How Much Does It Cost to Sell a House by Owner?

Expense 3: Home appraisal – $300 to $500

Setting the right price for your home is crucial for a successful For Sale By Owner (FSBO) sale. Unlike working with a Realtor who provides a Comparative Market Analysis (CMA) to determine your home’s market value, FSBO sellers often turn to professional appraisals. An upfront investment in a home appraisal, which typically costs between $300 and $500, can provide several advantages:

1. Accurate pricing: A professional appraisal gives you an unbiased, accurate value of your home based on current market conditions, comparable sales, and the unique features of your property. This helps in setting a competitive and realistic sale price.
2. Appeal to buyers: Presenting a recent appraisal to potential buyers can boost their confidence in the fairness of the asking price, making your property more appealing.
3. Negotiation power: With an appraisal in hand, you’re better equipped to defend your asking price during negotiations, as you have concrete evidence supporting the value of your home.
4. Efficiency in selling process: Knowing the value of your home upfront can streamline the selling process, potentially avoiding delays or renegotiations that can occur if a buyer’s appraisal comes in lower than the agreed-upon price.

A professional appraisal is a savvy investment for FSBO sellers, providing a solid foundation for pricing your home accurately and enhancing the credibility of your sale in the eyes of potential buyers.

Expense 4: Home inspections – $280 to $800

Conducting a home inspection can be a critical step in the FSBO selling process, designed to uncover any potential issues that could derail your sale. A property survey can also play a safeguard role. These steps ensure transparency and can prevent last-minute surprises that might otherwise jeopardize a deal. Here’s a breakdown of the costs and benefits:

• Home inspection: A thorough home inspection, which typically costs between $280 and $400, can identify hidden problems within your property, such as structural issues, electrical faults, or plumbing problems. Addressing these issues upfront allows you to make necessary repairs before listing, presenting your home in the best possible light to potential buyers.
• Property survey: While typically optional, a property survey can be invaluable, especially if there are potential boundary disputes or concerns about land encroachments. Costs for a simple boundary survey range from $100 to $200, but more complex surveys, necessary for larger or more irregular properties, can exceed $700. A survey provides a precise depiction of your property’s boundaries, which can be vital for addressing any legal questions about the land and structures you’re selling.

Together, these expenses can range from $280 to $800, a worthwhile investment for FSBO sellers. By investing in a home inspection and survey, you can avoid surprises that might complicate your sale, ensuring a smoother transaction and potentially saving you from future legal or financial issues.

Other specialized inspections you might need

• Pest inspection (termites, carpenter ants, etc.)
• Radon testing (naturally occurring, radioactive gas)
• Mold inspection 
• Septic system evaluation
• Well water testing
• Roof certification
• Chimney or fireplace inspection 
• Foundation inspection
• Lead-based paint inspection (homes built before 1978)
• Asbestos inspection

»Learn more: 15 Types of Specialized Home Inspections for Your Home

Expense 5: Listing and marketing – $400 to $1,300

Effectively marketing your home is essential to attract the right buyers and secure the best offer. For FSBO sellers, creating a compelling listing involves several key components, with costs ranging from $400 to $1,300. This is a must-do investment for ensuring your property reaches a wide audience. Here’s what you might need to budget for:

• Photographer/videographer: High-quality photos and videos are the keys to making a strong first impression. Hiring a professional can cost anywhere from $110 to $300, depending on your location and the size of your property. For drone footage, you can add an additional $100 to $400.
• MLS listing: Access to the Multiple Listing Service (MLS) is typically restricted to real estate agents, but FSBO sellers can use a flat-fee service to list their property for a fee, usually between $90 to $1,300. This is essential for broad exposure to potential buyers.
• Newspaper ads and listings: Although more traditional, newspaper ads can still be effective, especially in certain markets or demographics. Costs will vary based on the publication and ad size.
• Social media ads: Targeted ads on platforms like Facebook and Instagram can help reach potential buyers. Budgeting $50 to $100 can get you started with a basic campaign.
• Yard signs and flyers: Physical marketing materials such as a yard sign and flyers help attract attention from passersby and local interest. Expect to spend around $40 to $100 for quality materials. Lower-quality signs can start at around $20.
• Hosting showings: While not a significant cost, hosting showings or open houses requires time and potentially small expenses for refreshments or staging each time potential buyers visit.

Investing in these marketing efforts can significantly increase your home’s visibility and appeal, helping to attract serious buyers and potentially speeding up the sale process.

Expense 6: Home warranty – $450 to $600

Offering a home warranty can be a strategic move for FSBO sellers, serving as an attractive incentive for potential buyers and a valuable tool in negotiations. A home warranty covers the repair or replacement of major home systems and appliances, providing peace of mind for buyers concerned about potential post-purchase issues. The cost of a basic home warranty plan ranges from $450 to $600 per year, depending on the provider and the level of coverage selected. For those seeking more comprehensive coverage, plans can cost upwards of $1,000 annually.

According to a recent HomeLight survey involving over 1,000 top agents nationwide, more than half reported that providing a home warranty can significantly ease buyer concerns, making it easier to close a sale. While optional, the strategic value of offering a home warranty can outweigh the initial cost, making it a worthwhile consideration for FSBO sellers aiming to make their property stand out in a competitive market.

Expense 7: Field offers and review contracts – time

One of the most significant yet hard-to-quantify expenses of selling your home by owner is the investment of time, particularly when it comes to fielding offers and reviewing purchase contracts. Without the assistance of an experienced real estate agent, FSBO sellers take on the full responsibility of navigating this complex and time-sensitive process.

Here are key considerations for FSBO sellers in this area:

• Understanding offers: Evaluating and understanding the terms of each offer, including any contingencies, can be time-consuming. Missteps here can be costly on several levels.
• Negotiation: The back-and-forth of negotiations not only requires time but also a level of expertise to ensure you’re getting the best deal while maintaining a strong position.
• Legalities of contracts: Reviewing and understanding the legal aspects of purchase contracts is essential. This step can be particularly challenging without prior experience, potentially necessitating consultations with legal professionals, which can incur additional costs.
• Time is money: For many sellers, time spent on these tasks is time away from work or other personal commitments. This “opportunity cost” can add up, especially if the process draws out longer than expected.

The value of an experienced agent often becomes most apparent during the offer and contract phase, highlighting the potential cost of managing this process on your own. While saving on agent commissions is a primary reason many choose the FSBO route, it’s important to weigh the time and effort required against the potential savings to determine if it’s the right decision for you.

Expense 8: Seller concessions – $500 to $1,000+

Seller concessions are negotiations where the seller agrees to pay certain costs on behalf of the buyer, often to facilitate a smoother sale or to close a deal more quickly. For FSBO sellers, understanding and budgeting for potential concessions is essential, as these can directly impact the final sale price of your home.

In 2023, as hesitant buyers negotiated in a high-interest-rate market, seller concessions were on the rise. Transaction data revealed that nearly 43% of home sellers made concessions. While that number dipped later in the year, 35% of home sales currently involve sellers giving concessions to buyers in order to close the sale.

Concessions to the buyer may include:

• Closing costs: While you’ll have your own closing costs, this is also a common concession expense, where the seller offers to cover some or all of the buyer’s closing costs, such as loan origination fees, title insurance, and escrow fees.
• Home repairs: Following a home inspection, buyers may request that the seller undertake necessary repairs or provide a credit to cover these costs. For 2024, 40% of top agents in the U.S. recommend sellers offer a home improvement allowance to help close your sale.
• Home warranty: As previously discussed, offering or extending a home warranty can reassure buyers about future maintenance and repair costs.
• Mortgage points: Sellers might agree to pay points to lower the buyer’s mortgage interest rate, making the purchase more appealing.
• Moving expenses: In rare cases, sellers might offer to cover the buyer’s moving expenses to facilitate a quicker sale.

The cost of these concessions can vary widely, depending on the specifics of the sale and negotiations. On average, sellers might expect to allocate between $500 and $1,000 toward concessions, though this amount can significantly increase in more competitive markets or if substantial repairs are needed.

Expense 9: Seller closing costs – $4,000 to 12,000+

Even when selling your home by owner (FSBO), you’ll encounter various seller closing costs that can significantly impact your net proceeds from the sale. While you might be saving on listing agent commissions by opting for FSBO, it’s important to budget for the buyer’s Realtor fee, among other closing costs. These expenses typically range between 1% and 3% of the sale price, leading to an estimated $4,000 to $12,000+ on a $400,000 home sale.

Here’s a breakdown of what these costs may include, using a $400,000 home as an example:

• Buyer’s Realtor fee: Even as a FSBO seller, you’re typically expected to pay the buyer’s agent commission, which can range from 2.5% to 3%. For a $400,000 sale, this means you could be paying $10,000 to $12,000 just in buyer’s agent fees.
• Title fees: These can range from 0.5% to 1% of the sale price, covering the cost of ensuring the title is free and clear for transfer to the new owner.
• Settlement fees: Around 1% of the sale price, settlement fees cover the cost of the services provided during the closing process.
• Transfer tax or excise tax: This tax varies greatly by location, ranging from 0.1% to 3% of the sale price, paid for transferring the property title to the new owner.
• Reconveyance fees: These fees are associated with clearing the title of the existing mortgage, with costs varying depending on the lender.
• Recording fees: Paid to the local government for recording the sale and transfer of the property, the amount varies by jurisdiction.
• Attorney fees: If you hire an attorney to assist with the closing process, expect to pay $150 to $350 per hour. As noted above, some states require an attorney at closing.
• Property taxes: Sellers are responsible for prorated property taxes up until the sale date.

Total expenses: Adding it all up – $7,700 to $20,200+

Wrapping up the costs associated with selling your home by owner reveals a comprehensive financial picture that prospective FSBO sellers need to consider. From legal fees and home preparation to marketing and closing costs, our breakdown estimates that typical FSBO sellers could face total expenses ranging from approximately $7,700 to $20,200 or more.

This range underscores the importance of budgeting and planning for the various costs involved in the FSBO process. However, saving money on commission is only one strategy to retain more of your home sale proceeds. Swelling your home for more money — even after paying a commission — is a more likely scenario when you partner with a top professional.

Can you make more money using a Realtor?

The decision between selling your home as a For-Sale-By-Owner (FSBO) or employing a top-rated Realtor is significant, especially when considering the potential financial outcomes. Data from the National Association of Realtors 2023 Profile of Homebuyers & Sellers Report offers compelling insights into this choice.

Few sellers choose FSBO, and most know their buyer

FSBO sales in 2023 accounted for only 7% of recent home sales, tying with the all-time low seen in 2021. This trend suggests a growing recognition among sellers of the value Realtors bring to the home selling process. Notably, the majority of FSBO sellers (57%) sold their homes to someone they knew, which may not always represent the broader market’s potential selling price.

FSBO homes sell for 23.5% less

The difference in sale prices between FSBO and agent-assisted homes is particularly striking. Last year, FSBO homes sold for a median of $310,000, significantly less than the $405,000 median sale price of homes sold with the assistance of an agent. (An average of $95,000 less.) This 23.5% disparity highlights the critical advantage of using a Realtor: achieving a higher selling price.

Higher proceeds and a better selling experience

Here are some key benefits of partnering with a top-rated Realtor:

• Market expertise: Realtors have in-depth knowledge of local market trends, helping to set competitive pricing that attracts buyers while maximizing your sale price.
• Negotiation skills: Experienced agents negotiate on your behalf to secure the best possible terms and price, leveraging their understanding of the current market dynamics.
• Marketing reach: With access to extensive networks and marketing platforms, Realtors can significantly increase your home’s visibility to potential buyers, driving up interest and potentially the selling price.
• Time savings: By managing the complexities of the selling process, from listing to closing, Realtors save you time and reduce the burden of selling your home.
• Legal and procedural expertise: Realtors help navigate the legal and procedural aspects of the sale, minimizing risks and ensuring a smooth transaction.

While FSBO selling might seem appealing to save on commission fees, the data and benefits associated with using a Realtor strongly suggest that partnering with a professional can lead to higher proceeds from your home sale — even after accounting for Realtor commissions. This strategic investment in expertise can not only potentially yield a higher sale price but also provide a smoother, more efficient selling experience.

Avoid disclosure pitfalls with a top real estate agent

Selling a home involves more than just finding a buyer and agreeing on a price. One of the most critical aspects of the transaction is ensuring all necessary disclosures are accurately completed. Failure to disclose known issues can lead to legal problems, financial losses, and a potentially voided sale. This is another area where the expertise of a real estate agent becomes invaluable.

Benefits of using an agent for disclosures:

• Expert guidance: Real estate agents are familiar with the specific disclosure requirements in your area and can guide you through the process, ensuring you comply with all legal obligations.
• Risk mitigation: By accurately completing disclosures with an agent’s help, you reduce the risk of post-sale disputes or legal action from the buyer.
• Professional reputation: Agents work to maintain a positive reputation in the industry. They ensure disclosures are handled correctly to protect both their clients and their professional standing.
• Peace of mind: Knowing that all disclosures have been accurately completed with professional guidance provides peace of mind during and after the sale.

The true cost to sell a house by owner

Selling your home as a For-Sale-By-Owner (FSBO) can initially seem like a straightforward way to save on Realtor commissions. However, the true cost encompasses far more than financial expenses. From legal complexities and marketing efforts to the potential for lower sale prices and the time invested in managing the sale process, FSBO sellers face numerous challenges.

The expertise of a top-rated real estate agent can not only help you navigate these challenges but also potentially secure a higher sale price, more than offsetting the cost of their commission.

If you’re considering selling your home and want to ensure you’re making the most informed decisions (and the most proceeds), HomeLight can connect you with top-performing agents in your area.

»Are you buying and selling? You may be interested in our innovative “Buy Before You Sell” program that streamlines the entire process, so you only need to move once. Learn more by watching this short video.

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