Thinking of Listing Your Home as For Sale By Owner? Here's What You Need to Know
Selling your home without help from a real estate agent or broker, known as for sale by owner (FSBO), could save you some money. On the other hand, if you don't know anything about home sales, this decision might be a costly mistake. Here are the advantages and disadvantages of listing your home on real estate websites as for sale by owner as well as some useful tips if you decide this is the right choice for you.
Advantages of For Sale by Owner
If you're living a home that doesn't have a lot of equity, you might need to squeeze as much out of a sale as possible to cover your mortgage payoff. The typical commission for a professional real estate broker is around 6%, which comes out of your pocket. So, if the median list price for a home in your area is $210,000, you could potentially save around $12,600 in commissions. You might still be asked to pay a commission to the buyer's agent, however.
Another advantage to selling your home yourself is that you maintain complete control of the process. Some sellers don't completely trust real estate brokers and sometimes see them as having ulterior motives. A FSBO allows you to decide how to price your home, where to advertise it on real estate websites (if any), and when you'll be available for showings.
Disadvantages of For Sale by Owner
There are several disadvantages to selling your home on your own, which is why a majority of people don't do this. In fact, just 8% of home sales in 2015 were FSBOs. The main reason that most sellers don't elect this option is that it's a lot of work. If you sell your home yourself, you need to list it on real estate websites or pay someone to do this, negotiate the contract, set up the closing, and hire your own settlement agent.
While an advantage listed was that sellers could save on commissions, a common argument against FSBOs is that sellers won't get as much for their homes as they would using a realtor. The National Association of Realtors (NAR) reports that FSBO homes in 2015 sold for an average of $185,000, while agent-assisted homes sold for an average of $245,000. NAR argues that realtors have market and area knowledge, negotiating skills, and can get more exposure for your home than you can achieve on your own.
Listing Your Home on Real Estate Websites
If you decide to sell your own home, you should first understand the effort involved. You can use real estate websites to get an idea of sales trends and prices for comparable homes in your area. Once you've done this, prepare your home for sale, write a compelling description, and take clear photos for marketing. List the property in classified ads as well as real estate websites and the MLS if possible.
After you have a contract to sell your home, stay on top of the process and other paperwork required to get to closing. If you have your home listed on real estate websites, change the status to "sale pending," and cancel those listings once you finalize the sale. Find out the value of homes in your area now with our search properties feature.