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Should You Sell "For Sale By Owner"?

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Should You Sell "For Sale By Owner"?
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Thousands of homeowners nationwide choose to sell their homes without the services of a real estate agent or broker - as much as 20 percent of home sales annually are accomplished on a "For Sale By Owner" basis (also known as FSBO, or "fizz-bo").

Is FSBO the method for you? If you've never done it before, it certainly can be challenging, but if you are willing to do the work necessary to market your house and work with potential buyers, there are some advantages.

For example, by selling FSBO, you can:

• Save Money on Commission Fees
• Sell Your House More Quickly
• Protect the Equity in Your Home
• Keep the Selling Process in Your Control

Following are brief descriptions of the potential advantages to selling your home by yourself. Then we will outline some of the challenges that face those proceeding with a FSBO.

Saving Money on Commission Fees

Typically, a real estate agent or broker who lists and sells your home gets paid with a commission of between 5% to 7% of the selling price. That means that if your house sells for $200,000, you would end up paying him or her between $10,000 and $14,000. The commission makes up by far the biggest chunk of the expenses associated with selling your house. If you sell it without the help of an agent, you save that money.

Sell Your House More Quickly

True story: Depending on the choices you make and the real estate market in your area, you may be able to sell the house faster than an agent could.

If a fast sale is a high priority to you, once you've figured out what the asking price for your house should be, subtract the amount you would pay an agent if he/ she were to sell it at that price, and reduce your asking price by a like amount, passing on your savings to the buyer. Your house will be priced lower than other comparable ones in your area, and buyers are likely to respond quickly and enthusiastically!

Even if you do not pass all the savings on to the buyer, you may be able to sell your house just as fast or perhaps more quickly than an agent if the market in your area is particularly strong and houses are being snapped up rapidly. Furthermore, it may be that you are more motivated to sell the house than an agent, who may be busy with dozens of properties at a time.

Protect the Equity in Your Home

An agent's commission, though based on the selling price, is paid out of the equity you have in your home. Therefore, if that commission costs you $10,000 and you only have $40,000 in equity in the home, the commission will take away 25% of your equity. If you choose FSBO, you protect your equity.

Keep the Selling Process in Your Control

If you choose FSBO, you will make all the decisions about when your house is available to be shown, about the correct price for the house, about the escrow company you use. All the advertising decisions - where and when your ads will run, what aspects of your home they emphasize - will also be yours. If you are the type who relishes being in control of all life's details, you will probably prefer selling your home yourself.

Challenges That Come With Choosing FSBO

Of course, FSBO is not the answer for all sellers. It can take more energy and commitment on your part than if you were to list with an agent.

You will need to be able to show your house almost at any time if you are serious about selling. You will need to pay for advertising so that potential buyers know your house is available, and do some research to know how to price your house. You will need to find and hire a good real estate attorney to tell you what things by law have to be disclosed to the buyer prior to a sale, look over any contracts, and ensure you do not inadvertently discriminate against potential buyers. You will have to negotiate directly with buyers, and with buyers' agents. You will need to find an escrow company to administer the closing.

In short, selling by yourself is not simple. But, neither is selling through a real estate agent. The FSBO option can be worth your hard work, if you are committed to saving money, equity and quite possibly time. You will never know unless you try!

Educate Yourself!

Use the resources offered on this Web site by Owners.com and we think you'll be on your way to the smooth sale of your home.

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