BEND, Ore. (CNN/Money) – Like many sellers in thriving real estate markets, Susan and Ray McGlynn had a hunch that their house would practically sell itself.
"It's in a great location, and other houses in the neighborhood sold within a couple of weeks," said Susan of the 6,000-square-foot colonial in Annapolis, Md.
So they bypassed a real estate agent, opting instead to spend a grand total of $500 on a "For Sale By Owner" sign, ads in the local paper and a Web site listing.
"Then we just waited for the phone to ring," said Susan.
One week after putting their house on the market, the McGlynns accepted a $920,000 offer from a buyer who'd seen the house online.
For sale by owner, or FSBO, transactions account for roughly one in five home sales. But thanks in part to the advent of sites like ForSaleByOwner.com, Owners.com, and FSBO.com, more sellers seem to be striking out on their own – or at least thinking about it.
With real estate commissions generally ranging from 5 and 6 percent of a sale price, the seller of a $200,000 house could save as much as $12,000 by going it alone. The McGlynns estimate that they would have paid a real estate agent about $50,000 to sell at their $945,000 asking price. Even with a lower sale price, they still came out ahead.
The McGlynns were fortunate; few houses just sell themselves . Many first-time FSBO sellers realize the process is time-consuming, stressful and not always lucrative.
"This isn't for everyone," said Robert Irwin, author of the "For Sale By Owner Kit" (Dearborn). "If you haven't bought and sold a house a couple of times [with an agent] I suggest you stay away."
Here's where do-it-yourself sellers get tripped up.
The price isn't always right
Pricing the property correctly is the first problem FSBO sellers face. It's not enough to know your neighbor's asking price. You need to know what the property actually sold for, and why your house commands more or less.
|The McGlynns sold their house on their own to save about $50,000 in real estate fees.
"Sellers in their innocence think they can overprice and lower the price later," said Ray Brown, "Home Selling for Dummies" co-author. "But you often get your best price by coming in where the fair market is and creating lots of excitement for the property."
Sellers just need to spend some time studying their local market, said Colby Sambrotto, chief operating officer for ForSaleByOwner.com. Actual sale prices are often printed in the local paper, and are available online, too. In fact, most of the FSBO sites allow you to search for comparable sales for free.
Hassle free? Hardly
Good real estate agents separate the serious buyers from the seriously hopeless browsers. Most agents pre-qualify buyers before they bring them into your house.
On their own, sellers must screen calls, host open houses and show the place on a moment's notice.
"The people who bought my house called me at 11:00 on a Wednesday while I was at work," said Jeff King, who recently sold his Omaha, Neb., house on his own. "But for $8,000 I'll drive home from work."
Marketing is a must
FSBO sellers often miss out on what is perhaps the most effective way to market a house – via a buyer's agent. According to the National Association of Realtors, about 63 percent of all sales are done with a buyer's agent.
When you list with such an agent, your house is usually entered into a multiple listing service that is accessed by buyer's agents who typically tour the house shortly after it goes on the market. Although many FSBO Web sites will put your house into a multiple listing service for a fee, agents often steer clear of FSBO properties, said Brown.
Better to market directly to buyers. They often think an FSBO property is "the one house their agent didn't show them or the one house they can get a deal on," said Irwin.
His advice is to list your house online, print a flyer from your Web page and post your Web address on your sign. "That way, sellers can look inside and outside the house, get the price and the size without even having to call you," Irwin said.
Not always such a bargain
Many sellers find they don't save the tens of thousands of dollars they'd been banking on.
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Out-of-pocket marketing costs add up. An agent charges you only if the property sells, but when you buy ads and listings yourself, you have to pay up front.
If you agree to work with a buyer's agent, you'll give up 2 percent to 3 percent of the commission, said Brown. The $12,000 you hoped to save on your $200,000 is quickly reduced to $6,000.
Unless you have great negotiating skills, the buyer's agent may be able to bargain down the rest of that savings, too. "A good real estate agent can take 2.5 percent away from the selling price in nothing flat," said Brown.
It ain't over 'til you close the deal
According to Irwin, the most difficult task for FSBO sellers is managing the paperwork. Once an offer is made, sellers need a to-do-list of contracts, disclosures, inspections and other essential, time-sensitive steps.
Some sellers get help closing the deal. The McGlynns relied on a friend and title attorney to oversee their transaction. Others have no trouble making sense of the legalese on their own.
"Complicated? You're kidding, right?" said King, a small business owner. "Most of the work is done by the closing company."