Long before I entered the world of real estate, homes listed for sale by owner (FSBO) were commonplace. As the primary way of advertising a real estate listing was through the local newspaper, a competent FSBO seller could (somewhat) compete against even the most experienced agents in the area of marketing exposure.
What happened? The internet changed everything. Buyers were now able to look for listings online. Buyers no longer had to drive around the neighborhood looking for homes for sale. Open houses were simply posted online.
That was 15 years ago.
Trying to successfully FSBO your home in the age of the internet is generally a very poor idea. However, in rare cases, I have seen it successfully done. I will explain your options, as a seller considering listing your home FSBO, below.
What Does For Sale By Owner (FSBO) Mean?
As we know, FSBO stands for; for sale by owner. This means that an owner is not contracted with a real estate agent or broker. Note, sometimes homeowners who have hired agents like to take the lead when selling their house. Such sellers might negotiate directly with the buyer’s agent or listen in on the home inspection themselves. This is not the same as a FSBO, it is just a very involved seller, of which there are many. After all, a seller has the final say. It is up to them to listen to their agent’s advice or not. It is a free country, after all.
What is FSBO in Real Estate?
To truly be a for sale by owner listing, a seller must be trying to sell their home without a signed contract with a real estate agent.
Can FSBO Sellers List Their Home on MLS?
As you may know by now, listing your home on your region’s multiple listing service (MLS) is extremely important. Most MLS’s distribute their data to hundreds of third party real estate sites, like Zillow and Realtor.com. That means if a home is listed on an MLS, it is likely seen with hundreds of potential buyers within hours.
Any FSBO seller that wants to maximize the exposure of their listing should find a way to post it on their local MLS. One option is to list your property as an entry-only listing with a licensed broker (explained below). Another option is to simply get licensed as a real estate agent yourself, a process that in many states can be accomplished in a few weeks.
What is an MLS Entry-Only Real Estate Listing?
An entry-only (or entry only) listing is a type of agreement between a broker and home owner. In this agreement, a broker posts the homeowner’s listing to their local MLS and provides limited additional services. In such circumstances, a homeowner will likely be responsible for hosting their own open houses, negotiating any offers received on their house and marketing their home. An entry only agreement with a broker is generally extremely affordable when compared to hiring the services of a full-service broker. Many entry-only agents simply charge a flat fee. If you do decide to go down this route, make sure to interview multiple agents to compare prices and services.
A word of caution, entry-only brokers and discount brokerages appeal to consumers trying to save money on a real estate commission. However, a seller who utilizes such services may ultimately sell their home for a lower price, negating the savings. In fact, a study conducted by the Brookings Institute found when consumers listed their homes with agents who charged a low commission rate, it took longer for their homes to sell:
Low commission listings are 5% less likely to sell than high commission listings and stay on the market for twenty more days. Not selling a property the first time is costly and selling during the off-peak season (wintertime or in the middle of a school year) could lead to a protracted time on the market
Think carefully before signing with an entry-only firm.
How to List FSBO on Zillow
If you do decide to FSBO your home, it is very easy to post it on Zillow. Here is the link to do so. Make sure that you save your listing description and details, as you will need it to post to other third party sites.
Once you do post your home on the market, I strongly recommend posting it to many other sites. In other words, make a game plan before bringing your home to the market. After all, you only have one shot at making a good first impression.
Why For Sale By Owner is a Bad Idea
Listing your home for sale by owner can work out. In fact, earlier this year, a successful interior designer did so in my neighborhood. She used many of the skills she had from her profession, and took beautiful photographs of her home.
Did she get the highest and best offer for her home? Maybe, but we will never know because she did not list her home with a real estate agent.
I frequently see people FSBO their homes online in the hopes of generating an offer. Perhaps they list it at a relatively high price, hoping an out-of-town buyer will simply fall in love with it and make them an offer they cannot refuse. That rarely happens. Online tools have made it much easier to estimate the true value of real estate. These days, no competent buyer is fooled into making a high-ball offer on a home.
The other issue FSBO sellers run into is that they do not understand the basics of the real estate process. For example, which comes first, the radon test or the building inspection? That is a trick question. In reality, either could come first (at least where I live). If you do not understand how the process works in your area, you set yourself up to be taken for a ride. For that reason, and that reason alone, I strongly recommend you hire a real estate agent.
If you do end up listing your home FSBO, please let us know how it goes. Leave a comment below or use the contact form to send me a message. I am more than happy to provide what advice I can from 40,000 feet.