though realtors and others will argue against it, here are reasons to give it a try.
1: The most obvious, you’ll save the real estate commissions.
These are a percentage of the sale price, usually in the range of 5–6%, paid entirely by the home seller when they receive their house equity at closing.
A real estate agent is a marketing professional. If you feel that you can market your own home, you’ll keep that 5–6% of sale price, and with most home searches happening online, it’s easy to reach buyers. If you are looking to buy another home, those are substantial savings you can use to purchase your new home.
An important caveat though: make sure you list your home on a site that allows you to identify yourself as a For Sale By Owner, and specify that you are willing to work directly with owners (so, not the MLS). If it helps a deal to happen, you can offer to pay a buyer’s realtor a co-broke fee, but you don’t have to pay them a full half of the standard commission, you can specify whatever percentage you’re willing to pay if a realtor brings you a buyer. But endeavor to work directly with buyers to save the full commission if possible, and sometimes buyers are willing to pay the realtor representing them out of their own pocket. Depending on how competitive the market is in your area, you may be able to negotiate not having to pay any commission.
2: You’ll have more control over the process.
Everything from when your home goes live online to when showings will happen, to when and how often open houses will occur, or if you will even have them. I once had a realtor insist on bringing a buyer over when I was giving baths to four kids, and I’d left the kitchen a mess.
As a For Sale By Owner, I arranged showings myself, so it was at a time when the house was ready. And, I could hold an open house every single weekend if I wanted to, and lots of buyers enjoy visiting homes on the weekends. You can also schedule your open houses for later in the afternoon, after most of the realtor’s open houses are over, so that more buyers will have the opportunity to visit your home.
3: You can hire a real estate attorney to insure that the transfer of home ownership is legal, proper, and works in a way that’s in your best interest.
For a fraction of the real estate agent’s commission, an actual real estate attorney can handle documents (preparation of the Purchase and Sale contract, provide you with blank offer forms), hold deposits in an escrow account (more reassuring for buyers), scheduling or even hosting closing, informing you of anything you need to provide to the buyers, and even negotiating terms, including inspections and financing deadlines. Having a lawyer to handle the legal aspects of a home sale may make you feel more secure than having a real estate agent do so, given that an agent’s primary job description is marketing your home.
4: You know your home, your neighborhood, and your town better than a realtor, and can write a more in-depth and compelling description.
When you write up your description of your home (after you put in the bit about working directly with buyers), communicate to the buyer what it is that you love about living there. Are there special features, something you love about the neighborhood, unique things about the location, services your town provides, or is it convenient to shopping, conservation land, or public transportation? Instead of a bland, vanilla description of your home, you can personalize it and really convey what makes it special. This is an important goal when marketing the home, and you are most qualified to provide it. And if you do decide to list with a realtor, consider helping them write this description.
5: You can give yourself the option of trying a listing as a For Sale By Owner first, and if you don’t like it, switch to a realtor.
It’s nice to have options. Sometimes realtors will try to convince you not to do so, saying that properties get “stale.” But think about it, do you avoid seeing homes based on how long they’ve been listed? You see homes that you like in the area where you want to live. From pictures online, you can see if there are problems with the home. There’s really no reason why you can’t try doing For Sale By Owner first (especially in a seller’s market), and if it feels like too much work, you can hand it off to a realtor. If you are considering hiring a realtor, give yourself time to think about it, perhaps 24 hours. You can also list with them for a trial period. In other words, you can control the length of the contract. You can also insure that the contract allows you to sell the home yourself, so that they would not be entitled to a commission if, say, a family member, friend or co-worker approached you and wanted to buy the home directly from you.
6: Homes that are sold by For Sale By Owner sell for just as much as realtor-sold homes.
Sometimes the statistic that most For Sale By Owner homes are on the lower-priced end of the home value spectrum is misrepresented so as to claim that realtors get you more money for your home. This isn’t true, and a study in Wisconsin showed there is zero difference in the sale price of homes sold by owners verses realtors. So you don’t need to worry about losing money on your home by selling it yourself, you can feel confident that you’re not going to “leave money on the table.”
Link to the study here: https://www.econstor.eu/bitstream/10419/38634/1/574941975.pdf
7: Since you will be saving the real estate agents fees, you can be more flexible when negotiating the sale price, and this can help you sell faster.
Your home’s market price is set according to the market, and when it sells at that market price, your net will be reduced by realtors fees. If you don’t have to pay any realtors, it would be great to keep all that money for yourself! But if it helps to sell the house faster, you might consider coming down in price during negotiations, or even setting the house price below market when there is a lot of competition for buyers. Not having to pay a realtor gives you more room for setting the price competitively in the beginning, or for making price adjustments if the market is slow, or in negotiating a final sale price.
Summary
There are plenty of advantages to being a For Sale By Owner, and those of us who have gone that route always say the same thing: we wouldn’t do it any other way. Getting a home ready for sale is often a lot of work, but the actual process of listing it online, showing it to buyers, and closing the sale is a well worth the time when you consider the incredible amount of money saved. And though keeping a home ready for showing, especially for a family, is tough, having the control over the process makes that so much easier. The savings in realtor’s fees gives you an advantage in pricing competitively, and you may still retain more of your equity. And with an attorney on your side, you can have confidence in the entire process. And when you are successful, join those of us who enjoyed it and would do it again in a heartbeat.
Adapted from: Real Estate Without Realtors, Save Money Buying or Selling Real Estate. Donna Rucinski, Copyright 2020.
