Information on Real Estate Sales of Homes by the Owner

Find out what you need to know about selling your home on your own.

Real estate sales of home by owner, known in the industry as FSBO (or "for sale by owner") represent nearly 15 percent of the real estate market. Homeowners who go the FSBO route typically eschew the use of a real estate agent and market their home on their own. Not surprisingly, this has definite benefits and disadvantages. As a result, homeowners--or home buyers--who are interested in the For Sale By Owner route have to consider their options carefully before making any decisions.

Facts

Real estate that is For Sale By Owner more or less speaks for itself: the home owner has made the choice to try to sell the property without the assistance of a real estate agent. Choosing FSBO means that the homeowner will not have to pay the real estate agent's commission, and it means that the potential buyer will contact and meet the home owner directly to see the home.

Benefits

One of the most significant benefits of a home sold by the owner is the absence of a real estate agent commission. The average commission is anywhere from 2 percent to 4 percent. While this might not sound like much, it can add up quickly. A 4 percentcommission on a home sold for $350,000 is $14,000. And that $14,000 comes off the price of the home that the seller makes. In addition, choosing the path of FSBO is becoming increasingly popular, and some companies even provide FSBO kits--priced at considerably less than the agent's commission--to assist the owner in selling the home by himself or herself. Finally, a homeowner who decides to go FSBO has considerably more control over the real estate transaction. Many homeowners and home buyers can feel lost in the details of the transaction, unsure of what is happening until they are required to sign endless documents at closing. FSBO allows sellers and buyers to be more involved in the process.

Disadvantages

On the other side of benefits are some disadvantages. For experienced home sellers, FSBO can be an excellent option, but for first-time sellers it can be downright overwhelming. An owner who sells a home by herself must understand the market value of the home well enough to affix a fair price, and she has to work closely with the potential buyers. In addition, many potential buyers find FSBO to be off-putting because they have to work so closely with the seller. The agents in between can be more comfortable for many buyers.

Considerations

Selling a property--and especially a high-end property--by owner can come with risks. Buyers in certain price ranges expect to work with real estate agents, so when the seller decides to use FSBO it can send up red flags about the property. Expect FSBO to take more time in high-priced markets.

Expert Insight

Real estate experts encourage sellers to consider FSBO when they are already fairly savvy with real estate: when they know and understand the market and appreciate the challenges of maneuvering the industry by themselves. In addition, the FSBO kits can be an excellent option for assisting even the most experienced sellers in selling their property more quickly.

References

• Overly Real: FSBO, For Sale By Owner: Advantages and Pitfalls