How to Sell Your Home Without a Broker

Written by
David Mully Read Time: 7 minutes

Homeowners spend a lot of time and money building up equity. So it's not surprising that many of them would balk at the idea of parting with 6 percent of their home's value in the form of real estate commissions when it comes time to sell. So the For Sale by Owner (FSBO) approach – selling your home without a broker – can seem an attractive option.

So how to sell your home without a broker? What do you need to know? What tools are available to help you? What are the possible shortcomings?

Selling your home without a broker

The first thing to know about selling your home without a broker is there's a reason why real estate agents' commissions typically amount to about 4-6 percent of the selling price of a home. There's a lot of work that goes into selling a home. And if you take the For Sale by Owner approach, you're going to be doing all that work yourself.

Determining the right selling price for your home is only part of it, although many assume that's the main benefit of having a real estate agent. But an agent/broker provides a lot of other services as well, including advertising the listing, showing the property to prospective buyers, helping make sure disclosures and other legal requirements are taken care of, shepherding you through the closing process and basically making sure all the t's are crossed and i's are dotted.

On a For Sale by Owner, you're doing all those things yourself. Or paying someone to do them for you.

Don't expect to pocket the entire savings from the agent/broker's commission yourself. Whoever buys your home will likely want a piece of those savings as well by getting a lower price – that's why they're looking at a For Sale by Owner in the first place.

If the purchaser is using a buyer's agent, that agent will want to be paid the usual half of the customary agent's commission they typically receive, or about 2-3 percent of the sale price – and which is paid by the seller, though the amount is negotiable. Plus you may incur other costs for things like attorney fees, an appraisal, advertising, etc. that will cut into your savings.

Still interested? Ok, here's a step-by-step look at what you need to do to sell your home without a broker.

Pricing a For Sale by Owner home

Getting the pricing right is one of the biggest challenges in selling your home without a real estate agent – and one where a mistake can have serious consequences. Price your home too low and you risk wiping out the savings you're trying to get through an FSBO. Price it too high and it may not sell – and even if you do get a buyer, they may not be able to get a mortgage if the property doesn't appraise for what they offered.

In pricing your home, be wary of using automated pricing systems like Zillow or Trulia. While those can provide a very rough estimate of a home's value based on things square footage and nearby sales, they don't do a very good job of taking into account the condition and other individual characteristics of a home that affect the price. They are convenient for finding out what other homes have been selling for, though.

The best way to price your home is to spend a few weeks visiting open houses in your area to get a feel for what people are asking for homes similar to yours. Then set your asking price accordingly, but be ready to negotiate.

It's also a good idea to hire a professional appraiser for a few hundred bucks to get a professional valuation. That will likely be similar to the valuation the mortgage lender will eventually obtain, so you don't run into any surprises with a price too high to support the loan.

Get professional help

At the very least, you should get a real estate attorney to assist and advise you on such things as drawing up a sales contract, identifying disclosures you're requiring to make, ensuring compliance with relevant laws and the like. Title companies can often supply this type of expertise and handle the closing as well, including the preparation of all the paperwork that requires.

A real estate attorney can also advise you on what fees are customarily paid by the buyer or seller in your area, and which are subject to negotiation, which is something a broker would usually help you with.

You also need to be aware of contingency clauses in the sales contract and which ones you should insist on and the ramifications of ones the buyer may seek. Again, a real estate attorney can advise you here.

Listing a For Sale by Owner

You may be surprised to learn that you can list a For Sale by Owner property on the MLS – multiple listing service – that is the most comprehensive listing of available homes for sale in a given area. There are a number of companies that will do this for you, for a fee. Many of these are specific For Sale by Owner websites that will put your listing on the MLS and their own site, as well as provide other tools for selling your home without a broker.

You can also use sites like Craigslist or other non-MLS sales listings, which can save you a few bucks. But the MLS will get you the greatest exposure.

You also need to consider preparing things like yard signs, flyers, handouts and other promotional materials and assorted costs. But many For Sale by Owner services will now include those in their cost.

Identifying suitable buyers

When you're selling a house without a broker, you're in charge of showing the property. You don't get to slip out for a few hours while the agent shows off the home's features and gives a sales pitch to prospective buyers. That's your job.

You also have to take on the job of evaluating qualified buyers. You're going to get a fair number of rubberneckers just looking around and kicking tires, and you don't want to waste your energy giving them your best sales pitch.

You also don't want to be in the position of accepting an offer from someone who is unlikely to qualify for a mortgage, and then waste several months with your home effectively off the market while they try unsuccessfully to get approved for a loan. Do they have a prequalification (not preapproval) letter from a lender? If so, the lender has already determined they have the credit and income to get a mortgage of a certain amount.

Be aware too, that FSBO properties tend to attract lowballers. They'll offer you a price well below what you're asking in hopes you've gotten frustrated enough to accept it. But don't assume such offers mean you've overpriced the home, particularly if you've only had it on the market a few weeks.

Is it the right choice for you?

Selling a home without a broker is hard work, and can take hours and hours of time. Before choosing to sell your home without a broker, carefully weigh the risks and the rewards. You may save big money by not having to pay a realtor's commission; you could also lose big if you don't have the resources to sell the property. It's a tough call-make sure that you think it through before deciding to "do it yourself."

(Updated August 2017)