The Pros and Cons of For Sale By Owner
You’ve likely heard the term “for sale by owner” (FSBO) before.
The “for sale by owner” process is where a homeowner sells a home directly to the buyer without any agent involved. In doing so, the owner spares both of the parties from having to pay pretty hefty commission fees.
While it might sound like a win-win on the surface, there are some things that need to be taken into consideration. In fact, this type of approach ends up being far more costly in the long run, especially for sellers who do not have a lot of experience.
Before you hop on the FSBO train, let’s talk about the pros and cons.
Pros of FSBO
Lower Commission Fees
One of the top reasons people opt into the FSBO route is that it has the potential for cost savings. When you sell your home the traditional way with an agent, you typically have to expect around 6% in commission fees, 3% of which goes to your agent and 3% of which goes to the buyer’s agent.
When you work on the FSBO route, you only need to pay a commission to the buyer’s agent. That 3% savings can be fairly significant.
More Control Over the Sale
In the FSBO route, you control the price. You’ll have the final say as to how much you sell your home for, what types of improvements you must make ahead of time, and who you want to sell your home to. If you’re someone who likes control, it might be a good route.
However, you will need to handle every part of your transaction, even if you aren’t prepared to do so.
Because you know your home better than anyone else, you will be able to sell your home better. You know what it is like to live in your neighborhood and you can share that experience with potential buyers.
Cons of FSBO
Lack of Pricing Strategy
Developing a pricing strategy is not easy if you don’t have experience. Because there is limited access to public marketing data, there is no clear-cut way for a homeowner to know which of the home out there are or are not selling.
Since closing prices do not require public disclosure, people do not have any precise ways of knowing how one home’s value compares to another.
You need to make sure that your home is ready to list whether you have an agent or not. As we say all the time, first impressions mean everything. While you might absolutely adore your interior decor, a prospective buyer might not. Having an unbiased agent giving you suggestions can be helpful in this regard, especially if you are trying to make your home marketable.
No Access To Marketing Channels
Reaching prospective buyers is no walk in the park. While you might be able to put up a for-sale sign or post your home on Facebook, most buyers aren’t using these channels to find homes.
One of the main benefits of working with a listing agent is the ability to post your home to MLS. However, a great agent will go beyond the bare minimum and provide you with targeted marketing strategies to maximize your home’s exposure.