FSBO vs. Realtor: Explore the Pros and Cons for Your Home Sale

So you’ve made the huge decision to sell your home. Congrats! Now you need to choose your selling path: FSBO vs. Realtor®. Do you take the traditional route, relying on your agent to do the heavy lifting? Or, do you list your home “for sale by owner” and dedicate your time to save on commission?

Each route comes with unique advantages and challenges — you’ll want to know what lies ahead before you embark on the home sale journey. To help you weigh your options, we’ll compare what every stage of the selling process entails, whether you sell FSBO or hire a real estate agent (or Realtor®, if your agent is an active member of the National Association of Realtors®).

For added insight, HomeLight spoke with one of our top real estate agents, Jesse Dill from Portland, OR, who sells more than 87% more single-family homes than the average agent. Dill has more than 15 years of experience working with clients and FSBO sellers and is intimately familiar with both selling processes.

Weigh the upgrade options before selling fsbo vs realtor
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1. Complete pre-listing home upgrades

Before you list your home, you’ll probably want to upgrade, update, and repair some areas of your house to boost its value and marketability. But not all improvements are equal.

HomeLight’s Top Agent Insights Report for Q1 2019 estimates the average return on investment of common upgrades based on national averages:

  • Deep cleaning (935% of costs recouped)
  • Decluttering (432% of costs recouped)
  • Installing new wood floors (51% of costs recouped)
  • Painting a home’s exterior (51% of costs recouped)
  • Exterior landscaping (20% of costs recouped)

Still, national averages are just one piece of the puzzle. The best home upgrades for your property depend on local factors, such as the state of the market and your home’s condition compared to the competition.

FSBO:

If you choose to list your home on your own, you’ll need to research which home improvements will add value and marketability to your home based on your local market. Compare your home to similar properties for sale online — what would influence a buyer to choose those homes over yours?

The key to an accurate evaluation is objectivity. You must confront your bias as a homeowner and the myths you’ve heard about remodeling. For example, maybe you always thought that a bathroom remodel would have a huge ROI. In reality, our Top Agent Insight Report reveals that bathroom remodels hardly recoup their project cost (-1% of costs on average).

Dill shares that FSBO sellers often “struggle with getting their house ready for the market correctly” and often over-improve their homes.

Realtor®:

Real estate agents see homes day-in and day-out — they know exactly what features buyers are looking for in your market. The agent will walk through your house with you and identify upgrades and improvements that are guaranteed to boost your home’s value and marketability.

You might find out, for example, that the money you were going to pour into finishing your basement isn’t necessary because none of the comps in your market have a finished basement and all sold quickly for asking price.

Agents help sellers distinguish between their personal taste and what’s best according to actual sales data. Dill provides an example of a seller who wanted to improve their bathroom with high-end tile flooring:

“It’s the pride of ownership — they want to do right by the house. [An agent can say], ‘no, no, no, you don’t need to do that tile to upgrade that bathroom, because all of the other homes in the area don’t have those types of things,’” he shares.

Agents often save sellers money in the pre-listing phase by helping them focus solely on improvements that will positively impact their profit.

2. Pinpoint a listing price

If you’ve listed a home in the past, you can recall the nerve-wracking decision of choosing a listing price in the midst of a million factors. The process brings feelings to the surface, as the seller sums up the value of their home (and profit) in a single number.

Here’s how the process looks — FSBO vs. Realtor®:

FSBO:

Pricing your own home is challenging since you have years of memories wrapped up in the decision. Even for the least sentimental person, there’s an aspect of “getting what you deserve” from the deal.

Unfortunately, this subjectivity tends to lead to a critical issue: overpricing. In our Top Agent Insights Report, 70% of real estate agents identify overpricing as the number one mistake sellers make when selling their home.

We get it: You still remember the $15,000 pool remodel bill from three summers ago. And while it’s tempting to tack it onto your listing price dollar for dollar, you’ll end up with an overpriced home that sits on the market.

Your first step to determining a listing price is to track down comparables: homes in your area similar to yours. Start by comparing basic features between your house and comps on online listing websites. Look for properties with a similar number of rooms, bedrooms and bathrooms, square footage, and lot size. Next, analyze more subjective qualities, such as the desirability of finishes, layout, and overall condition.

The trick is determining how much weight each of these aspects carry to help you land on a competitive listing price. While you may think your house should sell for as much as your neighbor’s, you may overvalue or undervalue your home’s qualities and end up overpricing (or in some cases underpricing) your home.

Realtor®:

Your Realtor® will harness their years of experience and intimate market knowledge to advise the best listing price. Then it’s up to you to greenlight the listing price!

Your agent starts by determining your home’s fair market value. They’ll conduct a comparative market analysis (CMA), which weighs your home’s qualitative and quantitative features against those of similar homes sold recently in your area. The agent will leverage this market data and their local expertise to determine your home’s fair market value.

Then, the agent will take into account the local market (e.g., whether prices are rising or falling) and your personal selling goals to pinpoint the best listing price. They may even employ a pricing strategy, such as underpricing, incremental price reduction, or value range marketing to encourage more offers or spark a bidding war.

Craft an enticing listing fsbo vs realtor
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3. Craft an enticing property listing

When you’re selling your home, buyers won’t magically show up at your door with offers in hand. You need to create a compelling online listing and market your home to create a buzz and inspire competitive offers. Typical marketing strategies include social media promotion, open houses, private showings, physical flyers, and local media outlet advertising.

FSBO:

If you sell your home FSBO, don’t cheap out on the listing photos. Unless you have a background in photography and top-grade equipment, you should hire a professional real estate photographer.

Find a photographer by googling “real estate photographers near me.” Prices vary but expect to pay your photographer around $120 per hour.

Next, list your home online on FSBO-friendly listing websites. You can use a flat-fee MLS listing service to get your listing on the MLS (Multiple Listing Service) for $50 to $500. The MLS will auto-syndicate your property details to the major online listing sites, so it reaches as many buyers as possible.

Dill highly recommends getting your listing on the MLS. FSBO sellers rely solely on social media and FSBO-only listing platforms often fail to generate enough exposure for their homes to receive competitive offers.

“Their outreach is limited,” Dill comments. He adds that sometimes FSBO sellers feel they need to reduce if they aren’t getting any bites, when in reality, they may just not have reached a wide enough audience.

Realtor®:

Your agent will spearhead hiring a professional photographer and writing a compelling listing description. They’ll then post the listing on the MLS at the best possible hour for exposure. For example, Dill publishes his new listings on Thursdays since his local MLS has the highest traffic on this weekday. Your agent will also email your listing to the hundreds of buyer’s agents in their network and share the listing on their brokerage’s social media channels.

Once the listing is live, your agent handles communication on your behalf. They’ll promptly respond to calls and emails throughout the day and arrange showings to get buyers in the door.

4. Complete the home inspection and appraisal

A home inspection is a thorough analysis of your home and lot, inside and outside, in which an inspector checks the safety and condition of the home. On the other hand, an appraisal reviews the property’s condition and features to determine its fair market value or worth.

In a traditional appraisal, the appraiser walks through the home to take notes on the home’s condition. In a drive-by appraisal, the appraiser remotely assesses the home’s value based on the neighborhood comps and property details provided by the seller’s agent. Then the appraiser examines the home’s exterior in-person to note the overall condition.

FSBO:

After the home inspection, your buyer may request extensive repairs (or repair credits) based on the home inspection findings. As an FSBO seller, you’ll need to negotiate with the buyer’s agent to leverage the best deal possible without losing your buyer in the process. So brush up on your negotiation skills — you’re up against a seasoned pro with years of experience spinning terms in their client’s favor.

Before responding to repair requests, Dill advises sellers to remove themselves one degree and ask: “What is it going to take to get through this transaction in a reasonable way?” It’s sometimes worth conceding to repairs to close the sale.

When it comes to the appraisal, Dill advises FSBO sellers to stay out of the appraiser’s way rather than be at home trying to influence their decisions. “It’s a big turn off,” he adds. “They are very data-driven. They appreciate a list of some of the updates, but if a FSBO [seller] is present during the appraisal, the seller may oversell the property.”

Realtor®:

Dill himself chose to sell his home with a real estate agent (even though he is one) to bring objectivity to the process, especially during the post-inspection negotiations. A real estate agent navigates negotiations based on how much leverage the seller and buyer ultimately have in the deal.

For instance, in a seller’s market, a seller may be able to refuse repairs if there’s a line of backup buyers ready to purchase their home. On the other hand, in a buyer’s market where offers are few and far between, the seller usually has less leverage since they’re more motivated to reach an agreement with the current buyer to close the sale.

During the appraisal process, your agent will go above and beyond advising you to leave the house. They’ll prepare paperwork to deliver to the appraiser to help justify the home’s value to ensure the home appraises and the buyer’s loan is approved. Dill always provides the appraiser with three to five comps along with those comps’ sale contracts and addendums. In his experience, providing the appraisers with this research upfront has resulted in less critical drive-by appraisals.

Close the sale fsbo vs realtor
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5. Close the sale

One of the most difficult challenges for any seller is navigating the piles of paperwork that accompany a house sale, including the mortgage statements, appraisal, proof of insurance, and sale contract.

FSBO:

As an FSBO seller, you single-handedly manage the many documents required to sell a home. You must sign and file documents on time to prevent closing delays and cancellations.

“A lot of times sellers don’t have certain documents signed that are required,” Dill comments, sharing that the closing is often the most difficult phase for FSBO sellers.

You’ll also need to educate yourself on the local real estate laws, such as mandated disclosures. If you accidentally break the law or overstep the contract, your buyer can cancel the sale or even sue you for damages. Ideally, you should hire a real estate attorney to assist you with closing some states even require an attorney to be present at the closing. On average, real estate attorney fees add up to $2,500 to $3,000.

Realtor®:

Real estate agents have years of experience closing sales, have studied local real estate laws, and are legally protected with errors and omissions insurance. If you partner with an agent, they’ll walk you through the closing process and help you understand the documents you’re required to sign.

FSBO vs. Realtor®: Choose the best path for your needs

While FSBO and hiring a real estate agent each come with pros and cons, ultimately, there’s a reason why 88% of sellers use a real estate agent.

FSBO takes a Herculean effort to pull off, costing sellers significantly more time, effort, and stress. Without a professional to guide you, there’s more room for error at each step of the home sale. Misprice your home or blunder repair negotiations, and you’ll chip away at your profit.

And after all of the extra work, you’re statistically likely to net less money selling FSBO than if you hired an agent (even if you account for commission). Research shows that FSBO homes sell for a median price of $217,900, significantly less than homes sold by real estate agents (median sale price of $242,300).

Now you know what lies ahead with FSBO vs. Realtor® — what path will you take?

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