If you’re looking to educate yourself on the nitty gritty of selling your home on your own, look no further! We’ve combed through the latest data and reports from organizations like the National Association of REALTORS (NAR) to bring you this comprehensive guide.
Whether you’re a buyer or a seller, read on to learn everything you need to know about for sale by owner homes.
- For sale by owner works best for sellers who already have a buyer in mind.
- In most cases, you’ll still need to pay a buyer’s agent commission (3%) on the sale of your home.
- Only licensed real estate agents can post to the MLS, but you can post to websites like Zillow and ForSaleByOwner.com for free.
- Buyers can sometimes save money by purchasing a for sale by owner house because many of them sell for under market value.
- As a buyer, your realtor may be reluctant to show you a for sale by owner home if there’s no buyer’s agent commission.
You can save money on your real estate commission without sacrificing the expertise of a real estate agent by listing with Real Estate Witch. Learn more we can sell your home for a low, 1.5% commission!
Top for sale by owner questions for sellers
1. How do I sell my house for sale by owner?
When you’re selling your house for sale by owner (FSBO), you — the homeowner — are representing yourself. That means you’re responsible for preparing your home for sale, marketing your property, and showing your home to buyers.
According to a 2020 study conducted by the National Association of REALTORS (NAR), preparing FSBO homes for the market and sifting through paperwork are the two most difficult steps for sellers.
Prepare your home for sale
To start, you’ll need to get your home ready for the market. Make any necessary repairs, such as fixing broken faucets, windows, or ceiling fans, and clean the interior of your home.
Make sure your home will make a good first impression on potential buyers by sprucing up the exterior. Add mulch to your landscaping, put a fresh coat on the siding of your house, or plant some flowers.
It’s also a good idea to stage the home so prospective buyers can easily picture themselves living there.
Market your property
You’ll also need to set a list price and market your house to find a buyer. You can hire a professional photographer to take pictures of your home.
List your home online and consider hosting an open house to attract potential buyers. You can list on Zillow, Trulia, and most forms of social media for free.
You may be able to post on the MLS (multiple listing service) for a flat fee.
Show to buyers
When buyers reach out to you, you will need to make yourself available for a private showing. You may even hear from some real estate agents who are interested in representing you.
When showing your home to potential buyers, it’s important to make sure they are qualified and pre-approved for a loan.
2. Who is for sale by owner best for?
Generally, people who know real estate very well (like real estate agents) and those with a lot of time on their hands are good FSBO home sale candidates. That’s because selling a house yourself takes a whole lot of time and energy. It’s not impossible, but it can be laborious.
For sale by owner also works well if you already have a buyer in mind. Perhaps you are transferring your home to a friend or family member, going through a divorce, or coordinating an estate or bank sale. Knowing the buyer is pretty common — it accounted for more than half of FSBO sales in 2020. These houses also tended to stay on the market for less than a week, and sellers received the full asking price.
If none of the above conditions apply to you, consider whether you can afford to deal with potential buyers, manage and complete the right paperwork, and be flexible on your timeline.
3. How long does it take to sell a home by owner?
On average, homes that are for sale by owner sell quickly. In 2020, over 75% of FSBO homes sold in less than two weeks, compared with three weeks for agent-assisted homes.
But here’s the thing — over half of FSBO sellers have a buyer lined up before they even put their home on the market. Because of this, the data may be a bit skewed.
If you already have a buyer lined up, there’s a good chance your sale will be complete within one to two weeks. But if you don’t have a buyer in mind, it could take longer than it would take with a realtor. For context, most realtors move homes in less than seven days.
There are a few factors that could slow down the sale of your house. If the home is overpriced, it may sit on the market longer and sell for less in the end.
Buyers who are not preapproved may have a hard time getting a loan, and this can slow down the closing process. Finally, if your home needs significant repairs, the buyer may ask for contingencies, which can also slow down the sale.
To speed up the sale of your home, make sure it is priced accurately. Vet your buyers thoroughly, and take care of big repairs before putting your home on the market.
» READ: How Can I Sell My House Fast?
4. How much do for sale by owner sales cost?
If your buyer has an agent, you’ll need to pay a 3% buyer’s agent commission in addition to other costs. Your home is also likely to sell for less — FSBO homes sell for 6% less than agent-assisted homes.
Breakdown of for sale by owner costs
|Home repairs and improvements
|For-sale-by-owner yard sign
|Flat-fee MLS listing
|Real estate attorney
|$150–$350 per hour
|Buyer’s agent commission
|3% of the home sale
If you already have a buyer in mind, you may be able to skip most of the marketing costs, such as staging your home and getting professional photos. There are also ways to market your home for free, such as posting to social media, word of mouth, or listing on Craigslist or Zillow.
» READ: How to List on the MLS by Owner
5. Can I save money by selling my house without a realtor?
The short answer? Maybe — but probably not. You’ll save money on the real estate agent commission, but chances are, you’ll lose money overall on the sale of your house.
For sale by owner homes typically sell for less than the selling price of other homes. According to a report from the National Association of REALTORS, for sale by owner homes sold at a median of $217,900 in 2020, compared with a median of $295,000 for agent-assisted homes.
That’s a loss of $77,100, or about 26%.
To avoid getting lost in the numbers, here’s an example of Peter, the statistically average FSBO seller.
Quick case study: Peter the FSBO seller
Peter’s home is worth $250,000. He decides to list it on his own, and he comes up with a price based on comparable listings in his area.
Peter overestimates the worth of his home, so it ends up sitting on the market for a while. Eventually, he gets anxious and reduces the price.
The home sells for $185,000, 26% lower than the value he would have gotten from an agent. Because Peter sold the home to a direct buyer — meaning there was no real estate agent involved — he didn’t have to pay any buyer’s agent fees.
So, did Peter save money? Let’s break it down.
- Peter saved $11,100, or 6% of the sale price, by not paying a real estate commission.
- Peter lost $65,000 because his home sold under market value.
- He also spent $2,000 on professional photographs, staging, a flat fee MLS, and a real estate attorney.
Total = Peter lost $55,900 on the sale of his home.
While this seems like a huge number, it’s actually a conservative estimate, considering that many FSBO sellers still have to pay a commission to the buyer’s agent. If Peter’s buyer had had an agent, he would have likely only saved about $5,550, bringing his total loss to $61,450.
6. Do I need to offer to pay a buyer’s agent commission?
Yes, you should if you’re selling your home to someone you don’t know. The buyer’s agent might check in advance to make sure you’ll pay them the standard 2–3% commission.
If you refuse, buyer’s agents won’t be motivated to show your home — because there’s no incentive in it for them.
If you really don’t want to offer a buyer’s agent commission, you’ll need to find a buyer who’s not using an agent or is willing to cover their agent’s fees (and therefore pay additional closing costs). You will need to negotiate with the buyer in that case.
» READ: What Is a Buyer’s Agent?
7. How should I price my home?
Doing three things can help you get the best price for your home: running a comparative market analysis (CMA, or comp) of other homes in your area, getting an appraisal, and adjusting the price as needed.
If you’re already using a discount broker or limited agent, they can do a CMA for you. You can also ask a few realtors so you can compare the results; most will do this for free in the hopes of winning your business if you decide not to sell FSBO.
To save money, you can run a comp yourself using home value websites like ForSaleByOwner.com, RE/MAX, Trulia, Redfin, Realtor.com, and Zillow. However, each of these websites’ value calculators may yield different results.
For example, Zillow’s Zestimates can often be inaccurate because the input information is not verified or may not reflect renovations or additions. Running multiple comps will paint a more complete picture.
When running your own comparisons, look at the selling price for homes sold in the past three to six months. Do not look at listing prices or at homes that are still for sale.
Make sure you are comparing homes with similar qualities to your own, such as:
- Neighborhood or district, staying within a half mile of your home
- Square footage and lot size
- Number of bedrooms and bathrooms
- Age and recent renovations
- Special features or additions
Get a professional appraisal
An appraiser visually inspects a home and assesses recent sales of similar homes and market trends to determine value. They’ll also factor in how new appliances, remodels, and updates (or lack thereof) could affect the price. An appraisal costs about $300–400.
Consulting an inspector or real estate broker can help, but they should not replace an appraisal.
A home inspection — which may be needed at other points of the selling process — costs $338 on average and can help you identify which issues will affect your home price. Some brokers offer a broker price opinion (BPO), an informal analysis of your home’s location, local market, and condition.
Adjust your price when you need to
FSBO homes tend to sell for less than those sold with a realtor, so pricing your home correctly early on is vital. If speed is important to you, listing your home at the lower end of your price bracket can help it sell faster.
Listing your home too high can put it out of budget for buyers. In fact, 60% of sellers end up dropping their initial listing price.
Sometimes the lower selling price is due to a lack of industry knowledge and pricing trends. Other times, it’s because buyers form negative opinions of a home that’s been on the market for a long time or adjusted its price multiple times.
8. What can I do to make my home more attractive to buyers?
After creating a good listing description and price, thoroughly cleaning, decluttering, repairing, and staging your space can make your home attractive.
Write a detailed online listing description
- Include basic information: number of rooms, square footage, appliances, and special features. Look at other listings for inspiration.
- Ask yourself how someone could benefit from this home. Is it best for a growing family? People with pets? Lovers of the outdoors? Has it withstood multiple storms?
- Describe the neighborhood: neighbors, school districts, nearby amenities, shopping centers, groceries, parks, and walkability or transportation.
- Hire a professional photographer: 77% of buyers said viewing professional photos was important in their home-buying decision.
- Offer incentives: home warranty policies, credit toward repairs, credit toward HOA fees, movers, or buyer’s agent commission.
Boost your curb appeal
Homes with good curb appeal sell for an average of 7% more than those with bland exteriors, according to a 2020 NAR study.
Make the most of your property’s appearance by:
- Landscaping your yard
- Fixing obvious exterior disrepair
- Cleaning up your garage and driveway (power washers can work wonders)
- Adding a fresh coat of paint to your front door.
Clean, declutter, and stage
You want new buyers to envision themselves in the property, so take these steps to land a good first impression:
- Hire a professional service to deep-clean floors, carpeting, and walls — as well as anything that could trap bad smells.
- Clean your windows to increase the amount of light coming into each room — this is especially important before taking pictures!
- Hide personal photos, kitschy decorations, and old furniture, even if it’s sentimental to you.
- Prioritize the living room, kitchen, dining room, and primary bedroom. Staging a home office may be more important now as people work remotely.
According to NAR, 82% of buyers’ agents say staging lets buyers picture themselves in your home, and 31% of sellers’ agents say it decreases the amount of time the home spends on the market.
Staging can be as simple as rearranging furniture and simplifying décor schemes. But it can also involve renting temporary furniture and repainting some rooms. You can do it yourself or hire a professional staging service, which averages $75 per hour.
9. How do I market my house FSBO?
Here are some of the best ways to market your FSBO house:
- List your home to an MLS. Real estate websites like Zillow and Realtor.com also pull from there, so you’ll get the best bang for your buck.
- Tap into your social networks. Post to Facebook, Twitter, and Instagram, and ask your friends and family to share those posts. Don’t underestimate simple word of mouth: tell the people around you — like your coworkers and neighbors — that you are selling your home, and encourage them to spread the message.
- Put up a “For Sale by Owner” sign in your yard. A quarter of FSBO sellers use this trick. You can get these at most printing and home improvement stores, such as Home Depot, Vistaprint, Lowe’s, and even Amazon.
- Use flyers and print ads. Ask local businesses if you can put up an ad for your home — for example, on the window at a local coffee shop, or at a board in your yoga studio.
It may come as a surprise that nearly half of all FSBO sellers don’t market their home, meaning they’re potentially missing out on buyers or settling for a lower price.
When you start marketing your home, local realtors will often approach you to hire their services — so be prepared for marketing calls!
10. How do I list on the MLS? What does it cost?
Only licensed real estate agents can list properties on your local MLS. You will have to work with a flat fee MLS company or a limited agent in your area to get your home listed.
A flat fee MLS (FFMLS) company will post your property for a one-time fee, usually $70–300. But unless you opt for an upgrade, the listing is all you get, and you will have to manage the entire listing yourself.
Some services may have listing restrictions — for example, allowing a maximum of six photos, or limiting the length of time a listing stays live.
More expensive packages or pricing tiers may include services like:
- Help staging and marketing, including with photography
- Pricing advice
- Negotiation and paperwork support
If you’re considering upgraded packages, you may get more value by hiring a listing agent, who will include all of these services in their fee.
11. Where can I list my FSBO home for free?
You can list your FSBO home for free on Zillow, ForSalebyOwner.com, Facebook Marketplace, Nextdoor, and Craigslist.
On Zillow, your listing will be cross-posted to Trulia, exposing it to more buyers. However, they’ll have to search using the For Sale By Owner filter to find your home — your listing won’t show up by default on the property map. If you use ForSalebyOwner.com, your ad won’t be syndicated on any other real estate websites.
You can also list on social network sites for free:
- Facebook Marketplace — You can share to local Facebook groups to get more traffic to your listing.
- Nextdoor — Homeowners can post their home once in the For Sale and Free section.
- Craigslist — Listings are only live for a couple weeks at a time, so you need to actively monitor them to make sure they don’t disappear.
Other FSBO websites — such as HomeLister, Trulia, FSBO.com, and HomeFinder — offer low-cost listing packages.
Keep in mind, none of these sites list your home on the MLS. You’ll have to get help from a realtor or flat fee MLS company for that.
12. Do I need to host an open house? How?
No, you don’t need to host an open house.
Although an open house can help attract buyers if you don’t have one lined up, it can also attract a lot of people who are just browsing, leading to a lot of wasted time and energy. You’ll also need to be present during open house hours.
In general, open houses have become less popular. In fact, only 11% of FSBO sellers said they held an open house, and 40% of NAR members stopped holding open houses during the COVID-19 pandemic.
What are your alternatives to an open house? Since many buyers are doing their research online, investing in your home’s web presence can pay off faster than hosting an open house.
It may be more worth your time to focus on one-on-one tours. According to data from Zillow, private showings are more effective for closing a deal. Those can be in person or over video, like Skype or Facebook.
Post-COVID, 73% of buyers’ agents say having virtual tours available for your home is more important. You can also create a 3D property scan.
Regardless of how you’ll be showing your home — whether an open house, one-on-one tour, or virtual tour — you’ll have to prepare your home for the public.
If you decide to host an open house, follow these basics:
- Clean and stage the house. Make sure the real life walk-through matches any photographs online.
- Remove valuables. Consider stationing someone in each room to keep watch.
- Be available to answer questions. Prepare one-sheets with basic information and disclosures for buyers.
- Collect contact information to follow up with potential buyers.
13. What do I need to disclose with my FSBO?
According to federal law, you are required to disclose the presence of mold, radon, asbestos as well as lead paint. Each state has its own disclosure requirements, so check your state’s disclosure laws on Nolo.
Disclosures usually cover the following areas:
- Recent occupation history
- Property disputes
- Age and condition of appliances, including HVAC, water, and sewer
- Foundational or structural defects
- Quality of air, water, or soil
- Safety and climate hazards
- Recent renovations
You may be held legally liable if these issues aren’t disclosed. Buyers can also perform a title search to verify these facts, so make sure to provide disclosure copies to buyers.
» READ: What Is a Property Title Search?
14. Do I need to offer a home warranty?
You don’t have to. In fact, only 5% of all FSBO sellers offered any kind of warranty, according to NAR’s 2020 Consumer Profile study.
But don’t rule them out just yet, as warranties can serve as a buyer incentive and protect you from financial harm.
When selling a house, you’ll want to consider a seller’s warranty and a buyer’s warranty. They’re similar, but slightly different.
|What a Seller's Warranty Does
|What a Buyer's Warranty Does
|Covers the breakdown of major systems and appliances
|Covers the breakdown of major systems and appliances
|Coverage can extend to smaller appliances, like microwaves and doorbells, or be upgraded to include additional things like the fridge.
|Coverage can extend to smaller appliances, like microwaves and doorbells, or be upgraded to include additional things like the fridge.
|Lasts during a specific time frame, from when the home is on the market until closing
|Usually lasts one year
|Can protect the seller from unexpected costs during the time the home is for sale
|Can act as an incentive for homebuyers who are worried about old homes or unexpected future costs
Buyer home warranties protect the buyer, but they can also protect the seller. If the HVAC fails a month after selling the home, the buyer could think you covered up a faulty system and decide to sue. If the system is covered, the buyer probably won’t start calling their lawyers.
However, it’s important to note that warranties will only cover repairs under certain circumstances. If the 10-year-old HVAC unit goes kaput, and the home warranty company deems that its failure was due to the past homeowner’s neglect, they probably won’t cover it.
Home warranty costs vary by where you live. On average, they cost about $300 to $600 per year, according to the Zebra.
Some home warranty companies will provide a free seller’s warranty along with a buyer’s warranty, so shop around.
15. How do I negotiate a FSBO sale?
Without an agent, you’ll be doing the negotiating yourself. If the buyer has an agent, you’ll be primarily working with them. If they don’t, you’ll be working directly with the buyer.
Negotiations can be tricky, so you’ll need to study negotiation strategies for sellers. You may be better off hiring a low commission agent to help you if it seems like too much. Here are some key things you’ll want to know how to do:
- Counter an offer. How firm is your listing price?
- Reject an offer. Do you want to play hardball?
- Deal with repairs. Are you willing to take the time to get that screen door fixed, or would you rather just give the buyer a $250 credit?
- Understand contingencies. If something is uncovered during the home-buying process, like something serious is found during inspections or the appraisal is too low, the buyer can void the contract without penalty.
- Make concessions, if necessary. Will you help cover some of the buyer’s closing costs or include a home warranty? Will you throw in that nice new fridge?
- Set a closing date. When do you expect this deal to be done?
You can employ shrewd tactics, like putting an expiration date on your counter offer and setting deadlines to increase urgency. When fielding multiple offers, setting a deadline can drive a bidding war where you get to pick the highest offer.
We strongly recommend using a lawyer to draw up contracts and review offers. In 21 states and the District of Columbia, it’s legally required to use a real estate attorney when buying or selling a house.
16. How do I handle the paperwork when selling my home FSBO?
Selling your house yourself comes with a load of paperwork, and you’ll want to have everything in order to avoid delays and keep your sanity. Each state differs on what paperwork they require. Common forms include:
- Plans and permits for expansions and improvements
- Disclosure forms
- HOA agreements
- Purchase contracts
- Mortgage statements
- Home inspection and appraisal reports
- Property survey
If you have an attorney, they can tell you what paperwork you have to complete. Real estate agents can also find, organize, and file many of these documents for you.
Some documents aren’t required but are nice to have. Things like warranties and manuals for appliances are useful for homebuyers, and utility bills will help them budget accordingly.
It’s helpful to have the original sales contract, too. This is the contract used when you purchased the home. It will help refresh your memory about any disclosures you may have forgotten about.
If you don’t have a lawyer or an agent, it’s up to you to locate, organize, and keep all this paperwork safe.
17. How do I find FSBO paperwork and contracts for my state?
Without an agent, you can hire an attorney to do the legwork for you. Title companies may also be able to help you find specific paperwork or provide you with the necessary contracts and disclosures.
Some forms, like the deed, are available at your county’s courthouse. Your state or county’s government websites should be able to steer you in the right direction.
If you have a local real estate commission, you should be able to call or email them for more information about what you need in your county.
18. Who holds the escrow money for a FSBO sale?
When a buyer is ready to show they’re committed to the sale, they will put up earnest money — either 1% to 5% of the home’s sale price or a fixed amount— as a deposit. This percentage or fixed amount will be in the purchase contract.
Normally, these funds are handed from the buyer to an agent, who then gives them to a neutral third party known as an escrow agent for safekeeping.
If the buyer doesn’t have a real estate agent, the earnest money should go directly to an escrow agent. Title companies and real estate lawyers can offer escrow services. Either the buyer or seller can open an escrow account, although the seller usually does it.
The earnest money is held until closing or the deal falls through. In certain instances, like if the buyer backs out of a sale without a good reason (e.g. the contingencies were met but they still don’t want the house), the buyer may have to forfeit their earnest money to you. The purchase agreement should detail what happens to the earnest money in these cases.
Do not hold the escrow money yourself. You can open yourself up to all kinds of lawsuits if those funds are mishandled.
19. Can I change my mind and hire a realtor?
Absolutely! There’s a reason why only 8% of all home sales in 2020 were FSBOs. Selling a house yourself is difficult — 28% of sellers said they chose an agent because they didn’t have the time or energy to go FSBO, according to a 2019 Consumer Housing Trends Report by Zillow.
If it all starts to seem too stressful, don’t lower your asking price and hope for the best. Hire an agent. According to the most recent NAR statistics, you’re likely to have a good experience: an overwhelming majority of agent-assisted buyers — 91% — said they would use their agent again or recommend them to a friend.
FSBO sellers who switch to an agent sold their home for more, too. According to the 2020 NAR Consumer Profile, the median sold price among all FSBO owners was $217,900. The median sold price among FSBO sellers who decided to switch to an agent was $269,000. That’s an increase of $51,100.
Those who are still worried about commission costs can try to negotiate their agent’s commission or use a limited-service, flat-fee agent.
Typically, these flat-fee agents sell your home for a set fee instead of a commission, but they may not do much more than plant a “for sale” sign by the mailbox and slap your house on the MLS.
For sellers who want a low commission fee and an agent who will actually help sell your home, Real Estate Witch offers full-service agents at discounted rates. We pre-negotiate a low fee of 1.5% of the home’s sale price, giving you the benefits of a full-service agent at a fraction of the cost.
Top for sale by owner questions for buyers
20. Should I buy a FSBO home without an agent?
Buying a FSBO house without an agent is certainly possible — it actually works just the same as using an agent. But it comes with pitfalls.
The biggest problem with not using an agent is that you won’t get any help during the process. You’ll also be working with the FSBO seller directly, which can be uncomfortable.
That means you won’t have someone in your corner helping with:
- Evaluating the price
- Finding other houses that might suit your needs better
- Preparing and negotiating offers and counteroffers
- Writing contracts
- Coordinating inspections and appraisals
- Attending the inspection and providing advice on the results
- Handling mountains of paperwork
- Understanding local real estate laws
Buying a home on your own isn’t easy — 33% of first-time buyers said understanding the home-buying process was the third most difficult thing about buying a house, according to NAR.
A good agent will have years of experience and will be looking out for your needs. FSBO sellers may not have priced their home correctly, meaning you could end up overpaying. An agent will be able to tell you how much you should pay for the house you want, and if the price the seller has set is worth it.
Need help finding an agent? Not only does Real Estate Witch match buyers with top-performing local agents, but you can get cash back at closing, too.
21. Can I save money buying a FSBO house?
Buyers may save money on FSBO homes because they are often priced under market value. In 2020, FSBO homes sold at a median price of $217,900 — about $24,000 less than the median agent-assisted price, according to NAR.
But the opposite is also true. Sellers without an agent can overprice their homes because they lack full knowledge of the market and comparable properties.
If you’re unsure about the price, talk with a licensed real estate agent. Agents can perform a comparative market analysis (CMA) examining sales of similar homes in the neighborhood. Their expertise will help you decide if you’re getting a good deal.
You can request additional price cuts at the negotiation table. If you’re using a buyer’s agent, you have an advantage. In 2019, a NAR report found that 38% of buyers said their agent negotiated a lower price.
Agents have extensive professional experience negotiating home sales, whereas most FSBO sellers are unaccustomed to brokering high-stakes deals. If the seller isn’t a seasoned negotiator, there’s a good chance you’ll come out on top.
22. How do I find homes for sale by owner?
FSBO-specific websites make it easy to find these properties online. Two of the most well known are FSBO.com and ForSaleByOwner.com.
FSBO.com has helped buyers find FSBO homes for more than 20 years. The site is free to search, but it doesn’t offer a notification program to alert buyers of new listings.
ForSaleByOwner.com is another FSBO site that’s been around for decades. It was established in 1999 and is backed by the Tribune Publishing Company. The site is simple to use, and buyers will find single-family homes, condos, and townhouses.
Popular real estate websites, such as Zillow, Trulia, and Redfin, also list FSBO properties, but they’re more difficult to find. The majority of listings on those sites are populated from the MLS, but only 6% of FSBO sellers pay to market their home this way.
On Zillow, those properties won’t appear on the map view. Buyers must select the “Other listings” button to see FSBO homes. On Trulia and Redfin, use the FSBO filter on the dropdown menu to isolate those properties.
Still can’t find what you’re looking for? Check Facebook Marketplace, Nextdoor, Craigslist, and other social media sites. Peruse the classified ads in your local newspaper. Ask friends and family if they know of any FSBO homes for sale.
If you’re looking for a specific neighborhood, drive around and look for yard signs. They’re the most common way FSBO sellers advertise, with 25% saying they had one in their yard.
23. Do I need to be preapproved to buy a FSBO home?
It’s always a good idea to get preapproved for a mortgage before making an offer on a home.
Getting preapproved means a lender will examine your finances to determine how much you can borrow. If the lender is confident you’ll be accepted for a mortgage and will be able to make future payments, they’ll provide you with a preapproval letter.
Preapproval shows the seller you’re a serious buyer who won’t have problems securing financing, which could otherwise slow the sale. If the seller is entertaining multiple offers, a preapproved buyer will likely have an edge over an unapproved one.
Preapproval can take 7–10 days, so if you want to move fast, have your letter in hand before making an offer on a home.
If you’re making a cash offer, show proof of funds instead of a preapproval letter.
24. How do I make an offer on a house for sale by owner?
Making an offer on a FSBO home is the same as making an offer on an agent-assisted home — by writing a formal offer letter. The only difference is that the seller will receive the offer directly and decide to accept, counter, or reject without the advice of an agent.
A buyer’s agent will write the letter for you. If you aren’t represented, you’ll need to draft the offer yourself or hire a real estate attorney. The document should include:
- Your name
- The address of the home
- The offer amount
- A copy of your preapproval letter
- Contingencies allowing you to back out of the sale if specified conditions are not met
- Items included in the sale
- A closing date
- A deadline to respond to your offer
Sellers generally have up to 72 hours to answer. When all parties have agreed to the terms, the buyer and seller sign a purchase agreement, and it becomes a legally binding contract.
It’s a good idea to enlist professional help, such as an agent or attorney, to look for costly errors.
25. What should I watch out for when buying a FSBO home?
There’s nothing inherently wrong with a FSBO home. If it checks all your boxes, it’s a perfectly viable option. However, there are certain aspects of the process you should consider.
Some homeowners may not be interested in actually selling. Choosing the FSBO route might simply be a way to assess interest in the property and gauge how much people would be willing to offer.
More than half of FSBO owners said they didn’t need to sell urgently, and many would wait indefinitely until they got a good offer. Be sure the seller is serious before continuing with the process.
Expect some reluctance from your realtor, especially if the seller refuses to pay buyer’s agent commission. In that case, you might be expected to pay your agent’s fee out of pocket. That’ll run you about 3% of the sale price.
There’s also the chance your realtor will end up doing the work of two agents because of the seller’s lack of knowledge and experience. For many agents, the hassle isn’t worth the effort of closing the sale.
Many FSBO sellers overprice their homes, which could affect your ability to get a mortgage. Lenders won’t approve a loan for more than a house is worth.
To make sure the home is priced accurately, get an appraisal to establish market value. You can also ask your agent to perform a comparative market analysis (CMA) to see if the home is priced fairly.
Owners with an inflated view of their home’s worth may be blind to its defects. Make sure the home matches what’s been advertised online by scheduling an in-person tour.
Sellers are required by law to disclose known conditions, but not everyone behaves ethically. Others may misrepresent the property unintentionally.
Protect yourself by getting an inspection and requesting a Comprehensive Loss Underwriting Exchange report, which notes insurance claims on the property. Beware of any seller who tries to persuade you to forego an inspection.
Finally, don’t expect much help paying for repairs or remodeling. Only 4% of FSBO sellers offered buyer’s a credit toward those services in 2020, according to NAR data.
Across the board, 85% of FSBO sales did not include any buyer incentives, such as home warranty policies or assistance with closing costs.
Feel confident buying or selling FSBO
Selling a home by owner isn’t easy. It requires a lot of time, and despite saving on commission fees, you may net less money than if you’d worked with a realtor.
Many who try FSBO decide it’s not worth the work and end up hiring an agent.
If your primary reason to FSBO is to save money, there are other cost-saving ways to sell your home.
Try working with a discount real estate broker. Real Estate Witch provides a free service that connects you with vetted, full-service listing agents who work for pre-negotiated discount rates — just 1.5% (or $3,000 minimum).
Can I save money by selling my house FSBO?
It depends. You won't have to pay the 3% seller's agent fee, but you can lose money on the overall sale — studies show that FSBO homes sell for 26% less than agent-assisted homes.
If you're worried about agent costs, check out these real estate companies that charge the lowest real estate commission fees.
Should I sell my house FSBO?
FSBO works best for sellers who have a buyer already lined up. If you don't, it's still doable, but it will take much more time and effort than selling with an agent. Find out everything you need to know about selling your house without an agent.
Where can I list my house for sale by owner for free online?
There are a number of different websites, like Zillow, which will let you list your home for free. Find out the best for sale by owner websites here.
Want to learn more about how you can save money on your next home sale or purchase? Read these articles to find out more.
Here’s How to Get a Home Buyer Rebate (And Save THOUSANDS): You can save money with a home buyer rebate — if you can get one. Companies that offer cash-back savings can put thousands back in your pocket, too.
What’s a Listing Agent, Anyway? Are They Worth It?: That 3% commission fee isn’t chump change. But you might be surprised to learn what listing agents do to earn their keep. (Hint: it often means getting your home to sell for more.)
Read This BEFORE You List Your FSBO on Zillow: Zillow is one of the most popular real estate platforms on the planet. Should you sell your home FSBO on there, or will it end up costing you?