For Sale By Owner (FSBO) Homes
You may have heard the term FSBO (often pronounced fizz-bo), which stands for for-sale-by-owner. What is a FSBO home, and how is it different from most homes on the market? How do you shop for or buy a FSBO home? Do you need an agent, or are agents not even part of the FSBO process?
When most people sell a home, they work with a real estate agent. This agent helps them prep the home for a sale, hosts open houses, and lists the home with the local Multiple Listing Service (MLS), which is a system that real estate agents use to sell, find, and help people buy homes. Think of it as a giant list of homes for sale.
In exchange for the agent's service, the seller agrees to pay a commission on the sale of the home. Usually this commission is a percentage of the home's sale price. The seller's agent (called the listing agent) will get a cut of this commission, and will usually offer an identical cut to the agent who helps the buyer purchase the home. The seller sells the home, gets the money from the buyer and the buyer's lender, and gives a cut to the agents. That's the typical scenario.
FSBO sellers are different. They don't hire an agent, but instead market and sell their home on their own. Since they don't use a listing agent, they don't have to pay a commission. The trade-off is that they also don't get to list their home in the local MLS, which is where most buyers and their agents find homes for sale.
Sellers may have a few different reasons for selling a home without an agent's help:
- Trying to save money on agent fees
- Prefer working directly with buyers
- May not like or trust real estate agents
- May be a die-hard do-it-yourself'er
You may, or you may not. There's no blanket advantage to buying a FSBO home; every home purchase is different. You may find the perfect home, and realize that the seller has it listed as a FSBO. Or, you may prefer buying a home directly from a seller without the involvement of agents, and limit your search only to FSBOs.
But, if anyone has told you that FSBO homes are always cheaper, less complicated, or better bargains than MLS-listed homes, it's simply not true. Buying a FSBO home may be the right choice for you, or it may not.
For perspectives from others who are dealing with buying (or selling) a FSBO home, visit our forums.
Tip!
Since FSBOs usually aren't listed in the MLS, they can be tricky to locate. Although Redfin can't help you tour or purchase FSBO homes, we can help you search for them.
On the map, click More Options near the search box at the top of the page. This will open a drop-down menu. Select For-sale-by-owner homes in the bottom left column to include FSBOs in your results. FSBOs will appear as pink icons on the map.
Outside of Redfin.com, you can also search for FSBO homes at forsalebyowner.com, Oodle.com, Owners.com and Craigslist.
Sometimes. Many sellers who go the FSBO route do so because it's cheaper for them when they don't have to pay an agent. This means selling without an agent, but it also means working only with buyers who are not using an agent.
On the other hand, some FSBO sellers recognize that it's much harder to attract buyers if you refuse to allow those buyers to use an agent. These FSBO sellers will advertise that they're open to working with agents, and are ready to pay a buyer's agent the standard commission for their services. By paying only one agent instead of two, the seller can still save a lot of money.
However, many buyer's agents will refuse to work with a FSBO home seller, whether or not they stand to make a commission. Deserved or not, FSBO home purchases have a reputation for difficulty and complication, and some agents aren't willing to risk their time or their client's time & money on them.
If you are working with an agent and want to buy a FSBO home, talk it over with your agent early in the process. If your agent is unwilling to help you with the FSBO purchase, you may be able to end your working relationship to find another agent or to make an offer without an agent.
If you've decided to make an offer on a FSBO home, you should proceed carefully. Be diligent about contracts, inspections, and appraisals. Be absolutely sure to hire an attorney, and have everything reviewed carefully before you sign anything.
For more information, read our page on buying a home without an agent.