What Does FSBO Mean? Your Guide to Selling Without a Realtor

By Lindsay Stefan

Posted on September 9th, 2022

Why sell without a realtor? | FSBO pros and cons | How to sell FSBO | How to buy FSBO | FSBO paperwork | Other resources | Does FSBO work?

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🏠 What is FSBO in real estate?

A “for sale by owner” (FSBO) sale is when a homeowner sells their house without using a seller's agent. FSBO sellers won’t have to pay commission to a seller's agent, but they’re taking on the entire responsibility of the home sale themselves.

Every season, a small number of independent-minded sellers— usually those who either have experience in the real estate industry or who place a very high value on saving on realtor commission fees — opt to sell their home themselves, without an agent. This is called a “for sale by owner” or FSBO listing.

Selling FSBO is a big job! The seller has to handle every facet of the sale process themselves — from running open houses, to negotiating the sale price with the buyer’s agent, to navigating the complicated closing process.

Unless you've sold a lot of houses before, or have industry experience, it can be an overwhelming experience, and the stats show that it can be tough for a FSBO seller to get an optimal outcome. Consider that:

  • FSBOs typically sell for much less than agent-assisted listings. According to a report by the National Association of Realtors, the median sale price of agent-assisted deals in 2021 was $318,000, versus a median of $260,000 for FSBO sales — about 18% less.

  • The majority of FSBO sellers (57%) knew the buyer of the home beforehand, so they never had to navigate the marketplace.

  • The share of home sales that are FSBO has fallen steeply, from 15% in 1981, to only 7% today.

Selling FSBO is time-consuming and difficult. If you're looking to sell your home but you don't want to pay the standard 2.5-3% realtor commission fee, we recommend our partners at Clever Real Estate. Clever is a nationwide low-commission brokerage that can connect you to top-performing, local agents who can help sell your house for 1% or $3,000. You'll get the full service of a traditional realtor at a fraction of the cost — and none of the work that selling FSBO requires.

👋 Connect with a Clever agent and find out how much you can save today!

Why Would Someone Sell Their House Without a Realtor?

The most common, and most obvious, reason to sell your home without a realtor is to save money on real estate commission.

In a conventional home sale, total real estate commission, which is paid by the seller, averages around 5-6% of the sale price. That commission is split between the seller’s listing agent, who receives 2.5-3%, and the buyer’s agent, who receives the other 2.5-3%. Since a FSBO seller doesn’t use a listing agent, they’re saving 50% on commission right off the bat.

Sellers who don’t use an agent have total control over their sale, which includes:

  • Setting the listing price

  • Marketing the home

  • Selecting the buyer

  • Taking the home on and off the market

  • When to hold showings

  • Negotiating or rejecting offers

  • Setting the final sale price

For seller’s who want to run the show, selling FSBO can be attractive. But it’s a lot of work. The FSBO seller is responsible for all the work an agent usually does, and many sellers don’t grasp just how much a seller's agent does on a typical home sale.

Some of that work isn’t just effort-based. If closing paperwork is incorrectly filled out, or misfiled, the deal can fall through, or the seller could become vulnerable to lawsuits.

For those reasons, we suggest that only experienced sellers undertake selling a house yourself.

📢 Don’t Forget About the Buyer's Agent Fee!

Some FSBO sellers think they’ll eliminate the entire 5-6% real estate commission by selling without an agent, only to discover that they still have to pay the 2.5-3% fee to the buyer’s agent.

The vast majority of buyers purchase their home through a real estate agent. hose buyer’s agents will likely steer their client away from any listing that doesn’t offer a buyer’s agent commission of 2.5-3%, since that’s how they're paid.


Pros and Cons of Selling For Sale By Owner

✅ Pros of Selling FSBO

❌ Cons of Selling FSBO

Lower commission fees: FSBO sellers generally pay only 2.5-3% instead of 5-6%

Huge workload: the FSBO seller has to do everything an agent normally would

Total control: FSBO sellers have final say over everything from when the home is listed, to price, to showings

Lower sale price: statistics show that FSBO listings sell for less than agent-assisted listings

Commitment: a typical real estate agent handles several listings at the same time, while the FSBO seller can concentrate entirely on selling their home

Risk: a home sale includes a lot of legal paperwork that, if omitted or incorrectly completed, can lead to serious consequences for the seller

Speed: if the FSBO seller is in a hot market, and is decisive, a FSBO sale can close just as fast as an agented sale

Wasted time: many FSBO sales fail, leading sellers to turn to an agented sale after wasting weeks or months

To successfully conduct a FSBO sale, you have to wear a lot of hats — host, marketer, lawyer, negotiator, and more. It’s a big job, and most sellers don’t have the time or expertise to see it through.

If you want to save money on seller's agent fees, the smarter alternative is going with a low-commission brokerage. We recommend our partners at Clever Real Estate, which can help you sell your home for just 1% or $3,000. Clever is a nationwide brokerage that pre-negotiates low fees with experienced local agents and passes the savings on to you.

The average Clever seller saves $9,000 in commission fees — and there's none of the DIY required for a selling FSBO. You get the same services as a traditional agent at a fraction of the cost.

And if you want an idea of how much your home is worth, check out Clever's home value estimator by plugging in your ZIP code below. Then chat with an expert about how you should price your home to get top dollar!

💰 How Much Is Your Home Worth?

Before listing your home, find out how it compares to others in your local market.

How to Sell a House By Owner

If you're selling FSBO, you have to handle the entire sale yourself. Let’s break it down into stages to get an idea of how much work is involved.

Pre-listing Prep

If your home hasn’t been updated in the last five years, you’ll want to think about updating certain features. Potential updates include kitchen and bathroom finishes, light fixtures, color palettes, flooring, and landscaping. Think about “curb appeal,” which is the first impression your home makes on someone from the street. But be careful — some improvements have a great return on investment, while others may not.

You’ll also want to prepare for your listing by having high quality photos taken of your home and writing an enticing listing description that conveys your home’s features and charms.

» MORE: How to Write an Awesome Listing Description

Pricing Strategy

Setting the right price is key to your sale. Setting it low will attract a lot of interest, but you could leave money on the table, and people may assume there’s a hidden reason your home is underpriced. Setting it high will drive away many buyers, and make your home linger on the market — the longer your home is on the market, the lower its chances are of selling.

Striking the right balance is going to require a survey of your market. Starting by looking up your home’s value on websites like Zillow or Redfin, and then look at recent sales of homes that are similar to yours. Use all those numbers as a guide, and come up with something in the same ballpark.

» MORE: Redfin vs. Zillow: Which Home Value Estimator Should You Trust?

Listing and Marketing

Next, you’ll need to get the word out about your home. The more prospective buyers who are competing for your home, the higher the sale price will be.

If you want your home listed on the MLS, but are determined to have a pure FSBO experience, you can contract with a flat fee MLS company, which will list your home on your local MLS for a one-time fee, but offer limited or no other real estate services.

If you’re not even going to list on the MLS, you’ll want to get creative. Use your networks (real and social) to spread the word, put up fliers around town, buy ads in the local newspaper, post on free sites like Craigslist, or on FSBO-centric sites like FSBO.com, Beycome, Homecoin, Zillow FSBO, and ForSaleByOwner.com.

» MORE: The 13 Best FSBO Websites to Help Sell Your Home

Open Houses and Showings

Once your home has been listed and marketed, you’ll need to conduct showings and open houses so buyers can tour your home.

Inviting dozens of strangers into your home can be intimidating, but running an open house is fairly straightforward. Make sure you have an information sheet listing details about your home that you can hand out to visitors, and stage your home before the open house so it looks its best. Beyond that, it’s a lot like hosting a party: smile a lot, make your guests feel welcome, and offer refreshments.

If you’re going to allow individual scheduled showings, you’ll want to come up with a tracking system so you can keep your appointments straight.

» MORE: How to Write Open House Follow-Up Emails (With Examples!)

Price Negotiation

Once you’ve received an offer, it’s time to negotiate. You’ll likely be negotiating with the buyer’s agent, who’s probably an experienced professional. Respond with counter offers promptly, and be prepared to give or deny seller concessions like covering inspection or appraisal fees, offering repair credits, or paying for the buyer’s home warranty.

Remember— drive a hard bargain initially, but keep in mind that ultimately, the deal will have to be a compromise.

Once you have a firm deal, you’ll want to draft a purchase agreement. You can find templates online, or acquire one from a FSBO company, but we suggest working with a real estate attorney to make sure the contract is airtight.

Closing

The closing process requires:

  • An escrow company, to hold the buyer’s money and the seller’s deed during the transaction

  • A title company, to make sure the property can legally be transferred without any complications

Unless you’re an experienced real estate professional or a lawyer, you should seriously consider using a real estate attorney or a transaction coordinator to guide you through closing, and to double check that all the paperwork is in order.

In some states, an attorney isn't just recommended, it's required. Check with your state's real estate department to see if you need an attorney present at closing.

How to Buy a House For Sale By Owner

Buying a FSBO home comes with its own challenges, though under ideal circumstances it can be a quick, painless buyer experience. But there are a few things to keep in mind.

FSBO Sellers May Have Unrealistic Expectations

In a conventional sale, the listing agent looks at similar properties that have recently sold and uses that as a guide to come up with a realistic list price. In FSBO sales, the seller sometimes sets a price based on emotion — what they feel the home is worth, or what they think it should be worth— rather than a market-based price. For that reason, many FSBO homes are initially overpriced.

Finding a FSBO Listing Can be the Hardest Part

It can be tough to find an FSBO listing, since there’s no listing agent getting the word out about the home. You may have to drive around looking for yard signs, or scour sites like Craigslist or Facebook Marketplace.

Another good source of FSBO listings are FSBO-specific sites like Zillow FSBO, FSBO.com, ForSaleByOwner.com, Beycome, Homecoin, and Fizber.

» MORE: The Best FSBO Websites to Find a FSBO Home

Get a Buyer's Agent

Just because the seller isn’t using an agent, doesn’t mean you can’t! A buyer’s agent offers a number of indispensable services, like professional price negotiation, making sure that all required disclosures have been made, and guiding you through the complicated closing process. The seller is on the hook for paying the buyer's agent commission, so it won't cost you a penny. In fact, using a buyer's agent can actually save you money by negotiating a better deal than you would have done had you gone it alone. And if you buy a house with our partners at Clever, you may be eligible for up to 0.5% cash back after closing!

In 41 states, Clever offers 0.5% cash back on home sales over $150,000. Buy a home for $350,000 in an eligible state and you'll get a check for $1,750 after closing, just for using Clever.

👋 Need a great agent?

If you're weighing your options for buying or selling a house, Clever can help! With our friends at Clever: 

✅ You'll only pay $3,000 or 1% to list your home 

✅ In eligible states, you'll get 0.5% cash back when you buy a home 

✅ You'll work with a full-service realtor from a top broker, like RE/MAX or Keller Williams 

Saving on realtor fees doesn't have to mean sacrificing service. Find a top local agent today!

For Sale By Owner Paperwork

Selling a house requires a ton of paperwork, and as an FSBO listing, you’ll be responsible for getting it all together. Here’s a partial list of some of the FSBO sale documents you’ll be expected to produce.

The Listing Agreement

If you decide to put your home on the MLS, this is the agreement that gets your home on there. It’ll contain basic information about your home, and the user terms of the MLS.

Mandatory Disclosure Forms

Federal and state laws mandate that you disclose certain things about your home. Almost all states require you to disclose issues like lead paint, mold, natural hazards like wildfires or floods, and termites.

Each state has its own disclosure requirements that you’ll also have to meet. In Missouri, for example, you’re required to disclose whether the property has ever been a meth lab. In California, you'll need to provide a natural hazard disclosure report.

» MORE: What's a Natural Hazard Disclosure Report?

Title Review

This is a document from a title insurance company stating that your home is free of old claims and deeds, and that you can legally sell the home without complications.

Counteroffer Forms

When you receive an initial offer, you should formally respond, in writing, with your counteroffer. You can find templates for this online, or get sample forms from an FSBO company.

The Purchase Agreement

This document is the heart of the deal itself— it lays out the terms of the sale, including the sale price, details about the property, the closing date, and the amount of earnest money.

The Appraisal

The buyer’s lender will order an appraisal of your property to make sure it’s worth the amount of the loan they’re extending. Appraisals aren't necessary for cash buyers.

» MORE: Should Buyers Waive the Appraisal Contingency?

The Home Inspection Report

The buyer will likely want to have your home inspected to make sure there aren’t any hidden problems. You can request a copy of the inspector’s report from the buyer.

Inspection Response Forms

If the inspection uncovers issues with your home, the buyer may formally request repairs before the deal moves ahead; these forms document these requests on paper.

Amendment Forms

If either party wants to change anything contained in the purchase agreement, they’ll fill out an amendment form and append it to the purchase agreement.

HOA Restrictions and Covenants

If your home lies within the authority of a homeowners association (HOA), many states require that you disclose your HOA agreement before the sale. You can get a copy of your HOA agreement from your HOA.

» MORE: Does the Seller Pay HOA Transfer Fees?

Title Report

This is the final determination from a title company that your home is free of legal obligations, liens, unpaid taxes, etc.

Closing Statement

This document is a final summary of the deal; it’ll spell out exactly how much you’ll receive after closing costs and other expenses. This document is usually produced by a title company, lender, or closing agent.

» MORE: How Much Are Closing Costs?

Deed

This is the document that actually transfers ownership of your property. You’ll probably need a notary or witness present when you sign it over at closing.

Tax Statements

These documents detail the property taxes your home is subject to, a portion of which will be included in closing costs. You can acquire this document from your local government tax office.

» MORE: Understanding Proration in Real Estate: What Is It and Who Pays?

Other FSBO Resources to Consider

Transaction Coordinator

A transaction coordinator manages important paperwork and keeps track of the deadlines involved in a home sale. Realtors often use transaction coordinators to help them keep track of mountains of paperwork, so they can be especially helpful for FSBO sellers.

Transaction coordinators usually charge a flat fee for their services. Transaction coordinators will help you through escrow, but they won't give you advice on pricing your home or help you sell your house.

🔔 Our friends at Clever can connect you with a local transaction coordinator! Find out more.

For Sale by Owner Yard Sign

A FSBO yard sign will let prospective buyers know you’re selling your home yourself.

Open House Sign and Sign-in Sheet

The sign will invite people to the open house, while the sign-in sheet helps you track attendance and strategize follow-ups.

Calendar for Tracking Showings and Open Houses

If you’re offering individual scheduled showings, you’ll need a detailed calendar system to organize and track these appointments.

Real Estate Attorney

A home sale is a huge financial transaction, and experts suggest that FSBO sellers partner with a real estate lawyer to make sure the transaction goes smoothly, and steers clear of legal trouble.

Who Draws Up the Contract in a FSBO Sale?

In a FSBO sale, the seller will typically draw up the sales contract. There are templates available online, and most FSBO service providers offer sample contracts that sellers can customize for their own use.

Keep in mind, however, that a home sale contract is a legally binding contract for a massive financial transaction, so there’s a lot at stake. We highly recommend you work with an experienced real estate attorney to make sure your sale contract is correct and complete.

» MORE: Everything You Need to Know About Purchase Contracts for a FSBO Sale

Does FSBO Work?

Selling FSBO can absolutely work for sellers who are fully committed and have some real estate know-how. But many sellers who attempt to sell FSBO end up going with an agent because it's too difficult.

If you don't have the time needed to sell a house for sale by owner, but you still want to save money on commission fees, we recommend going with a low-commission real estate agent. That's why Home Bay partnered with Clever Real Estate, a nationwide low-commission brokerage that can pair you with pre-vetted agents who can help sell your house for $3,000 or a 1% fee.

Customers love Clever — the company has a 4.9 out of 5 rating on Trustpilot from over 1,700 customer reviews. Clever pre-negotiates low rates with top-performing, local agents and passes the savings on to you. During the first few months of 2022, Clever helped 1,400 families save $12.5 million — in fact, the average Clever seller saves $9,000 in realtor commission fees.

Clever is free to try. If they can't match you with an agent you love, there's no obligation to continue and you can go right back to selling FSBO. Check out their home value estimator and speak with a Clever agent today!

💰 How Much Is Your Home Worth?

Before listing your home, find out how it compares to others in your local market.

Recommended Reading

FAQs About FSBO in Real Estate

What does FSBO stand for?

FSBO stands for "for sale by owner." In real estate, a home being sold FSBO means the seller does not have an agent. FSBO sellers don't have to pay the 2.5-3% seller's agent commission in exchange for doing all the work. Learn more about why someone would sell FSBO.

Who draws up the contract in a for sale by owner sale?

The seller draws up the sales contract in a FSBO sale. FSBO sellers should work with an experienced real estate attorney to make sure the contract is properly written. Learn more about how to sell a FSBO house.

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Posted in For Sale By Owner, How to Sell a House by Owner, Listing Your Home, Preparing to Sell Your Home, Selling a House