What is FSBO? An Objective Overview of For Sale By Owner

Set a listing price

The first step to selling your home is to determine an asking price. Ideally, you should set the price close to your property’s true market value. You must objectively compare your home to recently sold homes in your area and set the price accordingly. This task is easier said than done: In HomeLight’s recent survey of top agents, 67% said ineffective pricing strategies are among sellers’ top marketing missteps. Another 28% said overpricing is the top reason buyers walk away from a deal.

Create a home listing

When creating a property listing, don’t skip on professional photos — beautiful photos influence buyers to schedule showings. Pair the photos with a compelling description that highlights your property’s unique features. FSBO sellers can list their home on an array of For Sale by Owner listing websites or pay a flat-fee MLS listing service to get their home on the MLS for around $300. The MLS will then auto-syndicate the property details to the major online listing sites.

Market the property

When your listing goes live, it’s time to market your home. Create a robust marketing strategy that includes paid advertising, social media outreach, physical signage, and open houses. Remember, the more buyers you reach, the more offers you’ll receive.

Coordinate showings with potential buyers

Buyers need to see your home in person to truly fall in love with it. As a FSBO seller, you must be available to respond to calls and emails from prospective buyers. If a buyer is interested, coordinate a showing at a time that works for both parties.

Negotiate the price with the buyer’s agent

Once you receive an offer you’re ready to move forward with, hash out the conditions of the sale with the buyer. Review the offer for contingencies to understand the risk of the offer falling through. You’ll most likely negotiate the price and terms with the buyer’s agent, a seasoned negotiator. For many, this is the most challenging step in the FSBO process.

Complete the necessary paperwork and close the deal

When both parties come to an agreement, the seller must work with the title and escrow companies to complete the necessary documents — all 180 pages. Since you don’t have an agent at your side, you may want to work with a real estate attorney to protect yourself from documentation issues, titling errors, and expensive lawsuits. When all is said and done, you’ll sign the deed over to the buyer and collect the sale money.

Benefits of selling FSBO

While FSBO is double the work, it comes with its perks. Sellers have more control over the minutiae of their home sale and save on the listing agent’s commission.

FSBO sellers save on real estate commission

The main reason sellers choose FSBO is to save money. While real estate sales commissions vary, the national average rate is 5.8% of the sale price. When you sell FSBO, you save on the listing agent’s commission. According to NAR, 89% of homebuyers worked with real estate agents last year, and 6% purchased directly from the previous owner.

It’s worth noting that FSBO sellers don’t pocket all of the 3% they save on the listing agent. FSBO sellers must pay pre-listing home preparations and marketing costs normally included in the agent’s commission.

FSBO sellers retain complete control over the sale

When sellers hire a real estate agent, the agent guides them through the home sale, offering advice on pricing, marketing, staging, prep work, and price negotiation. And while most sellers appreciate the support of an experienced professional, some homeowners prefer to retain complete control over their home sale details. If you choose a FSBO, every part of the process — emails, phone calls, paperwork, marketing, negotiating, etc. — is directly under your control.

Drawbacks of selling FSBO

Without a real estate agent, FSBO sellers take on the responsibilities and risks of selling their home solo. You need time, energy, and objectivity to pull off a successful home sale.

Statistically, you’re likely to sell your home for less money

When you work with a top-selling agent, you reap the benefits of their expertise. Real estate agents understand the nuances of pricing a home competitively, presenting a home for the market, and marketing effectively to get buyers in the door. Every step increases the value of your home and ultimately helps you win the highest sale price possible.

Smith points to poor pricing as a top issue for FSBO sellers:

“The issue is they’re actually losing money on the value of their home because they’re guessing at the value; there’s no real science behind it . . . They don’t realize they’re leaving money on the table.”

Data backs the value an agent brings to the home sale process. According to NAR, FSBO homes sold for a median price of $310,000 in 2023, whereas, agent-assisted homes sold for a median price of $405,000 — that’s $95,000 less than what you would get if you worked with an agent. Furthermore, our analysis of transaction data reveals that the top 5% of real estate agents sell homes for 10% more than their peers, indicating real estate agents’ expertise in increasing the sale price more than makes up for their cost.

Costs can add up quickly

As a FSBO seller, you pay out-of-pocket for services typically included in the listing agent’s fee. These costs include:

• Professional photos
• MLS listing fees
• Signage
• Staging
• Open house expenses
• Digital and physical ads

Beyond the basic costs, FSBO sellers often over-improve their homes since they don’t know which upgrades increase value and marketability in their local market. If you spend money on the wrong improvements, you won’t recoup your investment in the home sale.

Marketing is easier said than done

Marketing is key to attracting buyers to your home. And sticking a sign at the head of your street won’t do you much good. As a FSBO seller, you need to learn the most effective real estate marketing strategies for your market. Digital marketing is especially crucial since all home buyers used the internet to search for a home in 2023.

Legal Responsibility

Smith points out that when sellers choose to sell FSBO, they take on responsibility for all of the legal aspects of the sale: “When you have an agent, that agent takes that responsibility to make sure that there’s a legally binding contract that all the terms are met for the seller.”

According to NAR’s 2023 report, 7% of FSBO sellers ranked ‘understanding and performing paperwork’ as the most difficult task in the home sale, second only to ‘getting the right price.’

Real estate agents have insurance that covers them, Smith says, “so if there are some unforeseen mistakes, they [agents] have something to fall back on.” If a FSBO seller breaches a contract or flops a disclosure statement, their buyer can sue them. “If something goes wrong legally, they’re just going to get sued by the buyer or whoever’s involved in that transaction with them. So, they’re taking on a lot of responsibility that they don’t realize,” Smith adds.

FSBO sale statistics

According to Smith, “80% to 90% of FSBO sellers end up hiring a real estate agent or broker within 30 days of trying to sell it on their own.” Here are a few helpful statistics from NAR that you may want to consider before jumping in feet first.

• For sale by owner sales accounted for 7% of total home sales in 2023.
• 15% of sellers shared that the hardest part of selling their home was getting the right price.
• 57% of FSBO sellers knew their buyer.
• 14% of home sales in rural areas were done FSBO, compared to only 3% in urban areas.

FSBO comes with pros and cons

Now that you know what FSBO is, weigh the option against selling with a real estate agent. A FSBO sale requires time and dedication and doesn’t guarantee you more money at the end of the day.

Working with a top real estate agent

If the cons of FSBO outweigh the pros, consider hiring a top real estate agent for your sale. Real estate agents who have years of expertise in their fields can benefit your sale and help you reach your goals, whether that’s selling your home quickly or for the most money possible.

They can take on pricing the home, finding a professional photographer and stager, writing the listing, and scheduling viewings of your home. Plus, they’ll help you go through each offer individually and decide which one is your best choice before guiding you through the closing process.

To find top real estate agents in your area, use HomeLight’s Agent Match tool. HomeLight will match you with two or three top agents who you can speak with directly before making your final decision.

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