Pros and Cons of “For Sale By Owner” (FSBO) Home Sales

FSBO pros

While FSBO sales are uncommon, there are reasons why some home sellers choose to take this route. Let’s look at some of the pros of a for sale by owner:

Saving on listing agent commission

Home sellers choose to go FSBO mainly to save on the listing agent commission. Sellers usually pay between 5%–6% of the home sale price as their fee. For example, if a house sells for $300,000, and the commission is 5%, you’ll pay $15,000 out of your proceeds to the agent.

But that agent doesn’t pocket the $15,000 entirely. About half goes to the agent representing the buyer. And often, the agent will have to pay a portion to their brokerage.

If you go FSBO, you’ll still have to pay the 2%–3% buyer’s agent commission. So in the $300,000 home sale scenario, if you went FSBO and paid the buyer’s agent a 2.5% commission, you would only have saved $7,500.

The other common scenario for an FSBO sale is when the seller already knows the buyer, oftentimes a family member, making much of the agent’s work much less relevant in this case.

Complete control of the process

The other main pro of for sale by owner is having complete control of the home sale process. If you’re the type of home seller who knows exactly how you want to market your home, how you want to price it, and what kind of offer you want, then FSBO could be the move for you.

But that is a lot of work and many things you’ll have to learn if you’re unfamiliar with the process. From setting the listing price fairly and strategically to finding a professional photographer to getting access to the MLS, you’ll have lots to do to carry out your plan like you want to.

FSBO cons

While going for sale by owner does have its perks, there are also several cons to consider.

“If you’ve never sold a house before, you wouldn’t have the information to make a proper sale: to do the correct marketing, to reach the right buyer, to get through all the inspection issues that will come up, to get through all the title issues,” says Alex Boylan, a top Minneapolis real estate agent with over 20 years of experience.

Here are a few cons to keep in mind before making your decision:

Statistically, FSBO homes sell for less

While you might be saving some money on the listing agent’s commission, you could also leave money on the table in your FSBO sale.

Statistically, FSBO homes sell for less than agent-listed homes. According to the NAR, FSBO homes sold for a median of $310,000 compared to a median of $405,000 for agent-assisted sales in 2022. Missing out on that much money essentially negates the agent commission you would have paid.

FSBO can take more time

Going FSBO can also mean undertaking a longer home sale. Pricing your home incorrectly can mean getting fewer offers. Additionally, if you don’t market your home correctly, you won’t get the kind of attention necessary for a quick home sale. Some buyer’s agents even keep their clients away from FSBOs.

“As a buyer’s agent working with a For Sale By Owner, you work a lot harder, and you make a lot less money,” Boylan says. “I steer my clients away from For Sale By Owners. I explain to my clients what’s going to happen, how it’s going to be a lot more difficult, and that the house will likely be overpriced.”

Infamously, the owner of ForSaleByOwner.com had to hire a real estate broker after he tried and failed to sell his own condo. His home reportedly sat on the market for six months before he turned to a professional.

There’s a lot of time-consuming work

There’s a reason why top real estate agents work full-time. They have a lot of work to complete when selling a house. When you go FSBO, that work becomes yours.

Not only will you be responsible for marketing your home, setting the price, and taking pictures for the listing, but you’ll also have to work with buyers to set up viewings, which can get complicated if you’re already working another full-time job.

When offers start coming in, you’ll need to take time to review each one and negotiate with the buyer and their agent — who most likely has much more experience in this realm than you do. In fact, choosing which offer to accept is often not as simple as picking the highest amount, when you consider contingencies and other factors.

Negotiating offers can be tough

Negotiating offers might seem simple in theory: you want to get the most money for your home sale, right? In reality, that’s not always the case. Not only will you have to consider the monetary offer on your home, but also the contingencies each buyer includes in their offers.

Contingencies make your home sale dependent on different factors. For example, a home inspection contingency protects the sale from going through unless the home inspection comes back without any problems. Similarly, an appraisal contingency protects the home sale from a low appraisal.

You’ll have to consider what your best offer is when factoring in both the money and the contingencies.

Setting a price is important but challenging

Real estate agents have the tools, experience, and expertise to price a home accurately and effectively. They use data to create comparative market analyses in order to price your home so that it will sell for the most money possible.

Because you’re not a real estate agent, you risk under- or overpricing your home. Underpricing your home means missing out on money in your sale. But overpricing your home means the home could stay on the market for too long, and you might become susceptible to taking a lower offer.

It’s also easy to fall prey to your emotions when selling your own house; you could inflate its emotional value with its monetary value.

“The reality is you didn’t get your house priced right because you have someone who is emotional about their home pricing it,” Boylan says. “They give it a value that they feel it’s worth. It’s a lot higher than true market value.”

Marketing can take a lot of work

While 57% of FSBO sellers already knew the buyer of their home, according to the NAR, many FSBO sellers are hoping to market their homes to the general public. But there’s a lot of work that comes along with marketing your home sale.

For example, if you don’t list your home on the MLS, you’ll miss out on a slew of buyers whose agents rely on the MLS to find their clients’ next potential home. Your word-of-mouth marketing plan might work if you already have a buyer in mind, but if you’re looking to find one through social media, it will likely be a slow go.

Working with a top real estate agent

If the cons of FSBO outweigh the pros, consider hiring a top real estate agent for your sale. Real estate agents who have years of expertise in their fields can benefit your sale and help you reach your goals, whether that’s selling your home quickly or for the most money possible.

They can take on pricing the home, finding a professional photographer and stager, writing the listing, and scheduling viewings of your home. Plus, they’ll help you go through each offer individually and decide which one is your best choice before guiding you through the closing process.

To find top real estate agents in your area, use HomeLight’s Agent Match tool. HomeLight will match you with two or three top agents whom you can speak with before you make your final decision.

Finding a competitive cash offer

Maybe working with a real estate agent isn’t right for you, but neither is going FSBO. If you want to have a quick and easy sale, consider getting a cash offer for your home. Getting a cash offer means your sale will be very short, and you’ll get your payout quickly. You also won’t need to schedule time or money for repairs, home prep, or showings.

To see what your all-cash offer could look like, consider HomeLight’s Simple Sale platform. With Simple Sale, you can get a no-obligation, all-cash offer within 24 hours from the largest network of vetted and pre-approved investors in the U.S. If you accept the offer, the sale of your home can close in as few as 10 days, and you can even choose a move-out date that works best for you.

Requesting a cash offer from HomeLight does not cost anything or require any commitment from you. You can also use the tool to compare the all-cash offer to what you might bring in from an agent-assisted sale.

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