Tips for Pricing Your Home Correctly as a FSBO Seller

One of the most challenging parts of figuring out how to sell your house without an agent is settling on a price.

Figuring out the list price with a “For Sale By Owner” (FSBO) deal is as much art as science. It involves not only objectively assessing a home’s appeal, but also comparing it to similar recent sales and taking the temperature of the larger real estate market. An experienced real estate agent can do this almost by instinct, but it’s a tall order for an amateur.

But what most agents won’t tell you is that there’s no “correct” price for your home that you can discover or calculate; there are only prices that meet your needs while still attracting buyers. The real challenge, then, is to come up with a number that will attract enough interest to drive up your sale price but not too high (or low) to alienate buyers. Here are some tips on coming up with the perfect list price for your home – without the help of an agent.

Don’t overshoot the mark

The main reason most people decide to sell their home without an agent is to maximize their profit. Especially in a hot market, it’s easy to see dollar signs. But don’t set your initial list price too high, or you’ll drive off many potential buyers. If buyers think you’re unreasonable or unrealistic, they’ll avoid your listing entirely, even if it’s an otherwise highly desirable home. They may also decide to hold off to see if you reduce your price, a waiting game that can lengthen the time your home sits on the market. And as the pros will tell you, the longer your home is on the market, the lower the odds it’ll draw the interest you’re hoping for.

Even if you list high and get a buyer to bite, it could still cause problems down the line. If your home is appraised below the agreed-upon sale price, your buyer may run into issues obtaining financing, which is typically based on the appraised value. If the buyer can’t make up the difference out of pocket, you’ll have to lower the price or risk losing the sale.

Don’t give buyers a reason to doubt

The flip side of this advice is to not set your initial list price too low. Many sellers do this because they want a fast sale, but it can backfire. Buyers have an idea of the approximate value of your home, and if it’s priced significantly below that, they may assume there’s something wrong with it. The bigger the difference, the more their minds may run wild – envisioning a leaky roof, a cracked foundation, or something similar.

The more comps, the better

The first thing an agent would do when pricing your home would be to pull as many comps (short for comparable homes for sale or recently sold) in your area as possible. You should do the same.

Local markets can fluctuate rapidly, so don’t go back further than about six months. In more volatile markets, you might want to limit that window to three months. Look for homes of a similar age in similar neighborhoods with comparable square footage and amenities to yours. These form an excellent starting point that can be tweaked according to your property’s unique characteristics.

Survey the market

You probably know whether you’re in a seller’s or a buyer’s market. But when you’re looking at recently sold listings to find comps, pay close attention to the differences between the original list prices and the final sale prices.

This will give you an idea of what kind of price reduction (or premium) you might expect at certain price points, which will allow you to adjust your game plan. For example, if you’re after a speedy sale, set your list price closer to the average final sale price. If you feel that the market has picked up, peg your listing closer to those initial prices.

Be realistic and flexible

You probably have an intensely emotional attachment to your home. That’s natural. But pricing your home requires objectivity. Though you might think your home stands out among its comps, buyers may not agree.

If your home doesn’t attract much initial interest, you may need to adjust on the fly. While a price reduction may be tough to accept, there’s no mistaking this clear sign from the market. It’s not always about your property. For example, you may have listed at the wrong time of year. Spring and summer are great for home sales, while the holidays and the middle of winter tend to be very slow. If your listing isn’t getting the interest you think it deserves and you have some flexibility, consider taking it off the market and relisting during a busier period.

Take your costs into account

While you won’t have to pay a commission to a listing agent, FSBO sellers still have some transaction costs to factor in. It’s vital to do a careful, complete accounting of all your selling costs before you list your home to make sure you can hit your profit goals.

First, you’ll likely have to hire a real estate attorney. Some states require all home sales to be handled by an attorney, but even if you don’t live in one of those states, experts strongly suggest hiring one to guide you through the sale. Real estate contracts are long, complex documents, and you’ll want an expert to review yours to make sure the terms are correct. In addition, an attorney can guide you through the sales process and answer any technical questions you might have.

Make sure you hire an attorney who specializes in real estate. Many work for a flat fee, helping keep costs affordable and predictable..

If you want to get your home on the local multiple listing service (MLS) — an excellent idea for getting it in front of the most potential buyers — you’ll have to pay a listing service to get on there, as only agents and brokers can access the MLS directly. You’ll also want to include some professional-quality photos with your listing, which means hiring and paying for a real estate photographer. While it’s not a requirement, many choose to pay for a deep cleaning of their home ahead of showings. And don’t forget to factor in the hours of your time spent hosting potential buyers!

Remember: You’ll still have to pay some commission

This can be a shock to some FSBO sellers, many of whom sell without an agent so they can avoid paying real estate commissions. But many forget the traditional commission structure requires the seller to pay the buyer’s agent, too. As the buyer doesn’t usually pay any commission out of pocket, this seller-provided commission is the only incentive a buyer’s agent has to show their client your home since it’s the only compensation they’ll receive for the transaction. If you don’t offer to pay a buyer’s agent commission, many agents simply won’t show your home to their clients, as doing so would mean they’d be working for free.

Even if you do take a firm position of not offering any buyer’s agent commission, buyers using an agent will likely negotiate for a credit to be added to the final sale price. That means that you’re still basically paying the buyer’s agent, just in a more roundabout way.

Unless you have an incredibly desirable property or you’re able to find a buyer also willing to forgo an agent, you should probably offer a 2 to 3% buyer’s agent commission. That means that selling FSBO doesn’t eliminate real estate commission, but it gets you a 50% reduction.

Keep these crucial pieces of information in mind and you may be surprised by the impact they’ll have on your future home sale.

Written by Billy Guteng. April 5, 2024

Billy is a content writer for Kukun. He was born in France, and has lived in multiple cities around the world ever since. He loves art, design and architecture as well as construction and real estate.