For Sale by Owner (FSBO) vs. Real Estate Agent

Selling your home means making dozens (if not hundreds) of decisions, starting with whether to work with a real estate agent. While the vast majority of homeowners hire a listing agent, others brave the world of FSBO (for sale by owner). According to Zillow research, 93% of sellers used an agent in one way or another, with 69% saying they hired an agent to help promote their home and find potential buyers.

We asked FSBO sellers their reasoning for selling on their own, and here are their leading responses: 49% aimed to save money; 35% felt confident they could sell without an agent, realtor, or broker; and 34% already knew a potential buyer.

Homeowners that attempt FSBO transactions are more likely to be older, living in rural areas, and are more likely to be selling a mobile home.

If you’re trying to decide whether you’re better off taking on the ultimate DIY project or enlisting the help of a local agent, read on for benefits of both types of transactions.

What does for sale by owner mean?

For sale by owner, often abbreviated as FSBO, is when a homeowner lists their home without the assistance of a professional real estate agent. When selling on your own, you’re responsible for the process from start to finish, including pricing, staging, listing, negotiating, drawing up paperwork, and closing.

Why sell FSBO? Most sellers decide to go it alone in order to avoid paying the standard 6% commission fee to the real estate agents involved in the sale. While most FSBO sellers are trying to keep more of their profit in their pocket, it’s important to note that a local real estate agent likely has more expertise in pricing strategy, so it’s possible that the net profit you earn from a FSBO could end up being lower than if you had listed with an agent.

Benefits of for sale by owner

1. You'll avoid paying listing agent commission

The most common reason to FSBO is to avoid paying commissions, which are fees paid to agents based on the final selling price of the home. Commissions average between 4% to 6% of the home’s purchase price and are usually paid by the seller from the proceeds of the sale. Typically, the buyer and seller have their own agents, with the commission split between the two.

2. You'll have complete control over the listing price

Without an agent, you’re the sole decision maker when it comes to your list price. You’ll need to make sure you put your emotional connection to your home aside. Look at your home as an asset and do your research to see how your property stacks up against other similar homes nearby. For $300-$500, you can hire an appraiser to give you a real market value.  

3. You can manage the schedule of showings and open houses

Fleeing your house for last-minute showings and all-day weekend open houses is a lot of work—not to mention having to keep your home pristine around the clock. When you’re running the show, you get to decide when you want to show your home. And, you won’t have to wait for your agent to be available to do a showing for you.

4. You're motivated to sell for top dollar

Because it’s your finances on the line, you’ll invest the time and energy to advertise your home in the best light. FSBO sellers can advertise online (where 94% of buyers say they search), including on Zillow and on sites dedicated just to real estate sold by owners (here’s where you can post your FSBO on Zillow). There are also some online services that can get your home listed on the MLS, usually for a flat fee under $1,000. Don’t forget about professional photos, signage, and print ads. 

5. You're the neighborhood expert

You can speak to potential buyers about not just the home itself, but what it’s like to live in the community. After all, you know your neighborhood best. Sharing that knowledge can be a huge selling point with buyers.

But, be aware of your own biases

When listing FSBO, it can be challenging to set aside your attachment to your home and focus on the process of selling. When dealing with real estate sold by owners, objectivity and acceptance of feedback from potential buyers are incredibly important. To help move your negotiations forward in a productive manner, make sure you know ahead of time what your bottom-line price is and what concessions you’re open to making. This can help make negotiations more logical and less emotional.

Benefits of hiring a real estate agent

1. They understand fair market value and pricing strategy

When you work with an experienced, local agent, they should have a great handle on just what your home is worth in your area, and what kind of pricing will get buyers through the door. They can help you walk the tightrope of getting you as much money out of your house as possible, while still appealing to a wide range of buyers.

2. They're objective listing experts

Good real estate agents have a deep understanding of their local market and want to show your home in the best light. They also have relationships with photographers and home stagers, who can all work as a team to highlight the amenities that local buyers want.

3. They have access to extensive market exposure

With access to the local MLS and online listing portals, social media presence, professional networks, connections with other agents, and name recognition, your real estate agent can get a lot of eyes on your listing and plenty of potential buyers in the front door.

4. Buyer's agents are more likely to show your listing to clients

Real estate agents are paid on commission, so some agents may not take the time to show your FSBO listing to their clients, since there’s no guaranteed commission.

As an FSBO seller, you can decide to offer a standard 3% commission to the buyer’s agent (still saving the 3% you would have spent on your own agent). This can help alleviate the bias some buyer’s agents have against for-sale-by-owner properties.

5. They'll negotiate professionally

Experienced agents can spot serious buyers and guide you toward the strongest offers, which eliminates the burden of calls and negotiations with less motivated shoppers. Agents are extremely familiar with both the selling process and your local market, so they can recommend appropriate counteroffers. Bottom line: They’ll help you get as much money as possible. No wonder 80% of sellers whose agents led contract negotiations said the service was very or extremely valuable.

6. They know the paperwork

There’s a lot of documentation involved when you sell a home, and without an agent, the burden of making sure it’s complete and accurate falls on the seller (or an attorney you’ve hired to help). Seasoned real estate professionals are experts at the purchase and sale process, and all the legalese that comes with it.

If you hire a real estate agent, you likely won’t be their only client. Be sure to hire an agent who understands both your motivations for selling and your timeline. Be clear about your communication preferences and let them know how involved you want them to be. You’ll be paying them a commission out of your profits, so it’s important that you’re satisfied with the level of service. Our partner agents at Zillow are ready to help. Contact us to learn more about your selling options.