For sale by owner (FSBO) vs. realtor statistics

Although exciting, selling your home can become complicated when it comes to the selling process and the real estate market. Before you start selling your home, you’ll need to figure out if you’ll be going through a real estate agent or selling it yourself, which is called for sale by owner (FSBO).

FSBO can help you save on commission costs and give you full control over the selling process – however, in many cases, hiring a real estate agent may outweigh the benefits of FSBO. Keep reading to learn more about the differences between for sale by owner vs. realtor.

What does for sale by owner mean?

For sale by owner (FSBO) is when a homeowner lists a home for sale themselves, rather than using a real estate agent. If you choose to go the FSBO route when selling your home, you would be responsible for the entire process, including:

• Research: Performing market research to find out how your home is valued
• Pricing: Figuring out a price that’s not too high but not too low
• Staging: Prepping your house for a potential buyer with staged furniture and decor, as well as making sure everything is cleaned and repaired
• Listing: Writing your home’s description, and taking and uploading photographs
• Advertising: Creating marketing materials such as ads, flyers, local newsletter placements, yard signs, etc.
• Showing: Organizing open houses and showings for potential buyers
• Negotiating: Handling communication with buyers and negotiating prices
• Drafting paperwork: Dealing with legal paperwork and closing the deal

Many homeowners will choose this route to avoid the heavy fees and commission costs associated with professional real estate agents. However, real estate agents do have expertise and experience under their belt, so on the flip side, you have fewer responsibilities when you work with them.

FSBO may be a good fit for you if you are well versed in the real estate industry or if you have someone in mind who’s looking to buy. If so, you don’t need to set aside extra time for listing and marketing your home which could lead to a quicker deal. 

For sale by owner vs. realtor: Advantages and disadvantages

Whether you choose for sale by owner or a realtor, there’s a lot going on when selling a home. Read on to explore the advantages and disadvantages of for sale by owner vs. realtor.

Benefits of for sale by owner (FSBO)

There are several benefits of for sale by owner, including: 

• You’re in control: Going FSBO means you have complete control over the home selling process. This is great if you’re comfortable navigating the steps and you know what kind of offer you want.
• You know your home best: You’ve lived in the home, so naturally, you know it best. This can help you if you’re choosing for sale by owner.
• You don’t pay listing agent commission: By choosing FSBO, you get to save on the listing agent commission. With a real estate agent, a homeowner would typically pay around 6% of the home sale price as the commission fee. However, if you choose FSBO, you still have to pay a buyer’s commission, which is around 3%.

Cons of for sale by owner (FSBO)

Although you save on agent commission by going for sale by owner, there are some disadvantages to be aware of, such as:

• Can take up a lot of time: Navigating the home selling process yourself is not easy – it can also take up a lot of your time and cause stress. If you choose this route, ensure you have the time and emotional capacity.
• Marketing expenses can get costly: Although you’re saving money on the commission fee, you still have to spend a good amount on advertising and promoting your home on top of the work you’re already doing.
• Could take longer to sell: A home that is sold as FSBO could sell up to 6% less¹ and at a slower rate than homes sold by a realtor. It all comes down to how much work you’re willing to put in and how fast you need to sell.

Benefits of a real estate agent

Benefits of hiring a real estate agent over FSBO include:

• They know the market: A real estate agent is experienced in the industry and is always up to date with what’s happening in the market. With their knowledge, they’ll be able to match the right price to your home.
• They have access to Multiple Listing Service: Multiple Listing Service (MLS) is a database that only real estate agents have access to that connects buyers to homes for sale.
• They have connections to stagers: Instead of staging your home yourself, your real estate agent already has connections for stagers and photographers, so you don’t have to find them or do it yourself.

Cons of a real estate agent

Although real estate agents make your job easier when it comes to selling a home, there are still a few factors to consider before hiring one, such as:

• You’ll have to pay a listing and buyer’s agent commission fee: Hiring a real estate agent to sell your home can be costly. They work on commission and will typically take 6% of the home’s sale price. This commission is split between the real estate agent and the buyer’s agent.
• They may have divided attention: Oftentimes a real estate agent will have multiple clients, so there’s a chance that your home may not get as much attention as needed to sell. However, since real estate agents work on commission, they’ll have increased motivation to get your house sold.
• They have busy schedules: Hiring a real estate agent means that you’ll have to be flexible and work around their schedules. This could cause the selling timeline to get pushed back if appointments and meetings continually get rescheduled.

5 reasons you should hire a real estate agent over FSBO

Hiring a real estate agent can be more time-efficient and less stressful than selling FSBO. Here are five reasons why you should hire a real estate agent instead of going the for sale by owner route.

1. Decreases legal risks 

There are many legalities involved in selling a home, such as seller’s disclosures and other paperwork. All of this needs to be completed correctly during the selling process, and if you’re inexperienced, your chances of error are higher.

For example, if the seller’s disclosure isn’t properly filled out, you, as the FSBO seller, can be held liable for things like breach of contract, negligence and fraud.

A real estate agent is likely to know a lot more about these laws and regulations than the typical person, so the legal risks decrease.

2. Filters out unqualified buyers

With a real estate agent’s experience, they can better help filter out unqualified buyers and narrow down your options, which can help speed up the buying process. Real estate agents are trained to ask strong qualifying questions and determine the motivation of a buyer, which better gauges how serious they are about the buying process.

This can save you a lot of time and hassle versus if you were to try and determine this yourself through FSBO.

3. Saves you time 

Above all, hiring a real estate agent will save you time and energy. They’re skilled and trained to handle every step of the real estate process, which can ease stress and save time on your end.

4. Requires negotiation skills  

The average home buyer usually doesn’t have sales or specialized experience in negotiating home sales. Luckily, real estate agents are trained in this area and can take care of this for you if you’re buying a home.

Having a real estate agent make the negotiations for you can take away a lot of potential stress – they’re also able to take emotions out of the equation. Selling your home can be an emotional process, and if you were to go the FSBO route and do it yourself, then you risk making a poor decision stemming from emotions.

Additionally, real estate agents are more experienced with the details of closing a home, such as closing costs and transfer taxes.

5. Helps get you a higher price

Selling your home with a real estate agent will likely get you a higher price than if you were to sell it by FSBO. Homes that are sold with a real estate agent typically close at a higher price than homes that are sold by the owner.  

The bottom line

The decision of for sale by owner vs. realtor is up to you and your experience. If you’re experienced enough, have time for the process or already know someone who wants to buy your home (such as a friend or family member), then FSBO may be right for you.

Keep in mind that a real estate agent can save you time and headaches, as well as provide the knowledge you need to get your home sold. No matter how you choose to sell, always make sure you have a professional check over the legal paperwork.

If you’re selling and looking to purchase a new home, learn how much home you can afford given today’s mortgage rates.

Sources:

1.  Collateral Analytics