For Sale By Owner (FSBO)
A sale method wherein the owner sells a property without a listing agent
What is For Sale by Owner (FSBO)?
For Sale By Owner (FSBO) is a method of selling property that is conducted directly by the seller without using a listing agent. Most owners opt for FSBO in selling their properties because it saves the commission that would’ve been paid to a listing agent or broker, which is usually between 3% to 6% of the final agreed-upon selling price.
However, FSBO requires the seller to assume all the responsibilities that a listing agent would’ve performed in the sale of the home. If the seller has little or no knowledge of the home selling process, they will find it challenging. Nonetheless, for sale by owner transactions are common in the real estate market.
How to Prepare Your Home as a For Sale by Owner
When selling a home, the seller should make the house attractive to potential buyers by making sure everything is in order. Here are a few things that sellers can do to prepare for a for sale by owner:
1. Examine the house from a stranger’s viewpoint
Sometimes, the homeowner may fail to notice some defects that may discourage potential buyers from initiating the buying process. Viewing the house from a stranger’s viewpoint can help spot some deficiencies in the house that might otherwise go unnoticed. Consider asking some close friends to pass by your house and give you an independent opinion of the state of the house. Note whatever they see as a defect and make an effort to make improvements in these areas.
2. Make improvements before selling
Selling a house with broken furniture or fixtures can either discourage potential buyers or attract lower offers. Buyers would want to lower the price to cater to the costs of making improvements in the house. One way to increase the value of the house is to spend money on home improvement by making minor, relatively inexpensive repairs. The seller should spend a reasonable amount of money on improvements in order to maximize their profit on the sale.
3. Separate pets from the house being sold
Even though pets add some kind of happiness to a home, not all buyers are interested in buying a home where pets have lived. To some buyers, the pets may be a turn-off, especially if there are family members who are allergic to pets. Separate the pets from the house being sold by keeping them outside when showing the home to potential buyers.
How to Market a Home as a For Sale by Owner
When selling a home, the seller should find creative ways to reach their target audience, even if it means spending money to get them inside the house. Since the seller is not paying commission to a listing agent, they can redirect that money to marketing efforts.
Here are some of the ways to market a home as for sale by owner:
1. Word of mouth
Word of mouth is a strong marketing technique because chances are that your friends may know someone looking for a home to buy. You can start by calling or emailing your friends, close relatives, and business associates. Let them know you are selling your home, and provide them with things such as the home description, photos and videos, and a link to a website where you have placed an ad.
2. Pay for ad space
Spend money on marketing to increase the reach of your marketing efforts. You can pay for an ad in your local newspaper, or on radio, public bulletin boards, or websites that cater to FSBOs. You can also use Craigslist to share information about the house and contact information that potential buyers can use to reach you. You can also design flyers to give to potential buyers who come to view the house or to workmates in your workplace if it is allowed.
3. Multiple listing services
Multiple listing services are operated by the local realtor association, and they are preferred by buyers looking to buy a new home. You can seek the services of an FSBO help website to help list your home on the multiple listing services. Most of these services charge a 3% commission per listing.
4. Create a virtual tour
You may want to consider hiring a good videographer who can create a virtual tour of the house. Modern videographers use drones to capture an aerial view of the house and create a media item that gives potential buyers a walkthrough of the house. The media item can be included in online advertisements that you use to attract potential buyers. It can also include HD photos of each section of the house that buyers would be interested in seeing.
Related Readings
CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following CFI resources will be helpful:
