For sale by owner, or FSBO, explained

When it comes to selling your home — most likely the highest-ticket item you own — it’s natural to want to maximize your profit.

Depending on whom you ask, the for sale by owner model (also known as FSBO, pronounced “fizz-bow”) can be a terrific money-saving way to sell your home. Or, it can be fraught with headaches and net you less money at the end of the transaction. Here are some things to consider when deciding whether FSBO is right for you.

What does for sale by owner (FSBO) mean?

“For sale by owner is when a seller chooses to market their property for sale on their own without hiring a real estate agent,” explains Tori Hughes, a Marietta, Georgia–based Realtor with Harry Norman. “Sellers are drawn to the FSBO route because they have the perception they will save money by not hiring an agent to market their home.”

When you hire a real estate agent, the agent is paid a percentage of the price the home sells for. The U.S. national average for real estate commissions was 5.49 percent in 2022, according to data from Clever. The commission is typically split evenly between the seller’s agent and the buyer’s agent. That means that if you sell your house for $300,000, using an agent for the sale, your agent’s commission would be about 2.75 percent of the sale price. Hypothetically, that’s $8,250 that you could have saved if you hadn’t used the agent.

How for sale by owner works

There are a variety of ways the FSBO arrangement can work. In today’s hot real estate market, a full-service agent may not be needed at all. Sellers can choose instead to do it all themselves, or use one of the many services available that help with some of the elements of selling a home.

For instance, real estate agent Josie Reo operates MLS 4 Less Realty, serving the eastern region of New York State. With this service, sellers pay a flat fee upfront to have their home listed on the multiple listing service (MLS) and advertised online. Other companies, like Redfin, have gained traction in recent years offering a tech-backed platform for selling homes and a 1 percent listing fee. And sites like FSBO.com offer packages that include signs and more. FSBO sellers can opt to work with a real estate attorney to draw up and review contracts, or purchase lawyer-approved forms online.

FSBO drawbacks

It’s important to note that in a FSBO situation, the seller assumes all of the responsibilities that a real estate agent would normally handle. This includes determining the home’s appropriate price based on market conditions, marketing, taking photos, staging, showing the property, negotiating offers and managing the logistics of the transaction. Agents are professionally trained and licensed to do all of those things, to maximize the profit and minimize the hassle for the homeseller.

“One common misconception is that [sellers] will be able to save money by not paying commission to a listing agent. But in most cases a seller will be able to sell their home at a higher value with the assistance of an agent and in turn net a higher profit after paying commissions,” Hughes explains. “Another drawback is not having the guidance of an agent who is an expert on the contracts and forms used in real estate transactions.”

Is FSBO the same as owner financing?

For sale by owner may sound similar to owner financing, but the two are unrelated. “Owner financing is when a seller will act as a bank and allow the buyer to make payments to them on the property versus going through a bank and obtaining a mortgage,” Hughes says. A homeowner can offer owner financing with or without using a real estate agent.

Is for sale by owner worth the effort?

For sale by owner works well for some and is an awful experience for others. In hot real estate markets, a FSBO house may sell quickly, but in a market with few buyers, FSBO sellers may have to do more work than they feel is worth it.

When Courtney Osgood’s parents needed to sell their Corning, New York, home in 2012, they decided to list it for sale by owner. “We chose to go that route simply because my parents didn’t want to pay a Realtor to sell the house when they thought they could do it themselves,” Osgood says.

They had a couple of unusual things working in their favor, though. Osgood’s father built the house, so he had a good handle on the appropriate resale value, and Osgood’s work as a publicist gave her the skills to write a compelling listing.

“I created the ad, wrote the copy, uploaded the photos, posted and managed the ads. Then my parents showed the house and dealt with all of the closing logistics,” she says. After showing the house to a few potential buyers, they received a full price offer and closed quickly. It went so well that a friend of Osgood’s parents asked her to help sell their home, as well.

Still, Hughes makes a case for at least consulting with an agent to make an educated decision about whether FSBO is right for you.

“Statistics show that most sellers will be able to net a higher value when hiring an agent,” she says. “Given most sellers’ lack of knowledge regarding the forms and contracts, and the stress that surrounds the transaction, FSBO is not worth it. I would encourage anyone who is considering FSBO to interview agents before making that decision. Give an agent the opportunity to present their marketing plan, and prove their value — you may just change your mind.”

FSBO Pros and Cons