For Sale By Owner Advice

[photopress:contracts.jpg,thumb,alignright]The most common obstacle to being successful at selling your home on your own, on your own meaning a truly private sale with no agent at either end, is the contract phase.

Owners usually figure out all of “their stuff”.  Getting the house ready. Pricing the house. Putting out ads.  Being available to show the house.  The “missing” part is the “buyer’s stuff”.  While it may seem that the buyer should figure out their end of things…that is not a realistic expectation on the part of the seller, most of the time.  It is also the reason that many “successful” For Sale By Owner’s only end up saving a portion of the commission, and not the entire commission.  I have heard many stories over the last couple of decades from For Sale By Owners saying “everyone loves the house and then leaves, and we don’t hear from them again”.  That can be very frustrating for a homeowner.  The buyers come, rave about the house, leave, and the owner is left scratching their head saying “What’s up with that?!?!”

Whether a buyer is working with an agent or not, they usually focus more on looking at houses, than on what happens when they find the house they like.  Unless your house is so hands down, oh my god, have to have it…it is unlikely that a buyer will have the supercharged motivation needed to get to the next step.  Timing is everything.  If the owner whips out a contract when a buyer comes in…it may scare the buyer.  If they don’t whip it out before the buyer leaves, often the owner doesn’t get a second chance.

So here’s my advice.  Find a lawyer who will draft a simple, layman-term version of a standard purchase and sale contract for you.  Something an average buyer can REALLY UNDERSTAND, that covers all of the bases in something less than the standard legalese.  Make it on as few papers as possible, while still covering the main points.  Do NOT, in other words, simply use the standard format that agents use with multiple addendums.  Have most of the “addendum” topics covered in one standard contract.  If your house was built prior to 1978, have the lead based paint automatically built into the contract.  We use an addendum for that because some need it and some don’t.  But you already KNOW if your house was built prior to 1978…so get it put right into the contract, and have the booklet regarding hazard info readily available.

Instead of waiting for the buyer to have to say “I’d like to buy your house”, hand everyone who comes through, a sealed envelope with the flyer attached to the outside of it.  In the envelope include the Seller Disclosure Statement and the contract (and a pre-inspection, and…).  Complete the contract with everything that YOU want.  In other words, you make an offer to them…rather than waiting for them to make an offer to you.  Have the name and phone number of the attorney who drafted the contract in the envelope, so they can counter with modifications to your pre-presented offer.  Of course you should also state that they can use an attorney of their choice, OR call the attorney who drafted your document. 

When you hand them the envelope, tell them “everything you may need is in this envelope, including everything we know about the house”.  This way you are giving them information, instead of pressuring them with regard to buying your home.  If they like your house at all, they will want to open that envelope to see the Seller Disclosure Statement.

You might say as they are leaving, “If you are not at all interested, then I’d appreciate your leaving the envelope here to save a tree.”  A nice, easy way for them to let you know that they are not interested in buying your house, without offending you.  They are not saying NO to you, they are saving a tree 🙂

Make it as easy as possible for a buyer to get from liking your house to buying your house, and you may be able to save not just half of…but the entire, commission.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

38 thoughts on “For Sale By Owner Advice

  1. That is a nice way for a FSBO to handle the process of initiating the paperwork, Ardell. I like it.

    I can’t speak for Seattle… but I know that in Atlanta – a FSBO will NOT save an entire commission, regardless of the absence of an agent in the transaction. The Buyer wants a concession… even when the property is offered below market.

    I liken it to two dogs fighting over the same bone. 🙂

  2. Good point Doug. That can be the case even if the property is listed. Except the two dogs fighting over the same bone are the buyer and the Seller’s Agent.

    What you are really saying, and rightly so, is that the seller should have at least 3% of room between their asking price and acceptable price:

    1) in case the buyer has an agent or wants one or needs one
    2) in case the buyer wants that 3% for himself

    Clearly the For Sale By Owner should leave the buyer the option of having an agent, and should have some room for negotiation between their asking price and what they will take.

  3. Let’s also not forget, that for the buyer to be perfectly ethical, and REALLY sell it on their own they should also not contact any agents with requests for free CMA. They should also not browse through IDX listings.

    Those two things are paid for and provided by Realtors in hopes of generating business and it would be really unfair to take advantage of a service without paying it. But then again, a lot of FSBOs I met are cheap and somewhat unethical. They’ll gladly use a Realtor’s service but whine about paying for it.

    Many FSBOs also wait until there are a lot of Realtor listings in the immediate vicinity of their house, and specifically state that they will not pay buyer agent’s commission. They put everyone in a difficult spot, where the buyer and their agent have to decide who dumps whom and how to bring up the awkward question of compensation.

    Put that up there as well, Ardell. It’s in the FSBO’s best interest to play nice with the real estate community. The home will sell faster. I would even suggest offering 4%, since the buyer agent will have to handle both sides of the transaction.

  4. Rick,

    I agree with a few of your points. But let’s deal with the general tone of your comment, which seems to be angry at For Sale By Owners, generally. Are all CPAs that angry at everyone who does their own tax return? Are all lawyers that angry at anyone who can manage to represent themselves wholly or partially in a legal matter? Why do agents, and I do assume you are an agent, get SO angry that someone just might be able to sell their own house? Other professionals don’t get angry at “do it yourselfers”…I don’t think.

    Many agents will assist a for sale by owner with a CMA. If the owner is able to sell it themselves, GREAT! If not, they will likely call on one of the agents who provided the CMA. Nothing unethical there. Though I do agree with you in that the owner should make it clear from the start, that that is their intention.

    “Not browse through MLS listings”…c’mon, you’re not serious, are you? That’s like saying a RE/MAX client should never look at listings on the Redfin site, or vice versa.

    I haven’t met too many For Sale By Owners, but those I have met are generally very nice people. Some just don’t like agents because they had a bad experience, or are tired of being talked down to, like they can’t possibly do it themselves. Some are trying to save money, for sure, but what’s wrong with that?

    You don’t want someone to hire you who doesn’t need your services, do you? Plenty do need our services…but does EVERYONE HAVE TO need them? That’s not very practical or necessary. Some guys can build their own deck, some can’t. Some can do their own tax return, some don’t want to that can, just to be safe and sure. Some For Sale By Owners try it themselves and only hire an agent if they NEED to do that. Nothing wrong with that. No one should pay for a service they do not need. Plenty do need it…let’s not be totally greedy.

    “How to bring up the awkward question of compensation”. I agree that the scenario you lay out can put you in a tough spot. I just take the buyer to see the house and let the chips fall where they may. If that is the very best house for your buyer, they certainly shouldn’t pass it up. Put the client first and they will appreciate that. So far I haven’t had a client want that For Sale By Owner anyway. Seems like you put yourself through a lot of anguish for nothing. Why would your buyer client agree to include your fee on the listed house, and not on the unlisted house? Makes no sense. Do not fear the unknown. Go forward with the right attitude, you want your buyer to see everything and get the right house for them. It will all work out if you keep the right attitude, and do whatever is best for your client.

    As to the For Sale By Owner offering 4%, no reason you have to do the seller’s work. Don’t presume the seller can’t. If you take it on, don’t whine about not getting paid for it. Don’t take it on. If the seller wants you to do “his side”, just tell him what your fee is for that. By your “4%” comment, it appears you are willing to do the seller’s part for 1%. Just tell the seller that if he needs you to do his side of things. Most times the seller will be happy to hand you his side of the work for 1%. You’d be surprised. Some can do it themselves, some will pay you to do it.

    I totally understand your feelings on this Rick, I’ve been around a long time. For many, many years we have relied on sellers to list their homes AND provide the buyer agent fee. But that’s a leftover system from when all agents represented sellers only. Now that agents represent buyers, we have to not “feel awkward” about discussing payment for our services with our clients…our buyer clients. It’s a tough change, but a necessary one. We can’t blame sellers for making us have to talk commission issues with our own buyer clients. It’s just an idea whose time has come.

    But I do empathize with you…change is hard.

  5. Ardell,

    I agree it’s a bad stategy to try to game the FSBO’s that are gaming me! Look, it’s a free country… owners are owners and have the right to sell their properties any way they want (while following state law of course). It’s like here in Chicago when Cub fans worry about what the White Sox are doing and vice versa! Worry about your own team.

    When I show FSBO homes with my clients, I give sellers my card. When they email or call for feedback, I go “look, Mr./Mrs. home owner, I’d be happy to provide my expertise, but it’ll cost you. And there is a reason for that”. You get the gist… I have fun with them, but the ones really looking to give up the selling effort will give me a shot. I flush them out right there.

    This is corny, but the best strategy is to assume you will be working with everyone… all the time. Don’t relegate people to categories. There are a thousand stories of Realtors meeting people at open houses (nosey neighbors), on the street, FSBOs… the Realtor treated them well, had fun with them and bam! The next week- to over a year later -they contact you out of the blue.

    Just change with the times… develop a business plan and grind away. I don’t even worry about FSBOs, except to show them to my clients. Some colleagues make that a part of their plan.

    My clients think I’m going above and beyond for digging deep and showing them “unlisted” properties” as I call them. As I said in another comment on RCG, FSBO sites are usually difficult to use and have incomplete information. So, if I get an FSBO email, I send them my company web site link, my blog link, a craigslist ad and marketing bullet points and say… “If you liked me at the showing, think of me just in case…”

  6. Hey Eric,

    I’ve been sweeping Zillow looking for For Sale By Owner Properties that meet my client’s needs. Maybe they will be less likely to have TWENTY FREAKIN’ OFFERS! Like the one we had an offer in on tonight. Can you believe it? December 10th and twenty freakin’ offers! Bid up way over value…no new kitchen…pretty old place…nothing real special about it that I could see. Basic three bedroom 1 old bath house with an unfinished basement. Sheesh!

  7. Nice post, Ardell. Thank you for noting that an attorney’s assistance is invaluable in the FSBO context — needless to say, I agree. I like your method of presenting the offer, too. One comment: if the buyer contacts the seller’s attorney, it could “gum up the works,” as the attorney should immediately point out that he/she is NOT working for the buyer and in fact is NOT concerned about protecting the buyer’s interests. Rather, because the seller has an attorney, the buyer should too. Given that your whole pitch is designed to make everything go as smoothly and easily as possible, that conversation could be problematic. Accordingly, I generally tell my seller clients that I will work behind the scenes, but that they should deal with the buyer, not me.

  8. Ardell:

    I’m not angry at FSBOs, I wanted to point out the not so obvious. I just think that all FSBOs derive some service from their local agent. They just don’t like to admit it. There are no TRUE FSBOs out there.

    FSBOs are the equivalent of those people who eat free samples at the grocery store until they are full, but never quite buy the whole product. It’s not illegal, but it’s not very ethical, technically. Nothing wrong with browsing MLS or getting CMAs, but it’s not ethical to badmouth Realtors at the same time as you’re using their services.

    As for buying, I always get a Buyer rep. agreement for this very reason. That way when someone decides to be clever and offer 1%, we can decide what to do. Most of the time I’ll just suggest we offer less to make up for the difference. Kind of like that dogs fighting over the bone analogy.

  9. Craig,

    That has always been the problem with one side having an attorney involved…the other seems to need one too, so one attorney turns into two…much like agents, I guess 🙂

    My thought was that the Purchase and Sale would be written up with the seller’s price, but the price could be blank and the closing date blank, with the buyer filling in the more subjective areas. The seller could tick off that the washer, dryer and refrigerator are included. The seller could fill in Title and Escrow names, but leave the price, and terms not offered, as blanks for the buyer to complete.

    I don’t like that as much from the seller side though.

    Forcing the buyer to go get a different attorney really wouldn’t work and would defeat the purpose. Maybe finding an attorney up front who doesn’t have a problem with a “transaction broker” type of role, with no “advices” to either. I know that exists in CA. Not sure about here in WA. In CA, if two parties agree on a divorce, for instance, they can find one attorney to write up what they have already agreed upon, without advices. Seems that should be possible in real estate, anywhere, as well. Hired for contractual assistance, not advices. One of my 1/1/07 anniversary posts will be on a situation like that I recently got involved in. You are right though…it didn’t turn out to be as TB, non advocacy, as I expected.

    Craig, I was thinking the seller would put “full price” in the price portion, and the buyer would say I want to offer x. The attorney would make a new contract with the buyer’s offered price, to give back to the seller. Price was the key point. Are you saying that can’t be done using the seller’s attorney?

  10. Ardell,

    I love this post and because of your open mindedness and putting your clients first you are exaclty the type of real estate agent we refer our sellers to when they are not in a place to sell by owner. All the sellers on our site are FSBO’s and you wouldn’t believe the stories we hear about what agents say to convince them to list. Everything from “somebody will be ripped off in the process” to “you’re basically just taking food off my kids’ table”! We know not all agents are like this, but it is refreshing to see there are agents who really are looking out for their clients.

    The idea about having contracts available is great. We usually have the seller have them sitting out along with any other paperwork so buyers see they are prepared and confident.

    About Rick’s comment. I do believe there are true FSBO’s out there, but does it really matter? If they get tired of selling by owner they will most likely come to you for help. The supermarket knows that not every single person who takes a sample will buy the product, but they don’t make you sign a contract to buy the bag of trail mix if you sample it. If a product is that good the store sample will get a good ROI.

  11. Rick,

    Would you “pick that bone” with me for a minute? Let’s say someone comes to you and says they saw a For Sale By Owner at an Open House on Sunday. Price is $750,000. These are people you know who haven’t been looking for a house, just kind a stumbled on this one and decided to buy it.

    They ask you for some assistance in proceeding as in write it up and help with negotiating the contract and inspection. That’s all.

    Any reason that your fee for that should be some kind of pre-ordained percentage? I just did one of these, (though I knew the seller and not the buyer) on a house that was not yet for sale, for a $3,000 flat fee on a house that was $1.1 million. Turned out to be two offers and I had a little more to do than I expected, but not much except to GET the house for the first offeror.

    You seem to think I should have charged $30,000 to $40,000 for that service. Can you justify that for me? Is there really a one size fits all fee/% for any price range and any service needed?

  12. Deanna,

    The funny thing is many agents send out thousands of post cards or advertise “FREE CMA – Want to Know What Your House is WORTH? Call ME – NO OBLIGATION!” I have never done that, but we all know many agents who do.

    Then when the owner takes them on their word, calls them for the “FREE CMA” to fine tune their price only, whether they are For Sale By Owners or listing with another agent…they get MAD, LOL. I think that is a riot!

    You said it was FREE and then complain that you worked for nothing. I’m not saying agents should charge for that…not at all. I’m just saying if you sent out 1,000 postcards with that wording, don’t complain when people take you up on your offer.

  13. Folks, it would incredibly useful if you could give me some insight into real estate trends in the redmond, wa area. the key questions i have are 1) are prices at the risk of going down? 2) is it better to go for a new home than a 30 yr old home? 3) what would you price a 2006-2007 (new home) of 2230 sqft in redmond wa (education hill for)?

  14. Hi Sandy,

    This comment came up three times like a spammer comment. Specific info like you are requesting would be an email to: And I can only answer that very specific question, if you do not have an agent representing you at present, for rules and ethics reasons.

    I will delete one of the three identical comments, (won’t delete Galen’s) and you can email me direct if you want a specific answer to that specific question. We need to know that you do not have an agent already, as the “ethics” rules state we cannot give advice to someone who is represented by another agent. Our advice may conflict with theirs, for instance, and that’s against the rules. Consequently, we can’t get too specific in generic comment style.

    We do the best we can though, to give a lot of info, but your questions appear to be about a real, given house, at 2,230 square feet…doesn’t look “generic”.  A generic house would be say 2,200 to 2,400 sf.  2,230 sounds like an ACTUAL house, and we can’t “badmouth” IT specifically.  Licensees can only do that if you are their client, so “your” agent is the only one who can show a specific home’s weak points, under the license and mls “rules”.

  15. Hello Ardell,

    Excellent post and advice. I totally agree with you regarding disclosure upfront. In fact, we suggest to our sellers that they should order an appraisal, home inspection and termite… upfront. Many real estate deals fall out because of one of the above, this can all be avoided if completed upfront. Also shows that seller is serious at selling and it gives buyers confidence that the property is priced correctly, the condition is good, and that termite is / is not an issue. Work repairs can be negotiated upfront or better yet, the owner completes them upon receipt of the initial report.

    As for REALTORS… it’s important that you not assume that you are entitled to a commission just because you have a real estate license. You must be able to convey the value you bring to a transaction. Most FSBO’s sell on their own because most agents have not conveyed their value. Your value is not the MLS because that can be purchase for a flat-fee. Your value is not in the bus bench marketing. Your value is not in the pre-printed contracts that protect the agent first, consumer second. Your value is not in claming that you will get a higher sales price.

    Your value is assisting buyers and sellers avoid possible issues before they arise which helps insure a smooth transaction during a difficult time. It’s to navigate the “potholed” road to closing trying to avoid a flat tire. Some agents like Ardell, can convey that very easily… others not so much.

    Also keep in mind that home owners try FSBO because they personally know of many agents. They understand that many of the ones they know… don’t know nothing. Especially in social circumstances where many agents will talk about war stories or how quickly they sold a home, didn’t do a thing, and made a bundle. This gets back to consumers and therefore they attempt to sell FSBO.

    You must be a consultant not a service provider. Services can be automated… personalized consulting cannot.

  16. That raises a question I wanted to ask Russ. In some states using the title Real Estate Consultant is covered under licensing and agency laws and is not permitted unless you have the highest degree of credentials.

    We recently hired an agent who used “consultant” on her business card from the time she was new in the business. I talked her out of using it, but wondered if WA had any rules on that title. I would think not, given her previously company that suggested she use “real estate consultant” was an established firm with many agents.

    I’ve always wanted to offer a flat fee “real estate consultant” service to help people who want to buy or sell primarily “on their own”.

  17. Ardell

    There is no prohibition in WA regarding the use of the title “real estate consultant”. In the end, all that matters is that the person is licensed. You could easily create a model under which you offered a non-agency “consultancy” for people who wanted to do FSBO and a higher fee agency relationship for those that wanted more services.


  18. Thanks Russ,

    I was thinking of offering it for both buyers and sellers. I’m trying to keep everything even, per my post on Redfin today 🙂 Here’s to the black dot of equilibria!!

  19. As a Home Inspector, I really don’t like dealing with FSBO’s either. From setting up the appt. to the conclusion of the inspection. I’ve honestly considered charging more for FSBO inspections. More than half the time when I hand them the report I get a blank stare, then they say something like “what do we do now?”.

    My usual answer is to hire an attorney.

    Bruce Lunsford Naples, Fort Myers Home Inspection

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