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The Pros & Cons of For Sale By Owner (FSBO) When Selling Your Home

Do you really need a real estate agent’s help to sell your home? Maybe not, according to a 2007 paper by the National Bureau of Economic Research (NBER).

The NBER compared sales of single-family homes in Madison, Wisconsin on a local for-sale-by-owner website with agent-assisted MLS listings and found no statistical difference in selling price. Because listing agents typically take 3% of the final selling price, sellers who forgo agent representation may come out ahead.

When a home hits the market without a listing agent, it’s known as “for sale by owner,” or FSBO (pronounced “FIZZ-boh”). FSBO listings are more common today than in 2007, thanks to consumer-facing listing platforms such as Zillow and easier access to the Multiple Listing Service (MLS) for non-agents.

But FSBO is no walk in the park, which is likely why only a small minority of sellers — about 15%, according to a 2018 Zillow report — work without an agent despite the financial benefits of going it alone. A good professional listing agent provides a lot of support for sellers and does a lot of behind-the-scenes work that FSBO sellers must take on themselves.

So, before you commit to selling your own home without professional help, familiarize yourself with listing agents’ professional responsibilities and consider the relative upsides and downsides of going it alone.

What Do Professional Listing Agents Do?

Before you decide to forgo representation, understand what you’re giving up. The principal duties of professional real estate listing agents include:

  • Helping the Seller Set a Realistic Price. Assuming you use a local agent with experience selling houses like yours, they should know the market well. They should also know how to interpret comps, or recent comparable sales, and recent sales patterns in your area. They can then take into account your objectives and motivations, such as how fast you want to sell, and help you set a realistic list price.
  • Preparing the Home for Sale. An agent casts an objective, even critical eye over your home, identifying issues to address before listing or which discounts to apply to the list price in light of issues.
  • Staging the Home. Your agent should help you prepare your home for listing. That usually involves a thorough, systematic cleaning and decluttering process and strict rules for maintaining order while the home is on the market.
  • Listing and Marketing the Home. Before listing, your agent should commission or take professional-quality photos of the home’s interior and exterior, produce a comprehensive description of the property, and add the home to the MLS. In sellers’ markets, your agent may shop the home around to buyers’ agents and potentially attract offers before it officially hits the market.
  • Facilitating Home Showings. Your agent is the primary organizer of and point of contact for home showings and open houses. They act as an intermediary for buyers’ agents; if your agent does their job well, you may never see a prospective buyer or buyer’s agent.
  • Facilitating Negotiations. Your agent also receives prospective buyers’ offers and acts as an intermediary in negotiations. Sales experience and local market expertise come in handy here; a competent agent can help you sort long-shot offers from quality ones.
  • Assisting With the Closing Process. Your agent should accompany you to closing, which is usually organized by a settlement agent or title company and may also involve a real estate attorney, depending on the laws and customs in your jurisdiction. For inexperienced sellers, the presence of an agent at closing is a major confidence-booster that may mitigate last-minute disputes or legal issues.

Well-organized sellers who are willing to put in significant time and effort are more than capable of assuming these duties themselves.

But before listing your own home, you do need to determine once and for all that you’re not willing to pay a listing agent’s commission to avoid doing them yourself.


Benefits of Selling Your House Without an Agent

Homeowners commonly cite these reasons for going FSBO. Cost is a big consideration, of course, but FSBO sellers also appreciate greater control over the process.

1. You Don’t Have to Pay the Listing Agent’s Real Estate Commission

In dollar terms, this is the biggest advantage of selling your house without an agent.

Listing agents rarely take less than 2% commission; that’s $2,000 for every $100,000 in sale value. At the Q1 2021 median U.S. home sale price of $347,500, that’s $6,950.

In many markets, 3% commission is standard; that’s $3,000 per $100,000 in sale value and $10,425 on a median-priced sale.

FSBO sellers still have to pay the buyer’s agent’s commission if the buyer has professional representation, which is usually the case. But 2% to 3% of the final sale price is less than 4% to 6% of the final purchase price, which you’d be paying if you both had agents.

2. You’re in Total Control of the Process

For better or worse, FSBOs have total control over the sale.

That’s ostensibly true for sellers with professional representation too, but anyone who’s worked with a real estate agent knows that they inevitably exert influence — however subtle or benign — on the process.

Even a well-meaning agent in no rush to close may push you to take an offer with which you might not be comfortable — or which you’d like to negotiate further — because they genuinely believe it’s the best deal you’re going to get.

Less scrupulous agents may push clients to close faster and accept inferior offers to log commissions or meet sales quotas before the end of a particular month or quarter.

They may even tip off buyers to the fact that you’re motivated to sell, in clear contradiction to your financial interests.

3. You Don’t Have to Deal With an Agent You Don’t Like

When you act as your own agent, you needn’t worry about clashing personalities, aesthetic preferences, or negotiating styles.

You might still have to wrestle with your own conflicting wishes or make compromises with your spouse or partner, but that’s different; you know your spouse or partner far better than a random real estate agent.

Agent-seller conflicts manifest in many ways. I often think back to an experience my wife and I had as buyers. Our agent, who worked out of a far-flung suburban office, was critical of the working-class area we wanted to buy in.

He relentlessly steered us to “nicer” — and more expensive — parts of town, and on the way to showings in our preferred neighborhood, he made derogatory comments about poorly maintained houses, shabby cars, and seemingly idle locals.

We ignored his advice and bought a great starter house in the neighborhood we wanted. It turned out to be the right call financially — the house has appreciated in price faster than homes in more expensive parts of town, putting us in a favorable equity position.

But if we could do it again, we’d probably spend more time looking for an agent whose preferences aligned with our own.

4. You Can Speak Knowledgeably About Your Home

Professional agents are, well, professionals. They know how to put a home’s best foot forward, highlighting its top selling points while minimizing its deficiencies.

But even the savviest professional agent doesn’t know your home as well as you do. While it’s never wise to let emotion get in the way of expediency or your best financial interests (see below), your affection for your home is a great advantage at open houses and showings.

I’ve always found FSBO showings more interesting and informative than agent-represented showings. At one particularly memorable open house, I had a lengthy conversation with the FSBO seller about the home’s central vacuum system, an implement I’d never seen before.

The home ultimately sold for above asking price, which was unusual for the market at the time, and I suspect the owner’s personal touch was partly responsible for the premium.

5. You Don’t Have to Go It Alone

Forgoing full-service representation by a professional agent doesn’t mean going it totally alone.

If you’re truly committed to DIY selling, use social media to find successful FSBO sellers in your area; they’ll no doubt have valuable advice. With resources like Craigslist and FSBO.com, you can list and advertise your home on multiple sites with reasonable effort.

And if you decide you need more help than you thought, flat-fee brokerage services still cost significantly less than full-service agent representation.


Drawbacks of Selling Your House Without an Agent

Here’s why you might want to think twice about a FSBO sale. Often, the downsides arise because of two main deficits all FSBO sellers share: lack of selling experience and lack of local market knowledge.

1. You’re Not As Experienced As a Seasoned Professional

FSBO sellers don’t have as much experience as seasoned real estate agents or brokers, whose credentials require years of study and practice.

Sure, you might work in sales or know your way around a legal contract, but you’re unlikely to have the complete range of knowledge, skills, and methods to match a real pro.

Despite the conclusion of the NBER study that FSBOs did just as well as agent-assisted sellers, your lack of experience could hurt you at the negotiating table or lead to a rookie mistake that increases your legal or financial liability down the road.

2. You Probably Don’t Have Local Market Expertise

No matter how long you’ve lived in the area, you’re unlikely to know your local real estate market as well as a professional agent who’s done business there for years.

Full-time agents participate in dozens of sales per year; those associated with larger brokerages see dozens or hundreds more. They can sniff out clues and trends not readily apparent from quantitative market analyses and turn those nuggets into actionable strategies that pay off for sellers.

For example, they can advise a client to price a starter home lower than the market can bear and trigger a bidding war between buyers eager to capitalize on the value-add opportunity.

3. You’ll Need to Devote a Lot of Time to the Process

Selling a house is time-consuming no matter what, but it’s way more so without an agent’s help.

Before you commit to going it alone, figure out how much your time is worth and how much you stand to save without an agent, bearing in mind that your home may wind up selling for less as a FSBO than in an agent-assisted sale.

If that premium isn’t worth the many, many hours you’ll spend preparing and showing your home, FSBO may not be for you. After all, your time is valuable.

4. You Must Be the Lead Negotiator

Not all FSBO sellers are born negotiators, but those comfortable with the give-and-take of dealmaking naturally have a leg up on those averse to confrontation.

If you’re willing to pay someone to negotiate on your behalf, particularly if you suspect they’ll do a better job than you, working with a professional agent may be worth your while.

As you weigh your options, remember that the selling price isn’t the only marker of negotiating success. If you’re motivated to sell but feel your emotional attachment to your home or inability to recognize a quality offer is impeding your ability to close the deal, a professional might help you and your buyer get to “yes” faster.

5. You May Face Resistance From Buyers’ Agents

Understandably, real estate agents are protective of their guild. Some actively steer their clients away from FSBOs. Others relish negotiating with amateurs but worry about the legal risks of dealing with inexperienced sellers.

Also, most agents don’t regularly check FSBO listing sites unless their clients specifically request it — another reason you should increase your home’s market visibility by listing on the MLS.


Final Word

Acting as your own seller’s agent has some clear-cut advantages, namely avoiding the seller’s agent commission, maintaining total control over the selling process, and access to online resources that can assist you at a fraction of the cost of an agent.

Selling your own home has some disadvantages too, including fairly obvious ones like lack of experience, limited local market knowledge, and a big time commitment.

These pair with not-so-obvious downsides like acting as your own negotiator — which can be surprisingly tricky — and potentially facing resistance from prickly buyer’s agents who don’t take kindly to FSBOs.

At the end of the day, it’s up to you to determine whether FSBO makes sense for your home, market, and objectives.

That determination may flow from a simple dollars-and-cents calculation or something more complex and subjective, such as your willingness to take the time to market your property or endure the tedium of direct interactions with prospective buyers.

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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