If you’re thinking about selling your house, you’ve probably considered doing so “for sale by owner” (or FSBO). This method is just what it sounds like – rather than enlisting the help of a broker or real estate agent, you, the owner, handle the transaction yourself. There is one main reason people choose to go this route – to (hopefully) avoid the commission costs associated with hiring a professional.
While it sounds like an attractive option – after all you’d get to keep that 4-6% fee yourself – it’s not quite that simple. Statistics show that the majority of FSBOs end up listing with an agent eventually. Why? Because the Internet, rather than making it easier to sell a house, has actually made it tougher. Websites like Zillow give people instant gratification and allow them to see every single listing in their area (except FSBOs - because these are not listed in the MLS). Gone are the days of buyers having to comb the classifieds in search of a suitable home.
Another challenge of selling your house for sale by owner is that buyers these days are savvy – they know that you’re not paying that agent commission, therefore they’re naturally going to make a lower offer when it comes time to get serious. FSBOs typically sell for about 20% less than houses that are listed with an agent. This loss quickly eats up those commission savings and then some.
That doesn’t mean this strategy isn’t for some people, you just need to consider the possible pitfalls before choosing this way of selling your home.