What is FSBO? FSBO in real estate, known as For Sale By Owner, is a commission-free way of selling a home by which the homeowner represents their own sale without the use of a real estate agent.
When it comes to selling real estate, For Sale By Owner or short form FSBO, really means taking matters into your own hands and gaining total control of the entire sales process. In the real estate industry, approximately 10% of homes are sold FSBO, where homeowners choose not to use the expensive services of a real estate agent. This allows the homeowners to save thousands of dollars in commission fees while retaining the ability to deal directly with their buyers.
Traditionally speaking, the FSBO process of selling a home may be older than Rome. The act of selling one’s own property has been practiced for hundreds if not thousands of years. In contrast, the agency brokerage model has only been around for a fraction of the time. Where in the late 1800’s intermediaries, today known as real estate agents, began to broker deals on behalf of property owners for a commissionable cost. On average these costs today represent 5%-6% of the total value of the home selling price, thus, making FSBO sales a highly attractive alternative for many consumers.
The process of selling your own home is safe, legal, and relatively simple. No matter which route you decide to sell your home, it is always a great idea to retain the services of a real estate lawyer. In many US states and Canadian provinces, you will require professional legal services to complete and close your final real estate transaction, regardless of if you use an agent or go at it alone.
When selling FSBO, you will be responsible to look after all matters of your sale. For many homeowners this can often be a highly fulfilling journey, while acquiring a small fortune upon success. Unlike using a real estate agent, you will be responsible for setting your own price, marketing your home online, showing the property to perspective buyers and finally negotiating the final merits of your sale. In most cases, your lawyer or your buyers’ lawyer will complete the final sales contracts. Check out our article on How To Sell Your Own Home for additional information.
The most time-consuming effort for any homeowner relates to making the property look at its very best and keeping it that way for every showing. To get top dollar for your sale and ensure that the home sells quickly you may need to invest some time and money in home improvements. Unfortunately, even if you hire a real estate agent, this will be something that you must do and pay for on your own. For some additional tips be sure to read our article on Preparing Your Home For Sale By Owner.
Let’s do the simple math. Assuming your home sells for $500k using the services of a real estate agent at 6% commission. Your cost to sell your home will amount to a staggering $30k!
What about flat fee MLS®? This may be a cheaper alternative, but it will still cost you a pretty penny. Flat fee MLS® allows you to save half the commission at best, but you still must do all the work on your own. In this formula your upfront cost for a flat fee listing is on average only $300, but you will have to declare a buyer’s agency commission of 2.5% to 3%. In this case you would pay appx $15k to sell but be left with doing everything yourself. For most homeowners, this makes the least amount of sense.
In this example, taking the for sale by owner approach can save you up to $30k, by using a company like TradeCasa.com. TradeCasa is the only “true” for sale by owner real estate marketplace. We do not sell or provide services that result in unexpected commission fees. Our premium For Sale By Owner Marketing Packages are just a one time fee of $100 and we will provide you with all the marketing and sales tools to get the job. Best of all your final savings are tax free!