If you’re looking to sell your home, the first piece of advice you probably heard was to find a good real estate agent. However, while this is common practice, it’s not a necessity, and it is possible to sell your home yourself. This is known as FSBO—for sale by owner—and it can save you thousands of dollars.
It’s not all rosy, though, and it’s worth thinking long and hard about it before rushing in. Read on to discover more about going FSBO, the pros and cons, and the best way to go about it.
Why Go FSBO?
Sellers who choose to go FSBO will typically do so to prevent paying the listing agent’s commission, which can rack up. A typical fee would be around 2.5% of the final sale price. In many urban areas across the country, this fee can soon reach between $15,000 and $20,000. By not hiring a listing agent, that money becomes yours—or at least a chunk of it will…
The Potential Costs of Going FSBO
You will potentially make savings by taking the FSBO route, but perhaps not as much as you were expecting. If we imagine you’re selling your home for $750,000, here’s what it could cost you if you don’t hire a listing agent:
- Buying agent’s commission (2.5%) = $18,750
- Legal fees = $3,000
- Home appraisal = $500
- MLS (multiple listing service) flat fee = $600
- Additional advertising (photographer, yard signs, flyers, etc.) = $625
- Total = $23,475
Using a listing agent with a fee of 2.5%, and bearing in mind your legal fees would be more or less halved since the agent will take care of some of the workload, would equate to a total of $39,000. So, while you will still save $15,525, there are still costs you will have to pay, as well as the time it’ll take to do things yourself. Be aware, also, that without an agent you may make costly mistakes if you’re not careful.
How to Go FSBO the Right Way
Going it alone can be a lot of hard work, since you will be required to do all the things that a listing agent would typically do. It’s unlikely that you’re as well-informed as a good agent, so you’ll need to do a lot of research before putting your home on the market. On top of that, you need to make your home ready for sale.
Preparing for Sale
Getting your home ready for sale includes thorough cleaning and renovations—a lick of fresh paint, a bit of yard work, etc. Once you’ve done this, you’ll need to take high quality photographs of your home, typically with a special, wide angle lens. Of course, you can hire a professional, though this would be an added cost.
A home inspection is also a good idea, as you never know what defects may be lurking behind the scenes. Knowing about these issues puts you in a stronger selling position, and prevents nasty surprises when potential buyers carry out their own inspections.
Valuing Your Home
Good listing agents will know your local market inside out, and will have the tools and contacts required to keep up-to-date. You don’t have this luxury, so you’ll need to work hard to ensure you value your home properly. An overvalued home will sit on the market indefinitely, while an undervalued home can cost you thousands of dollars.
Research the local market thoroughly, and obtain the average sale price for similar properties in your area over the last 6 months or so. To err on the side of caution, it’s well worth having your home appraised. While this is an added cost, you can at least be sure that you won’t drastically over or under value your home.
Listing Your Home
How you advertise your home is entirely down to you, though you’re likely to reach fewer potential buyers than a listing agent could. Whether you simply stick a sign out in the yard, or pay a flat fee to list your home on an MLS (multiple listing service), can be dictated by how much you want to pay, and how soon you want to sell.
There are a multitude of advertising options open to you, though using an MLS will ensure the widest reach. It’ll also be on your shoulders to arrange open houses and other visits from potential buyers.
Keeping it Legal
A typical real estate transaction involves a deluge of paperwork—contracts, counter-offers and standard documents. Add to all this negotiations, and you suddenly have a lot on your plate. Each province is subject to different regulations when it comes to selling property, so be sure you’re up to date. Hiring a real estate lawyer is advised, as they can ensure everything is above board.
Like anything in the world of real estate, it’s essential you arm yourself with as much information as possible. Consider your circumstances—if you wish to sell to someone you know, FSBO can work very well, whereas if you’re in a rush to sell quickly to a stranger, it might not be the ideal choice for you.