We’re all looking for ways to save money these days. And the process of buying and selling a home is no exception. Last year, 7% of completed home sales were “for sale by owner” (FSBO), and that number is expected to climb.
Going solo has its pros and cons – but is it for you? Here are 8 factors to consider:
FSBO May Be a Good Idea If:
You don’t need to make a lot of money on the sale. Historically, the ROI on FSBOs is lower than on agent-assisted sales. In 2018, the National Association of Realtors® reported that the median selling price of homes that year was:
$250,000 with an agent$190,000 without an agent/FSBO$160,300 when FSBO sold to a friend or relative
Now, that’s not necessarily a bad thing. FSBO eliminates sales broker commissions and fees, so you get to keep all the money you make. And while on one hand, it can be attractive to eliminate the middle man (er, person), on the other hand, real estate professionals have access to resources that can help you get a better price.
Your home has value issues. Full disclosure, the reason there’s such a gap between those agent-assisted and FSBO selling prices is that many FSBO listings are lower in value. They may be older homes in need of repairs that the seller didn’t want to invest in. Even more often the properties are in rural areas and small towns where prices simply don’t compete with those in the cities and suburbs.
You have room for a part-time job with no guaranteed payday. Selling anything comes with its own science and art – and this is especially true when selling a home. There are dozens of factors to consider. Starting with setting the right listing price, understanding how and where to advertise, qualifying potential buyers, property appraisal, and so much more. It can be a thrilling project, and you’ll definitely learn a lot – just make sure you’re ready to invest the time.
You want complete control over the sale. If you go FSBO, you get to decide when to show your home, where you’ll advertise, how to negotiate, and what offers to accept. There’s no commission to pay, so you get the biggest possible piece of the pie. You don’t have professional advice on hand, but the freedom you gain could be worth the trade.
You already have a buyer. If you’re in the lucky position of already having people who want to buy your home, FSBO can be a useful option since the whole process of staging, advertising, and showing your home can be avoided.
FSBO May Be a Bad Idea If:
You have no sales experience. The thought of having full control over your home sale and saving some money on commissions is very attractive, but it is highly specialized work. Real estate professionals need to be licensed for a reason. They are there to help make the enormous and sensitive job of selling your home efficiently, as profitable to you as possible, and safe. You might decide their expertise and resources are worth the fee.
You want to maximize your money and time. Remember how we said FSBO-ing is like taking up a part-time job? This can’t be emphasized enough. While FSBO homes can be priced very competitively, and that low sticker price can attract a lot of attention in online real estate listings, this route is full of hazards that can chip away at your net income from the sale. It can ultimately take much longer to sell on your own. The costs – in money and time – of marketing and showing your home can take their toll.
You really need your home to sell by a deadline. In fact, only 5% of FSBO-ers sold their home within a planned length of time.
In the end, FSBO can be an effective way to sell your home under the right conditions. Whichever way you go, make sure it’s the best decision – for your bank account as well as your lifestyle. Still on the fence? Learn more on the ditech blog about working with a pro versus going DIY – and how to take the stress out of selling your home.
Article published by Ditech Home Loans