Pros and Cons of For Sale by Owner Listings

When you list a property on your own, without the help of an agent, it is referred to as “For Sale By Owner,” or FSBO listing.

FSBO listings are primarily intended to cut out of the middleman, the agent, and avoid paying the associated real estate commission.

Homeowners believe that by eliminating the agent, they will benefit by taking in a greater percentage of the profit from the sale. However, this isn’t necessarily how things always turn out.

FSBO Listings Often Cause More Harm than Good

Selling a property is a difficult endeavor, one that takes time, patience, and hard work.

The problem is FSBO listings give off a certain vibe to home buyers. If you see a FSBO sign instead of an agent sign, you may be thinking “bargain” or “distressed sale” for starters.

You may also think the seller isn’t all that serious, that they’re just throwing a sign up to see what they can get for a home (would-be seller).

Along with that, the buyer who lists a FSBO may find that many interested buyers are in fact unqualified, bargain hunters, and simply just passing through. Many are looking for a good deal because somewhere along the way they associated the phrase “For Sale by Owner” with “bargain”. And it makes sense because it is a more seldom seen listing, so it may excite buyers.

Commissions Rolled Into the Sales Price

What’s important to understand is that the commissions charged by real estate agents typically go into the sales price and get paid by the buyer of the home.

In other words, if an agent wants to earn 6% commission, they will simply raise the asking price by 6% to make up for the difference. This is a bit of a catch-22. Real estate agents will tell you that if you go it alone, you’ll likely get offers below your asking price, but if you use an agent you’ll get a bid above your asking price. Unfortunately, that excess will likely go to the agent, so it’s almost awash.

The main difference, however, is that the agent should be doing most of the legwork for you, so in a way it can be a benefit for the seller to stick with the agent.

Real estate agents should supply promotional material and advertising, as well as provide advice, qualify prospects, and get your home listed on the MLS (Multiple Listing Service).

So their services go into that commission as well, and if you get the same price with less work, it may be a better choice.

So what about the benefits of a For Sale by Owner listing?

First of all, you make all the decisions, and you take in all the profits from the sale of your home. You also get to set the schedule for home viewings and negotiations. You personally meet and interview all potential buyers to determine if they’re qualified, serious candidates.

When it comes time to negotiate, it will be between you and the buyer. No agent to agent banter while you sit out of the loop, wondering what will be accepted.

Instead of having an agent parade around your home, you can genuinely show prospective buyers your home from an owner’s perspective. You clearly know the ins and outs of your home better than an agent who has seen the home only once or twice. You can highlight the good and focus away from the bad.

And what about that huge commission that agents charge? One noted downside to using a real estate agent is that to cover their commission, they typically raise the asking price 5-6% and then the home sits on market for months. If it fails to sell in that time, homeowners may panic and lower the asking price, thus taking their original asking price less the commission to the real estate agent.

With a FSBO listing, you can set a more realistic selling price for your home, attracting more buyers and ultimately getting the sale without the extra commission fee.

Better Support for FSBO Listings Nowadays

And nowadays, there are even support networks for FSBO properties that provide national listing services, advertising, and more for a much lower price. And many of these websites have proven that selling your home with these services is quick and efficient, and comparable to using an agent.

So where does that leave us. Are FSBO listings superior to agent listings, or are both riddled with problems? The answer really comes down to you as a homeowner, and what you know, and what you’re willing to put up with.

To many, the convenience of using a real estate agent at the cost of a commission may be worth it. To others who are skilled in the real estate trade, a FSBO listing may be much more beneficial to using an agent.

Take the time to decide how you want to proceed before setting out to sell your home.

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