For sale by owner: what you need to know


By ,
Ask a Lender
January 16, 2018


For-sale-sign-with-living-room-in-background

Key Points

How to sell your home without the help of a real estate agent

  • For Sale By Owner (FSBO) transactions can save thousands of dollars on agent commissions.
  • Listing your home for the right price is a key piece to attracting potential buyers.
  • Advertise with many sources, including buyer’s agents, and use good photos in ads.
  • Enlist the help of a real estate attorney to draw up a purchase contract.
  • Disclose any previous insurance claims, repairs or other required information.

Homeowners who are looking to sell their property might consider saving a few bucks by not hiring a professional real estate agent, who lists the home for prospective buyers, and aids the seller with the sales contract and closing process.

With the increased popularity of online real estate and listing services, more of today’s sellers are utilizing a full or partial For Sale By Owner (FSBO) process. According to an August 2016 study by real estate services company Redfin, 25 percent of sellers in the previous year did not use a full-service agent. The self-directed segment of sellers has grown about 20 percent since the 1980s, Redfin said.

Homeowners can save significant money through an FSBO sale. As of November 2017, the average sales price of a U.S. home was $377,100, according to the U.S. Census Bureau. Based on a typical real estate agent’s commission of 2 percent to 3 percent, a seller could pocket an additional $7,500 to $11,500 on an average transaction.

If you choose the FSBO path, here are steps to take to ensure your home is sold in a reasonably timely and profitable manner.

Establish value

Start the FSBO process by answering a key question: How much is your home worth? Obtain a comparative market analysis from an online FSBO specialist or a title company. This report lists comparable homes sold in your area within the past several months, as well as current local listings, which are less valuable because they may not be true reflection of market value.

Offering your home for the right price should help attract more potential buyers. Some real estate agents may not tell you if your list price is overvalued, if they’re looking to lure business away from their competitors. This can be an advantage of the FSBO process and using a neutral source for a comparative market analysis. Pricing is crucial as buyers often express the most interest within the first two to four weeks of the home hitting the market. After that, they may be more skeptical about purchasing, as an extended listing period may indicate problems with the home.

Market and prepare

Good marketing may not sell your home, but it will increase the number of inquiries you receive and help get potential buyers through the door. Examine your local real estate market to determine if it favors sellers or buyers. Good marketing in a seller’s climate can bring higher sales prices, while good marketing in a buyer’s climate may mean the difference between completing the sale or not.

Advertise in local newspapers, real estate publications and as many online listing sites as possible, as these are often free of charge or low cost. Target buyer’s agents as they will have good connections. Successful ads have good photos, so include shots of the interior and exterior, or consider a virtual video tour that leads the buyer from room to room. Crop out sidewalks and streets to focus on the home itself. Remove vehicles parked in the driveway, as well as pets and children’s toys in and around the home. Mow the lawn and trim bushes.

When photographing interior spaces, open the drapes and blinds, allowing natural light to make the room brighter. Remove trash cans and close toilet lids. Use floral arrangements to spruce up rooms, and focus on important details such as fireplaces or hardwood floors. Finally, post FSBO signs outside your home. If you’re part of a homeowners association (HOA), however, you may not be allowed to post for-sale signs in your yard.

Create a contract

Without the help of an agent, the seller or prospective buyer should consider hiring a real estate attorney to draw up a purchase contract. This will likely cost $500 to $1,500. A signed agreement should include the names of all buyers and sellers, the property address, an agreed-upon purchase price, results of the buyer’s inspection, a targeted closing date and a list of any items — such as appliances — that are part of the sale. If the buyer is providing any earnest money or the seller is helping with closing costs, include that information as well.

Whether or not you’re represented by an agent, a seller is still bound to the same federal and state disclosure laws. They must inform prospective buyers of issues like lead-based paint, deaths that have occurred on the property within the past three years, and the potential for natural disasters or pollution. A seller should also willingly disclose any home repairs completed during their ownership.

Another valuable step in the sales process is a Comprehensive Loss Underwriting Exchange (CLUE) report. CLUE reports list any insurance claims made on the home within the past five years, the amounts paid and whether damage was caused by a natural disaster. This may include issues like water damage, mold or structural defects. Buyers who have the seller’s permission can obtain a report for about $20, although some companies will provide a free CLUE report to the current homeowner, so consider getting one if the buyer asks.


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