Expert Q & A: For Sale By Owner

Posted by ForSaleByOwner

Gregory Healy, the vice president of operations for, is answering readers’ questions about for-sale-by-owner, or FSBO, real estate sales this week.


I think many people would agree that, in theory, it is a good idea for owners to sell their own properties, because they can avoid paying a 5% commission to a real estate agent.

However, is this the case in all markets? I live in Boston, MA, and most condominiums here seem to be sold through real estate brokers. I assume that most prospective buyers are therefore looking for new properties by contacting a real estate agency and not looking online at craigslist or another internet site. How can a seller in such a market avoid using a broker and paying the 5% fee?

While it’s true that many homes are sold through brokers, it’s also true that the internet has become a more central means of marketing a home – whether you ultimately work through a broker or not. Based on a 2007 report issued by NAR, the National Association of Realtors, many buyers who purchased through an agent found the homes they ultimately purchased by going to the internet first.

This research indicates that the trend is definitely moving in the direction of more and more people looking online buy a home. Buyers are becoming ever more independent, and are doing more of the search on their own. According to additional research, for example, it’s clear that 60% of buyers still drive around and walk through neighborhoods to see potential properties and to get to know the neighborhood on their own, independent of agents. This is probably especially true in a “walking city” such as Boston.

Whether you choose to list with an agent and pay the 5%, it is of course your decision – but if you decide not to do so, the home searching trends are definitely moving in your direction.

Hi, I live in a loft in Manhattan. Due to the specifics of the New York City market, there is obviously a premium attached to units in Manhattan. Is there a price level above which you don’t think it is advisable to sell FSBO and use a broker instead? If so, would this level be 1M, 3M, 5M in Manhattan?

New York City is a really unique real estate market – however, I think higher offering prices do not limit a homeowner’s ability to sell the home “by owner”.

The three main things to consider to be successful are: first, price your property well, by doing a marketing comparison, visiting similar condos, and obtaining some pricing reports; second, “widen your net” by marketing the property on “by owner” real estate websites, other free sites and through your own personal network; and third, hire an attorney or title company to help you through the closing process.

I will be selling my apartment in UWS FSBO. If I state “buyers” brokers are welcome,” how do I handle the 3% fee that needs to go to them? It’s almost like I need to have two prices — one for buyers without brokers and one for buyers with brokers.

If you are willing to accept an offer from buyers who are represented by a broker, you do not need two selling prices. Most of the time, buyer agents understand they will receive 3% of the final sale prices. For example, if your property is listed for $310k and the final, accepted offer from a buyer represented by an agent is $300k, you would owe the buyer’s agent $9k. When you subtract the buying agent commission, you have $291k left – so when pricing the property and negotiating, make sure the $291k is above what you are willing to walk away with when the deal is done.

When you accept an offer, the final contract should state the percentage owed to the buying agent as well the final, accepted offer price and the commission payment. So in the example above, the $9k commission payment should be clearly stated. This is very straightforward and a common practice.

Another thing to keep in mind is that the 3% you mention is always negotiable. You can offer more than 3% or less than 3% based on what you think may attract buying agents and make your transaction compelling as well as cost-effective for you.

What is FSBO and what are the advantages of selling a property without a broker? What are the disadvantages?

FSBO, which can stand for the phrase “for sale by owner,” means a home seller who decides to sell their home without using a full-service real estate agent. One of the primary advantages of selling your property “by owner” is to save money. According to RealTrends, the national average commission rate was 5.12% last year. This means that if you sold your home yourself for $300,000, you would save over $15,000 versus using a full-service real estate agent and paying the average commission rate.

Selling a home without an agent can be hard work. However, thousands of home owners successfully sell their homes each year. Furthermore, academic studies by two of our nation’s leading universities, Stanford and Northwestern, found that “by owner” sellers were as effective as agents in maximizing the sales price of their homes. Selling a home yourself (or with the assistance of an agent) requires a personal commitment, but for many people the opportunity to save $15,000 or more is a worthwhile use of time and effort.

How do you get your FSBO property in the listings Real Estate agents use?

The listings services that agents use are commonly known as Multiple Listing Services (MLSs). An MLS is a database of homes listed by agents in a specific geographic area. There is no MLS for New York City, and there is no national MLS. Homeowners can have their homes placed in the local MLS while still retaining many of the advantages of selling their homes themselves by utilizing a “flat fee” broker.

If a home owner uses the services of a flat fee broker, s/he will pay a fee (which varies across the country, but generally costs about $300), complete the paperwork required by the local MLS, and sign an exclusive agency contract that commits the seller to paying a buyer agent commission of between 2-3% if the buyer is represented by an agent. In most areas, the home owner does not pay a commission to the broker who placed the listing in the MLS when the home is sold. A homeowner can complete these simple steps very quickly and have their home in the MLS in a few days.

If a buyer is not represented by an agent, the home seller does not pay any commission and will only have paid the flat fee at the beginning of the process.

Many sites, including, have a nation-wide network of flat-fee brokers to enable their customers to have their homes appear in the local MLS using the process described above.