Considering FSBO - What resources have you used?

Question

Hello all,

My husband and I are likely going to sell out property in the next year-ish to get out from my student loans and if I FSBO our property it will leave us with money left over that we will use for another house hack in the future. For context we live in a house hack, do not have to pay capital gains, have been casually looking for a bigger duplex to house hack while continuously saving, and paying off his student loans. The profit from the sell of our first duplex will NOT be needed to purchase a bigger one. Our primary goal is to get out of student loans, which is why we are going to FSBO our duplex.

The math breaks down like this: Approximately...

Current Mortgage: $315K

Sell for: $400k

Pay Buyers agent fees at 1.5%: $6k

Pay closing costs at 3%: $12K

Approximate home sell profit: ~$67K

Balance on student loans: $40K

Total take home: ~$27K

I am interested in learning what worked and did not work for people that FSBO their properties. What websites/programs/lawyers/contracts, etc. did you use and why? What is something you learned? What is something you would do different? Where did you start? Did you get professional Pictures taken? Did you do an open house? Where did you post it?

I DO NOT want to financial advice or alternative solutions or to be told to use a real estate agent. Also, do not comment that the % are to low, its an approximation, and I am only interested in learning more about FSBO. Thanks,

Samantha

Marcus Auerbach · Answer

This is a little like telling a person over the radio how to land a plane. Here are the biggest mistakes that I see (for reference, we sell about 2 homes per week)

- not listed on MLS: that's where serious and qualified buyers are, flat fee MLS is a good option

- obviously FSBO: buyers are opportunistic and will offer less, just because you are a FSBO. And they will tell you that you are not paying an agent

- priced incorrectly: I just bought an SFR that was overpriced (on MLS) and had zero traction in the market. Weak agent, made every mistake in the book, seller ran out of options and agreed to a substantial discount

- photos: Google "real estate photographer near me": it's cheap and probably the single biggest mistake you can make is taking your own pictures. Spend a couple hundred bucks!

- not offering buyer agency fee: I see the reaction on buyer's faces every single time when I tell them that on this listing, they have to pay for their own agent. It seems to be worse if it is partial

- first weekend marketing: you never get a second chance for the first weekend

- contracts: fire an attorney to do your paperwork, review your disclosure and tell you what you can and should not do. Especially around title issues and when it comes to inspection and repairs

It can be done, but it is more work than you think. Most FSBO give up after about 2-4 weeks and list with an agent. That is a well-known statistic amongst agents, so expect that you will get a lot of calls from agents.

Frankly, I don't, because I don't have the stomach for it. Made me cringe when you said what you ask for help and then state what you do not want to hear LOL

The irony is that FSBOs think they can make more money on their own and on average they net less. Look it up. And take on a huge liability. FSBO is a really good way to get sued - best to hire an attorney.

Doug Pretorius · Answer

@Samantha Chacon-Johnson I second the flat fee MLS listing if you want to tap into the pool of buyer's who are using agents. The weird part about that is you have to shift gears from marketing to attract the buyer directly, to marketing to attract the buyer's agent. The best way to do that is to find out what the average buyer's agent commission is and offer more. If the average in your area is 2% (which is the case in my area) then offering 1.5% isn't going to get you anywhere. While I agree that is still a healthy chunk of money and buyer's agents should be more than happy to be paid that, the reality is they will direct their buyer's to the houses that offer the highest commission.

On the other side, for attracting buyers, signs and open houses have always been the most effective for me. Online ads are OK and do bring some interested buyers but the most qualified and motivated buyers usually come from signs. A sign in your yard and 10-15 pointer signs directing people in from the busiest streets around your house. Open houses do an excellent job of stirring up a sense of competition and urgency. They won't make uninterested buyers want to bid, but they will encourage the interested buyers to make a move.

In addition to having a real estate lawyer to handle your paperwork it's also a great idea to have a mortgage broker or 2 lined up to refer interested buyers to if they aren't already working with someone.

An alternative you may want to consider is offering seller financing. You could easily get $40k down which you can use to pay off your student loan. There would be no commission and closing costs are paid by the buyer. You would have to wait for the remaining $45k but you would be getting monthly income from the house in exchange.

Bruce Woodruff · Answer

I have used the HomeCoin program a few times, and with great results. It takes a little more work, but you are in control of the process instead of a RE agent who doesn't really care about your house the way you do.

I would say that you need to raise your offering to the buyer's agent to 2.5%. And of course, get professional photos...

Jonathan Minerick · Answer

Best value for your money is doing a flat fee MLS listing ($100-$200), which basically does 95% of the marketing for you (gets the home on MLS and all websites).  Pro photos ($200-$300) are next best investment. Also consider decent yard sign ($100).

Use a Transaction Coordinator ($400-$500) to assist with paperwork.

It's not nearly as difficult as some make this out to be.

Evan Polaski · Answer

@Samantha Chacon-Johnson, I will generally second Jonathan's comment.  The best marketing you can do is have your property on the MLS.  That is the primary driver of finding buyers.

I would be ready, and maybe you are, that you will very likely be paying the buyer's agent commission.  Most will have one.  But, on top of that, you will very likely have items arise in inspection that will cost money, potentially any closing cost assistance, and customary fees.

Doug Pretorius · Answer

@Samantha Chacon-Johnson I usually sell on owner financing using an installment contract. In Oregon these are commonly referred to as either a Contract for Deed or an Installment Land Contract.

As a comparison: Instead of selling for $400k, having various expenses, and pocketing a $67k lump sum. You could sell for $400k with minimal expenses, get $40k down, and finance the remaining $360k at current rates.

Current average for 30 year fixed mortgages according to bankrate.com is 6.78%. So let's say you offer that rate (and keep in mind that all of this is negotiable) your buyer will be paying you $2,342/month and they will also be responsible for the taxes, insurance, and handle all repairs. You will in turn continue to pay your underlying loan.

It's a good idea to use a loan servicing company to handle all of that for you. They collect from the buyer, pay your mortgage, taxes, insurance, and deposit the remainder into your account.

You can set up a balloon payment date when the remaining balance is due in full. 5 or 10 years is pretty common. Or you can let their loan fully amortize over 30 years. Even if you do full amortization most people will want to move before 30 years so buyers on an installment sale either need to refinance and cash you out or walk away. I've had people do both for various reasons.

Jules Aton · Answer

I sold a property on Craigs list in 2022 for cash, lol. The big thing with FSBO is they tend to be over or under priced so be sure you know the value. From a buyer's perspective if I'm buying as FSBO I want part of the savings the seller is getting from not using an agent so that is figured into my offer.

Samantha Chacon-Johnson · Answer

@Jonathan Minerick thank you!!

Abdi Na · Answer

The questions that you raised are literally the exact ones I have. 
Unfortunately so many of the resources out there are surface-level and 
often clearly a subtle (or sometimes not so subtle!) attempt at lead 
generation.

The best 2 resources I've found so far:

1) 22 minute breakdown - How to sell a house without a realtor. Seller walks through exactly what they did. Was the first solid video I found.

2) Reddit post of a seller breaking down in excruciating detail what they did.

Unsurprisingly, they all have one thing in common, they are written by sellers who went through the experience :)

Samantha Chacon-Johnson · Answer

@Evan Polaski thanks! All of those things I have considered, but I am not willing to show my cards before there is an offer in the table.

Considering FSBO - What resources have you used?

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