FSBO stands for "for sale by owner". This refers to homes that are sold by homeowners instead of a hired real estate agent.
Last year, FSBO sales made up eight percent of US home sales. Let's take a closer look at why some homeowners sell FSBO and others hire a professional.
The main reason for FSBO
Selling your home without hiring a realtor saves on realtor fees. These can run anywhere from five to seven percent of the total sale of your home. If you're selling a $200,000 home, about $12,000 of your profits will be used to pay your realtor.
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FSBO sellers will save money by not paying a realtor commission. However, if homeowners aren't real estate savvy, they may end up paying just as much money in other costs.
What is the MLS?
The MLS (Multiple Listing Service) contains all properties listed for sale. When a real estate agent lists your home, they do so on the MLS. If you're trying to find a home for sale, this is where you'll look.
Without the MLS, there is no centralized database for real estate listings. If a broker, agent, or homebuyer needs to find information about homes for sale, it's on the MLS.
Listing your home on the MLS increases exposure to real estate professionals and homebuyers. Without an MLS listing, marketing a home is very tricky.
For sale by owner MLS flat fee pros and cons
In an attempt to get the best of both worlds, some homeowners may decide to list their home on the MLS without a real estate agent. This is possible by listing a home as for sale by owner MLS flat fee.
In this situation, FSBO sellers pay a fee to list their homes on the MLS. They still do not hire a real estate agent or professional. They're selling a home themselves and paying an FSBO MLS flat fee.
Here's a closer look at the pros and cons of a flat fee MLS listing for sale by owner:
Pro: saving money
This is the most common motivating factor. With good reason. An FSBO MLS flat fee is usually $300 to $400.
Compared to a $14,000 realtor fee, that's pretty appealing. It may also be misleading. While the upfront cost of a flat fee MLS for sale by owner is much less, it may cost you more in the long-run.
Con: less guidance
Unless you're real estate savvy or have extensive legal knowledge, you'll likely bite off more than you can chew with an FSBO. Realtors are professionals who deal with the ins and outs of sales and negotiations daily.
If you're not fully educated in real estate legal requirements and contract negotiations, you could end up losing money.
Your realtor knows how to stage a house, what current buyers want, and how to best market your home.
Pro: total control
On the other hand, a sense of control can be nice for some buyers. You're not beholden to the requests of a real estate agent with a flat fee MLS listing for sale by owner.
There won't be any last-minute showings or open houses unless you schedule them. You have total control over who sees your property and when.
Con: lots of time
Unless you're a full-time realtor, be prepared to have a second job until your home sells. You'll need to stage your home, take pictures, and list your home on the MLS. This includes writing a description and completing a disclosure.
You'll likely need to make home repairs regardless of using a realtor or not. However, a real estate agent can best guide you on which repairs will give you the best ROI.
Real estate agents are often connected with handymen services and other professionals. They may be able to connect you with these services for discounted prices.
FSBO homeowners also need to make time to have representation at home inspections and showings. These tasks can add a lot of time to already busy days.
Con: less money for your home
On average, homes sold FSBO MLS flat fee sell for less than homes listed on the MLS by a real estate agent.
For sale by owner flat fee MLS services only give you a listing. There's no advocacy for your listing or marketing to encourage foot or online traffic to your home.
There's also no realtor to encourage contract negotiations. Real estate agents know how to drum up competing offers and handle bidding wars.
These situations pose challenges for the typical homeowner.
Pay for what you want, not for what you don't
Some real estate agents or brokers who will list your home for a flat fee will also help you out as needed. You may be able to work out an a la carte type deal with these professionals.
You can agree to pay them for services you'd rather not do yourself, like paperwork or assisting with showings. This makes sure the agent is paid fairly for their services and takes some burdens off of the homeowner.
Hiring a realtor
As mentioned above, selling your home without a real estate agent can pose challenges. There are many details involved in a traditional real estate transaction.
Average homeowners may not be aware or equipped to handle all of these. Here are some important things to consider before committing to a flat fee MLS listing for sale by owner:
Pro: realtors are pros
Real estate agents make their living selling and listing homes. They are more experienced than the average homeowner.
Real estate agents can commit time and energy to your home sale. They don't have to work around another full-time job. This is their job.
Professionals are also motivated to sell your home for the best price. The greater the amount of your sale, the higher their commission. Because of this, they have a vested interest to sell your home for a good price.
Speaking of commission, it's expensive. Real estate professionals make their living off home sales. While they need to be paid for their work, you're definitely the one paying them.
Sometimes, sellers agree to pay all realtor fees (the seller's and the buyer's agents). If this is the case, you could end up shelling out up to 14% of your home's sale to pay real estate pros.
Realtors talk to each other. They are connected. They are "people" people.
Real estate pros have a network of colleagues, competitors, and friends. This puts them at an advantage when getting the word out about your home.
Realtors have other clientele looking for homes as well. If they're showing homes to a buyer, they can suggest your listing as a place of interest.
These are connections the non-real estate agent typically doesn't have.
Selling your home as-is for cash
Some people don't have the time to list their home through a flat fee for sale by owner. Others don't have the money to pay a real estate agent.
Thankfully, there's another option. Selling your home to a cash buyer eliminates the hassle of listing it-with or without an agent.
Here's a closer look at the advantages and disadvantages of selling your house as-is to a cash buyer:
Pro: no costly repairs
If someone is buying your home as-is, they're not expecting a show-ready home. You won't need to replace big-ticket items like water heaters, furnaces, and appliances.
Someone who wants to buy your house as-is understands what they see is exactly what they get. Just make sure you're working with a professional.
Writing a contract for an as-is cash home sale requires a knowledgeable professional, such as an iBuyer.
Con: may accept a lower price
Selling your home as-is for cash is a significant saving. However, you will likely not be getting top dollar for your listing. Many homeowners don't mind this because it means they can be done with their house.
On average, cash buyers offer about 65% of a home's listing price. However, if you decided to sell to an iBuyer, you can expect a fair price for your home.
Pro: no hassle
If you're not excited about the hassles of selling your home, cash buyers are for you. No showings, no listing, no negotiating competing offers. No back and forth about what the buyer wants and what you'll concede.
Pro: a fast sale
If you need to sell your home fast, look into selling it as-is to a cash buyer. Selling a home as-is to a cash buyer is a cut-and-dry deal. Many will even let you pick your closing date and when you move.
A cash offer for your home means you're not going to wait three months to close. You won't have to worry about your buyer's financing falling through, either.
What is an iBuyer?
An iBuyer is a real estate investor who buys homes "instantly" (hence, the "i"). This usually works via a virtual property evaluation. Many iBuyers use online valuation tools to help homeowners find out how much their property is worth.
An iBuyer is different from some other cash home buyers. House flippers, for example, look for distressed properties that are below market value. Flippers fix the houses up and sell them to make a profit.
iBuyers make their money by buying and selling large amounts of real estate. This means they make a little bit off each transaction, but they're able to make many more transactions than a flipper.
Who should use an FSBO MLS flat fee?
Homeowners who are experienced in listing and selling homes may want to use a for sale by owner flat fee service. Those experienced in real estate dealings will have enough knowledge to navigate a home sale with minimal assistance.
Those looking to save a few dollars but lack legal and/or real estate experience may find themselves over their head listing flat fee for sale by owner.
Anyone wanting to sell their house at a fair price quickly may also be disappointed with the amount of time a for sale by owner MLS flat fee listing can take.
A great solution
Using an iBuyer to sell your home fast is a great solution for anyone who doesn't want a traditional home sale.
Not looking forward to selling for sale by owner MLS flat fee? Is hiring a realtor for a traditional home sale too stressful? We can help you find the right iBuyer for you.