For Sale by Owner (FSBO) – Part 6

Part 6: For Sale by Owner (FSBO)

Part 6 of an 8 part series -

Goal: To educate a home seller on the options for selling their home.

“What are my options?”

This is one of the most common questions I receive from home sellers, and it’s a valid question. How do you, as a home seller, expect to make an informed, intelligent selling decision without knowing all the options you have available? The short answer is you can’t. But don’t fret! The goal of this article is to clarify and explain all the options you (home seller) have when liquidating your property.

Below is an outline of the options at your disposal (in no particular order):

1. Traditional Listing
2. Net Listing
3. Mortgage Assumption
4. Cash sale (off market)
5. Owner financing
6. For Sale by Owner (FSBO)
7. Short sale
8. Foreclosure

Now that you know all eight options let’s dive into more detail describing each option and cover a few pros and cons.

6. For Sale by Owner (FSBO) – FSBO is the process of you (the owner) selling your house directly, without the professional assistance of a realtor or agent, to a buyer. Said differently, you (the owner) are the one responsible for selling your house, including; marketing, paperwork, determining list price, negotiating, vetting the buyer, etc.

• Pros
  • More money in your pocket. The largest benefit of selling your house yourself is you’ll typically save money on realtor commissions, pictures, listing costs and staging, allowing you to put more money in your pocket, especially if you are skilled at sales and negotiations.
  • No realtor fees (but not always). The biggest benefit is no realtor commissions (which are typically 6% of the sales price), but not always. If you list your property on Zillow, Truila, Redfin, FSBO.com, etc. a potential buyer MAY, not usually, have a realtor they are working with when they find your property. If the potential buyer does have realtor it will be up to you (as the seller), the buyer’s realtor, and the buyer to determine how the realtor will be compensated. Remember; everything is negotiable.
• Cons
  • Less exposure than a listing. Most likely you won’t be listing the property on the MLS – the site most buyers and agents will go to find properties – meaning you’ll have fewer buyers looking at your property. Fewer buyers typically means fewer offers and fewer signed contracts.
  • Unknown sale price. A realtor or investor will have access to the most recent market data. You don’t have this luxury and therefore don’t really know what your house will sell for. Maybe you price it too low and miss out on easy cash. Maybe you price it too high and it takes too long to sell. Your listing price won’t be 100% accurate without comparables. You could always as a realtor friend if they are willing to quickly pull comps on your property.
  • Self-marketing. Unfortunately you will have to do your own marketing, which means pictures, descriptions, signs, listing websites, etc. You could pay someone to do the marketing for you, just ensure they are familiar with the process because marketing is one of the most important components in selling your house.
  • Inconvenient showing times. When you are the one selling your property you will be speaking with all the potential buyers. You will be the one scheduling the showing times and occasionally the showings can be disruptive and inconvenient, especially when the potential buyer doesn’t show up.
  • House should be “show ready”. To sell at the highest price the house should look its best, meaning cleaned and tidied. Your house could be on the market for months, meaning you will have to keep the house cleaned and tidied (“show ready”) until it is sold.
  • Unqualified buyers. One of the most disruptive things about selling your home, on or off market, is unqualified buyers. When selling your home on your own vetting the buyer is your responsibility. Unless you have a solid process for vetting the potential buyer you may get to closing and find out the buyer either can’t qualify for a loan or doesn’t have the money to close as they claimed.
  • Must handle buyers and paperwork. There are contracts, option fees, earnest moneys, etc. that you and the seller will have to fill-out and sign. If you are unfamiliar with the process you could create complications or be led astray by the buyer.

Continue with Option 7 of our 8 Part series!