When you’re getting ready to sell your home you have a lot of choices to make. When to list and sell, where you want to move to, and how much money you hope to make. If you’re a “do-it-yourself” type, you might be considering another choice — selling your house without a Realtor®.
For most sellers, saving on real estate agent commission fees is the biggest appeal to selling by owner. But before you make the decision based on money alone, make sure you have a good grasp of the process and the amount of work involved.
Joel Carson is an experienced agent in Salt Lake City, Utah, who specializes in helping first-time homebuyers and relocations.. He points out that, “It’s the largest transaction that people do in their life. Without having a professional who does this for a living looking over documents and making sure the seller understands all aspects — that the buyer gets a proper inspection, and communicating what expectations buyers should have of the seller to make repairs — a lot of that is lost.”
He thinks that for sale by owner, or FSBO, sellers can underestimate all the moving pieces that go into a move, which is why we’re going to break them down for you.
Your three main options to sell a house without a Realtor® include:
- Sell to a cash buyer
- Hire a real estate attorney to facilitate a sale to a known buyer
- Handle the sale yourself via For Sale By Owner (FSBO)
We’re going to identify the pros and cons of each option, and give you some basic steps to follow if you decide to sell your house without a Realtor®.
Option 1: Sell your house to a cash buyer
If you need a fast sale, consider selling your house for cash. Cash buyers — including iBuyers and house buying companies — are individuals or entities that purchase your home outright, without the need for lender financing. Cash buyers offer sellers convenience and a quick sale, but often at the cost of a higher transaction fee and lower net profit.
You can sometimes avoid home inspection delays
Inspection issues account for 16% of closing delays, according to the National Association of Realtors. If you sell your home “as is” to a cash buyer, they may not require you to complete any needed repairs the home inspection found. Some cash buyers could waive a home inspection entirely.
You don’t need to deal with the stress of an open house and home showings
Put away the cleaning supplies and don’t worry about tidying up. With a cash sale, nobody is coming for a showing at a moment’s notice. Imagine how much time you’ll save out of your already busy week if you don’t have to make your kids and pets disappear for an hour!
You can skip the home makeover
Again, because this is an as-is situation, you won’t need to climb up on the roof or repaint rooms or obtain estimates from contractors. You can also skip cosmetic upgrades normally needed to increase your home’s marketability and attract buyers. Forget about decluttering, staging, painting, and updating hardware and fixtures.
Don’t give your home away to one of these [house-flipping] companies that’s offering you cash. They’re trying to make a profit and the way that they do it is they have to cut a deal.
- Joel Carson Real Estate AgentCloseJoel Carson Real Estate Agent at Utah Real Estate Currently accepting new clients
- Years of Experience 31
- Transactions 394
- Average Price Point $471k
- Single Family Homes 272
The sale price is often lower than you want
As hinted at earlier, convenience comes with a cost. Many cash buyers use a seller’s desire for convenience to leverage a lower price. For example, a study by Collateral Analytics reveals that iBuyer fees cost sellers about 13% to 15% of a home’s sale price. These fees are significantly higher than real estate agent commission — which range between 3% and 6%. So, if your home sells to a cash buyer for $300,000, you’ll typically leave $30,000 on the table.
Because many cash buyers are flippers or investors, they don’t want to pay market prices. They prefer to take a “how low will you go” mentality when making an offer on your home. They plan on spending money on the house after they purchase it — fixing it up for a quick flip and as large a profit as possible. Plus, they know that some sellers are willing to sacrifice money in exchange for speed and convenience.
Carson tells sellers, “Don’t give your home away to one of these [house-flipping] companies that’s offering you cash. They’re trying to make a profit and the way that they do it is they have to cut a deal.” In a hot market, an experienced agent can get you more.
If you want the highest sale price possible, you’re better off selling to a family who plans to live in and love your home — not a flipper or investor viewing it with dollar signs.
There’s no chance of sparking a bidding war
In a hot seller’s market, buyers often compete to purchase a home — driving up its sale price in a bidding war. When this happens, a seller can realize a final sale price well above the initial listing price. If you’re selling your home to a cash buyer, however, you miss out on the opportunity to spark a bidding war.
Since cash buyers purchase homes by the dozens, they’re only interested in buying your home if it’s a deal. If a competing buyer offers you more, they’ll typically let your home go than raise their price and consequently lower their future profit. They are solely motivated by dollars and figures in spreadsheets, unlike a family who fell in love with your big backyard and dreams of raising their children in your home.
If you want to sell your house for cash, ensure you’re selling your home for the most money possible with HomeLight’s Simple Sale platform. Fill out basic information about your home and location, and we’ll provide a cash offer to buy your home.
In addition, Simple Sale provides you with a side-by-side comparison of what you might typically make selling your house on the open market with the help of a top agent versus offers from our platform so you can make an informed decision.
Option 2: Sell your house to someone you know with the help of a real estate attorney
If you’re lucky enough to have a buyer waiting in the wings, consider selling your house without a Realtor®. Instead, hire a real estate attorney to help you close the sale.
As much as you may love your BFF or believe your brother-in-law is a good guy, it’s best to involve an attorney. “Money and blood don’t mix,” says Rajeh A Saadeh, a real estate attorney in New Jersey. In private home sales, “The relationship gets killed because they didn’t have something in writing.”
Attorneys specialized in real estate transactions can help draft and interpret the endless stack of closing paperwork, including contracts and legal documents. Depending on your state, you may even be required to have a real estate attorney present at closing, regardless of if you’re selling your home with a real estate agent or not.
A real estate attorney can craft an air-tight contract
Your attorney will draw up contracts that include deadlines for inspections and appraisals, any conditions, caveats and contingencies, and the details of the sale price and closing dates.
You have a legal advisor to resolve disputes
“Having an attorney help you with the process can be valuable, especially if problems develop. They can step in to help resolve disputes or prevent them from even occurring,” shares Safa Ashrafi, a licensed attorney with Gross McGinley in Allentown, Pennsylvania.
Common disputes include failure to disclose property defects and the inability to agree on a moving date.
You still save money compared to working with a real estate agent
It’s not cheap to hire an attorney, but it’s less than what you’d pay in commission working with a real estate agent (typically 5.8% of the sale price). Average hourly fees for real estate attorneys range between $150 and $350 per hour. For comparison, if you’re selling a $250,000 home, $15,000 (or 6%) goes to the agent.
An attorney won’t get you the best deal possible on your home sale
An attorney will help you close your home sale without running into legal issues, but they won’t help you sell your home for the best price possible. If you’re determined to work with one buyer, the attorney can’t really negotiate on price. For that, you need a top real estate agent.
“Attorneys, unlike agents, will not showcase or advertise a seller’s house, which draws a large pool of potential buyers,” comments Ashrafi. “Agents also may know the market and help sellers with determining a sales price.”
Agents are experts in crafting effective pricing strategies and negotiating the best price possible for your home. If you go without an agent, you could undersell your home — especially if it’s to someone you know, where personal feelings are in the mix.
You might lose a friend
There are definite do’s and don’ts when selling a house to a friend. Remain professional through the process and stay level headed during price negotiations to close a sale that satisfies both parties and keeps the relationship intact.
Carson has met with sellers who thought they had a friend or family member interested in buying the house, but he says, “What ends up happening is that the buyer thinks they’re going to get the home for a good price. When we tell them what the price is, 99% of the time those family and friend buyers are gone. ”
Option 3. Sell your home on the open market without a real estate agent (FSBO)
Sellers are often drawn to FSBO because they want to save on agent commission costs and control the entire process. However, with added control comes added responsibility. You’ll need to advertise and market the listing, price it accordingly, and host walk-throughs and open houses.
Few homeowners are willing to take on these tasks and risk selling their homes for less. In 2020, the National Association of Realtors shared that FSBO sales accounted for only 7% of home sales. But if you’re savvy at marketing, home design, networking, and negotiating, you may just pull it off.
You save on real estate agent commission fees
If you sell your home yourself, you keep the 3% commission fee that normally goes to the listing agent. However, note that you may still need to cover your buyer’s agent commission fees, typically 3% of the home sale.
While Carson will show his clients FSBO homes, because they’ve signed a contract with him as a buyer’s agent, the buyer is already obligated to pay the commission. Even if the seller isn’t offering a commission.
When taking someone to look at a FSBO, he’s very transparent and says, “Look, if I can get them to cover the commission, great, but if not, you’re going to be covering that.” Be aware that some people might not want to cover this 3%, and it narrows your potential pool of buyers.
You can still list your home on the MLS
You can advertise your home listing in Facebook groups, Nextdoor, other online neighborhood sites, or on your personal Facebook page. But to reach the widest homebuying audience possible, you’ll want to list your home on the real estate industry’s multiple listing service (MLS), where 9 in 10 sellers listed their homes. Go through a flat-fee MLS listing service — which costs $50 to $500 — to have visibility on the MLS.
FSBO homes can sell faster
Because it’s not an arm’s-length transaction, sometimes FSBO homes can sell and close faster than a sale in the open market. In 2020, 77% of FSBO homes sold in under 2 weeks. These sales closed quickly because the sellers often sold their homes to individuals they already knew, according to the National Association of Realtors.
Statistically, you’re likely to sell your house for less money than if you hired a Realtor®
Real estate agents sell homes for 6% more than FSBO sellers do, according to Collateral Analytics. And according to the National Association of Realtors, the typical FSBO home sold for $260,000 compared to the $318,000 that agent-assisted homes sold for in 2020.
There are many reasons why FSBO homes usually sell for less:
- Buyer’s agents out-negotiate FSBO sellers.
- FSBO sellers often miss the mark in setting a competitive listing price. When they price their homes too low, they lose money. When they price their homes too high, their home sits on the market, leading to a lower final selling price.
- A home inspection report could reveal issues that the seller struggles to address efficiently. They may agree to have too many repairs done and lose money in their home sale. Or they may push back too hard and the buyer leaves the deal.
FSBO is time consuming: You’re in charge of marketing and communications
If you’re planning to act as your own agent, it will feel like a part-time job. The seller must market their home with social media, flyers, and open houses. Top agent Joanne Owens of Sarasota, Florida, advises sellers to use a service like Vistaprint to help advertise their home, where 500 4×6-inch postcards cost $50. Ordering is the easiest part — you also have to design it and hire a professional photographer. And don’t forget to tack on a $.35 stamp to mail each postcard!
As a seller without an agent, you also must be available days, nights, and weekends to promptly respond to inquiries. If you fail to return an email or phone call quickly, you could lose the buyer who finds another home in the meantime.
Photos and staging are your responsibility
You’ll need to hire a professional photographer to take shots of your home’s interior and exterior. The average cost ranges between $110 and $300, and plan on spending several hours ahead of time picking up. Professional photos won’t compensate for a home that’s cluttered or poorly staged.
Your personal safety may be at risk
Owens recently met with an older woman selling FSBO. She felt concerned for her safety when she heard about some recent home showings. “Are they just casing the joint or do they plan to purchase it?” she wondered. An agent will not only host walk-throughs but also vet potential buyers to keep you and your home safe, verifying that they’re legitimate, pre-approved buyers.
“With a Realtor®, we’re licensed, we have a code of ethics,” Carson points out. “We use a lockbox, the showing is pre-scheduled and we stay with our clients during the showing, and we mind our COVID requirements.” If you decide to sell FSBO, you’re opening the door of your house to strangers.
You could be scammed
FSBO sellers also need to watch out for wire fraud and online-phishing scams.
Wire fraud is when sellers receive an email from a title company that looks legitimate, but contains fake wiring instructions that actually sends the money to a scammer’s account. Once it’s gone, you typically can’t get it back.
Some scammers will claim that they want to buy your house but can’t come see it in person. They’ll offer to send a money order as a deposit. A few days later, they’ll ask for their money back. After you send the refund, your bank discovers the money order was fraudulent and, again, you typically can’t get your money back.
You have to handle negotiations yourself
Agents are skilled negotiators focused on getting the best deal for their clients. The buyer’s agent isn’t looking out for your interests — and could try to take advantage of your inexperience during negotiations. They could ask for non-standard contingencies or timelines.
Are you comfortable pushing back on requests, and do you know what’s normal in the market? Can you handle the back and forth of negotiations and remain calm, keeping the deal intact but still getting what you need? Before you decide to sell by owner, be honest with yourself about your strengths as a negotiator because it’s a key part of the deal.
14 steps to selling FSBO
If you decide the pros outweigh the cons of a FSBO sale, follow this list to successfully list and sell your home by owner.
1. Research your home’s market value
An agent prepares a comparative market analysis to help potential sellers set the list price — you’ll need to do something similar.
This analysis includes whether or not nearby comparable homes (called comps) sold at, below, or above list price, how quickly they sold, and adjusts for differences between your house and the sold house (such as if the closed sale had a garage and your home doesn’t). When researching your home’s market value, look at real estate websites for closing information and follow the same steps.
For list price compared to sales price, online data isn’t always available. You may have to search records at your county recorder’s office.
You could also use the HomeLight Home Value Estimator tool for pricing your home. In addition to inputting your address, you answer a few simple questions to receive a ballpark estimate of your home’s worth in just two minutes.
Remember — no matter what you think a home is worth, if there isn’t data to support your list price, a buyer could have a hard time getting it appraised for the amount required by their lender.
2. Set a competitive listing price
If a home sits on the market too long, buyers might wonder if something is wrong with it. Price your home to sell — with a listing price that entices buyers and isn’t too high above what your market research found to be average in your area.
3. Prepare your home for sale
Preparing for a home sale goes beyond making sure there aren’t any kid’s toys on the floor. Some experts advise packing up at least half of your stuff before listing your house. Look around and see what easy and quick fixes would spruce up the place — from replacing burnt out lightbulbs to repainting your teenager’s black bedroom.
4. Hire a professional photographer
If you’re trying to maximize your return on investment when you sell, invest in a professional photographer for listing pics. Professional photography stands out on the MLS, and elevates your listing.
5. List your home with a flat fee MLS service
A flat fee MLS service will list your home for you — allowing potential buyers and their agents to find it. Your home will show up in buyer searches when they look in your area and select details that fit your home.
6. Market your property
When you work with an agent, they may have a pool of buyers and network where they can present your house. Without an agent, you need to find ways to reach your buyers. Take a page from successful agents in your area — are they sending postcards, putting out yard signs, and posting “for sale” notices in local groups? Copy them.
7. Field phone calls and schedule tour requests
Once your home is “live” on the MLS, you’ll hopefully start receiving phone calls to request showings. Agents use tracking software and online calendars to avoid double booking, and to let sellers know when they need to be out of the house. Consider setting up a special Google calendar or spreadsheet for this purpose.
Should you schedule an open house? Probably not. Research shows that they’re more effective for agents to find new leads — buyers already interested in the market — than to sell a specific house.
8. Follow up with potential buyers
After people have come through your house, follow up! An agent might reach out to the buyer’s agent for feedback, or send a form requesting comments. Call or email to ask if they have any questions.
While you can ask what they thought of the house, they might be sensitive to the fact that you’re the owner and could be reluctant to say anything negative. Strive for professionalism and detachment.
9. Review offers and negotiate with the buyer
Once offers come in, review and compare them. There’s more to an offer than the sale price — look at closing timelines, if the buyer is offering you a rent back period, or other contingencies to find the best overall offer.
Don’t forget that you can negotiate. Perhaps one buyer offered a higher price but you need a longer closing timeline — pick up the phone and ask if they’d be willing to bump it out a week. Be careful with negotiations, however, as you don’t want to anger buyers and cause them to walk away.
10. Manage contract timelines and due dates
After accepting an offer there’s a lot of paperwork to handle. From the purchase agreement to the closing statement, these are legally binding documents. You’ll need to monitor contract timelines such as how long the buyer has to get a home inspection done, to negotiate for repairs, or to walk away from the sale.
11. Prepare the required legal disclosures
States have different legal requirements for home sales. It’s a good idea to involve a lawyer in either reviewing or preparing these documents. At a minimum, you’ll need a purchase agreement and settlement statement.
12. Schedule inspection appointments with the buyer
The buyer selects and pays for the home inspection. While you may want to prepare for the home inspection, your primary responsibility is to make sure that the home is empty and that the buyer and inspector can access the property.
13. Renegotiate with the buyer’s agent based on inspection findings
After a home inspection, buyers can and often do negotiate home repairs. They could ask you to fix items before the closing, or request a credit back at closing to cover the repair’s costs. If the home inspector found serious issues, they could negotiate the sale price down.
Be prepared to handle these negotiations tactfully, and be realistic when deciding if you’ll make concessions. If the sale falls through, another buyer’s home inspector will find the same issues. It could be worth offering to knock a few thousand dollars off the sale price to close the deal.
14. Navigate the settlement process and close your home sale
The settlement process involves working with a title company to make sure the home has a clear title. You’ll have to collect all documents — title, deed, and any homeowner’s association covenants — as well as the mortgage payoff amounts. Some states require that lawyers be present at closing, so even if you chose not to involve one earlier in the process you’ll have to hire someone now.
FSBO sale Q&A — additional expert tips and insights
Have more questions? Here are answers to some of the most common FSBO questions.
Is it safe to sell your house without a Realtor®?
Everyone has their own risk preferences, and you may feel comfortable hosting strangers in your home. Many people can immediately see the dangers. As Carson puts it, “Would I want my wife opening the door to a complete stranger when I’m at work? It’s terrifying.” If you sell your home without a Realtor®, there’s no one screening potential buyers or protecting you from fraud. Use caution, common sense and research to stay protected.
What paperwork do I need to sell my house by owner?
You’ll need the following documents to sell your house by owner:
Residential property disclosure form
State laws vary, but most require you to complete a seller’s disclosure outlining any known problems with the home. In states with older housing stock, it’s common to require disclosures about lead paint and asbestos, too. Note: you can be held legally responsible for these disclosures, so complete them honestly and to the best of your ability.
This is the legal contract to sell the house, called a sales contract or purchase agreement.
It will identify the buyer and seller, and contain the following initial items: list of appliances and fixtures included, the purchase price, earnest money deposit and information on the buyer’s financing, and details about the property itself (such as the address, type, and lot size).
Carson says that when buyers and sellers start working together directly, there ends up being issues. A common issue he’s seen? “Something was promised, but it wasn’t put in writing, and after closing the refrigerator was taken from the property.”
Then, the contract delves into specifics about the closing: the closing date, contingencies such as inspection, appraisal, or the buyer selling their home, and the type of title. It should clearly spell out any taxes, assessments, and utilities owed by either party and who pays the closing costs.
Be sure to include specifics about what happens if the contract is breached. Should the buyer walk away from the sale, or fail to comply with its terms, you’re in a better position if you can keep their earnest money.
A title company researches your title’s history and puts together a report for the buyer. This research includes verifying that you have the legal right to sell the home, and identifying any easements or assessments.
The physical deed document that describes the property and its boundaries in detail. It’s used to sign-off ownership to the buyer.
You, or the title company, will call your lender to obtain a payoff amount. You’ll need to bring documents related to your current mortgage and outstanding lines of credits to closing.
Recent utility and property tax bills
This isn’t a requirement, but buyers may request that you bring recent utility bills and property tax statements to the closing. That way, they know who to call to have everything switched into their name.
Homeowners association agreements (if applicable)
If you’re selling a condo, townhome, or single family home in a homeowner’s association, the buyer will need copies of the rules, covenants, and agreements.
Plans, permits, and other paperwork relating to work done on the house
Did you add on a deck? Build a garage? Pull together the associated plans and permits to prove to the buyer that the work was done legally.
Receipts and warranties
Again, not required, but if you’re leaving major appliances the buyer’s agent could ask you to provide copies of receipts and any applicable warranties.
What is the top mistake FSBO sellers make?
Not putting the price on the listing! Believe it or not, some FSBO sellers think that failing to disclose the list price in private advertisements will increase interest. The reverse is true — most buyers feel uncomfortable calling and asking directly, and may worry that you’ll overprice the home. Being upfront increases their confidence in you and the transaction.
Bottom line — Weigh the benefits and understand the trade-offs
If you decide to sell without a Realtor® you’ll be wearing many hats — scheduler, marketer, legal expert, and more. It is a full-time job, which is why most real estate agents do it full time.
If you decide to sell with a Realtor®, use the HomeLight Agent Match to find the best agent to sell your home. HomeLight’s tool analyzes millions of transactions to find top agents who sell homes faster, and for more money, than others in your area. It takes just two minutes to find someone to take all that work off your plate — and guide you through the complicated process of selling a home.
Header Image Source: (David Suarez / Unsplash)