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For Sale By Owner - FSBO - and what it really costs

An article by Carol Costanzo

NAR (National Association of Realtors statistics on For Sale By Owner (FSBO)

Did you know?. . . the typical FSBO home sold for $198,200 compared to $230,000 for agent-assisted home sales.

FSBO Methods Used to Market Home:

  • Yard Sign . . . 61%
  • Friends/neighbors . . . 46%
  • Newspaper ad . . . 37%
  • Open House . . . 29%
  • Internet . . . 17%

Most Difficult Tasks for FSBO Sellers:

  • Getting the right price . . . 14%
  • Understanding paperwork . . . 17%
  • Preparing/fixing up home for sale . . . 16%
  • Attracting potential buyers . . . 9%
  • Having enough time to devote to all aspects of the sale . . . 8%

FSBOs are often mistaken as targets for low ballers. The adage buy a deal, sell a deal certainly has a ring of truth in these transactions. Purchasers feel that since the seller is unrepresented and not paying a commission to a Realtor that there is more room for discounting the price. Purchasers know that since the seller is obviously looking for a deal in the sale, by not using a Realtor, they should benefit too.

Selling a home requires paperwork and FSBO's generally do not have all the knowledge of real estate that they need. All questions asked from a potential buyer should be answered. This sounds easy, but if you are a FSBO who does not have all the necessary information, then it can become challenging. Your knowledge of financing should be on point allowing the buyer to be presented with all the available options.

Realtors do much more than facilitate a transaction. They share the risks of the transaction with you, from advertising costs to many liabilities associated with the transaction. For example, do you know how to properly fill out a disclosure? Most real estate lawsuits are brought by buyers and the most frequent reason is a dispute over property condition. A Realtor knows what you should disclose and how to avoid liability.

I just don't want to overpay in commissions.

Seventy-five percent of buyers are represented by Realtors, and if the buyers are buying a home from the owner, they are going to expect the amount they pay for the home to be reduced because you aren't paying a Realtor for yourself. So, if you don't hire a Realtor, all you've done is allow a professional negotiator who is working for the other side to get paid out of the transaction proceeds, you have reduced your price, exposed yourself to tremendous liability and received no help on your side to boot.

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