Long Distance Moving

Real Estate FSBO

For most people looking to sell their home, the savings of a for sale by owner (or FSBO in the lingo) is tempting, but there's more to it than saving agent fees. Here are some pros and cons, and some tips and advice, with this approach.

1) Save on commissions. This is the No. 1 reason: saving on the 5% to 6% commission the real estate agents demand (about 3% to the buyer's agent and 3% to the selling or listing agent is typical). On a $400,000 home, commissions can be about $24,000. If an agent can deliver a contracted buyer in about 30 days, you just paid $800 a day for using a listing agent. That kind of money is enough to sell some home-sellers on giving it a whirl.

2) Be available. When people take on a side business, friends might joke, "Don't quit your day job." To have the time to show your home properly, you might just have to quit your day job, at least for awhile because showing homes is time-consuming if you want to reach the maximum number of would-be buyers.

Buyers go house-hunting at all times of the day. So you can say you are only doing showings between 6 p.m. and 9 p.m. on weekdays and all day on the weekends, but what if while waiting for you to be available, the potential buyer goes off and finds another home they like just as much as yours?

Buyers get turned off if they don't hear back for 48 or more hours -- especially when it's a buyer's market.

3) Use well designed marketing materials. Take some tips from the pros and provide potential buyers with a detailed brochure about homes for sale, complete with high-quality photo images. And in all marketing materials provide a website URL where buyers can go for more info. You're not design-savvy? Pay a seasoned graphic designer to layout your brochures and website. The cost would still be less than paying an agent's fees.

Also, the Internet has made it easier than ever to get your home in front of potential buyers.

4) Know your competition. Take time attending open houses about three months before you're ready to list, and keep going while your home is up for sale. Looking at other homes and how they're marketed will give you a good idea of how the other homes compare to yours. You can even approach other real estate agents about obtaining a list of sold and active comparables and perhaps even give you an idea of how you should price your home; they might do so because they hope you'll recommend them to a friend or even use them if you grow tired of being an FSBO.

5) Offer incentives. Again, you're competing with the marketing muscle of big real estate firms and homebuilders. Buyers will find them to be more reliable about disclosures than they'll find you.

Here are some incentives you can offer: Buy a home warranty that will cover repairs on major appliances. Or offer a year of paid utilities. Give potential buyers a list of what each utility costs you per month, or on average each season, and then offer to pay one year of utilities for the lucky buyer by paying the companies in advance. The cost will still be less than any real estate agent commissions you'd have to pay – and even if you go with an agent, you might have throw in similar types of incentives.

You could also split the commission -- or in effect lower the sales price -- based on what you would have paid a real estate agent.

6) Don't do the paperwork yourself. There are stacks and stacks of forms involved in closing a home, from title insurance to escrow. Most FSBO sellers say it's above their head and most buyers aren't willing to trust their own knowledge, let alone yours, in this area. Offer to pay for a real estate attorney or a real estate agent to handle paperwork, and say you will do so in your marketing materials.