When it comes to selling one of your largest assets, it can be tempting to try FSBO (for sale by owner), thinking you will keep more money in your pocket.
Sure, in a seller’s market, you might have your pick of buyers and save 1-3% of your final sales price.
But when you’re not in a seller’s market, FSBO will not only cost you more time, it may also cost you more money.
How FSBO can cost you more
- Seller’s disclosure. Most states require that a seller “disclose” any known defects in the home. Failure to do so can cost you dearly in the form of a lawsuit from the new buyer. Example: You had a mold problem. You “remediated” it, but not professionally, and the mold returns. If you did not properly disclose this information, be prepared for an expensive lesson. The cost to remediate mold on a 2,100-square-foot home is approximately $13,000, which dwarfs the $6,000 commission you are trying to save on a $200,000 home.
- Legal considerations. Selling real property requires some form of contract in all states. Contract paperwork protects the buyer and seller. It’s just not about negotiating a price. How long of an option period will you allow? How much earnest money will you accept? And where will it be deposited? (Hint: Only at a title company.)
- Marketing the property. How are you going to handle showing the property? Are you flexible enough seven days a week for showings? How will you handle strangers coming into your home, not to mention keeping your meds and jewelry safe during showings? How will you screen potential buyers to see if they are able to afford your house?
- Value and appraisal of your home. Before putting your house on the market, how will you determine how much to sell your home for? Just because the neighbor’s house sold for $200K doesn’t mean your house will fetch the same price. Realtors have access to data about real-time property values, actual sales prices, days on market, and more. These data can help you get a higher price or help you sell faster than if you go it alone.
- Sales process. If you are able to find a buyer to sign a contract for your home, how will you make sure the buyer follows through on the terms of your contract? What if you want to terminate the contract? If you end up needing an attorney, the cost for contract review can run to $3,000 or more. This doesn’t include the cost to have your attorney take action to get the buyer to perform, so could easily spend more than your Realtor’s commission.
While FSBO seems like a low-cost way to sell your home, it actually comes with a high cost to your time and an increased risk of higher costs down the line.
Have you ever done a FSBO? What was your experience?