FSBO or ‘For Sale By Owner’ is when a property owner attempts to sell a home without hiring real agent or broker. Sellers may consider FSBO to avoid paying a commission on the sale or to avoid restrictive contracts.
In a traditional sale, homeowners contract with an agent through a listings agreement. This agreement stipulates how long the home will remain on the market, the listing price, the terms of compensation, and other conditions. It also typically provides an exclusive right to sell which states that for the duration of the listing, the agent and only the agent has the right to sell the home. Once signed, the agent works on marketing the home and fielding offers.
For virtually all of the past century, traditional sales made up the vast majority of real estate transactions. Agents held significant advantages over the general public in access to market information and advertising to a point where FSBO was a lengthy and costly affair.
But the seller-agent dynamic began changing in the 1990’s with the introduction of the Internet to the real estate industry. Property sale portals and IDX made more real estate information publicly available than ever before, allowing homeowners to advertise and do market research at little to no cost.
Under FSBO, the homeowner takes responsibility for all aspects of the real estate transaction. This includes home prep and staging, creating the listing, marketing, fielding offers, negotiating the final sales price, and producing all required paperwork and contracts.
Selling FSBO can give you a HUGE advantage over Realtor® listed properties. In today's market PRICE IS EVERYTHING. FSBO sellers have much more room to negotiate a sale price compared to an MLS listed property potentially carrying a six percent commission.
The fact of the matter is that agents and brokers can be costly. A typical commission is 6% paid by the Seller. So in a transaction involving a $300,000 home, this commission would cost the homeowner $18,000!
Beyond this obvious advantage is potential savings. Suppose you decide you’ll only reduce your price by half of the typical commission or three percent. You’ll still enjoy a substantial selling advantage over the "full service" MLS properties in your neighborhood, but also reap a multi-thousand dollar windfall.
Maybe you’re in a more desirable location where demand is equal to or exceeds inventory. In this case, you can keep the entire six percent commission.
Even if you’re unsure of your odds of success the cost of trying is very low. It's not like you can't try casting the larger net and taking advanatage of our Flat Fee FSBO Plus MLS or even our Flat Fee MLS Enhanced Options later!
A traditional sale involves a listing contract to stipulate the terms of your transaction. Many times, this contract can be restrictive. Furthermore, listing contracts often include an exclusive right to sale, which ensures the agent collects payment even if the homeowner finds the buyer.
Then there's that inherent conflict. You and your listing agent have opposing interests. They get paid when your property sells. How much it sells for may not be such a big deal to them, the agent may want to sell the home faster than the owner so he or she may pursue other commissions. There are no conflicts of interest when you represent yourself in a home sale.
If they can sell a property really fast to one of their other clients they'll make a lot more money. Even if it sells for only 80% of its true value the commission they will earn will be 60% greater than had they sold it to another company's client at full value.
On a $250,000 property that's a loss of $50,000 before commission for the seller and a gain of $4,500 for the real estate agency.
FSBO can allow sellers to pay for some services à la carte. For example an owner may pay to list the home on the MLS but do all the marketing herself. This can allow owners to play to their strengths and avoid paying for services they don’t need.
Now there is a downside to selling on your own. It is real work. You will have to handle your own showings and open houses. You will have to negotiate the sale. But it also pays real money.
You will have to deal with listing agents and brokers harassing you. There's a whole industry built up on "converting FSBOs."
They'll try to scare you out of doing it (hire a real estate attorney to back you up and you'll be safer than any agent can make you and you'll still save a lot of money). They'll try to create a sense of obligation to them by "helping" you sell FSBO. They'll tell you they have a buyer interested in your property and can you let them preview it? Only that's just a come on to get in the door. There is no buyer.
And don't believe the hype.Real estate agents don't get a higher price for your property.
If you're selling commission free real estate in the Madison area, you can't get better web exposure anywhere else.
FSBO Madison is one of the most heavily trafficked regional FSBO websites in the world. There is no other FSBO, flat fee or discount real estate website serving south central Wisconsin that even comes close.
We have for years consistently ranked at the top of the search engines on Madison real estate searches. Even searching on just "FSBO" typically brings us up on page one of the top search engines.
FSBO Madison has been on the web since 1998 and is deeply and widely connected. There are literally tens of thousands of links from websites around the world pointing to FSBO Madison.
For $150, you just can't buy better exposure.