FSBO or For sale by owner is when the homeowner decides to sell their own home on the market without the use of an agent or brokerage.
Primary reasoning of FSBO is to save money by not giving commissions to a sales agent.
Okay but I can solve a lot of the advertisement problems if I become a customer at a brokerage right? I wouldn't have to pay commissions and I will be able to get my listing at MLS.
This is true to some degree, yes your house will be on MLS and will have agents bringing their buyers to your house. That still won't help you with getting useful advice from an agent, you’d still have to do your own due diligence which requires time and work. You may not pay commissions to your selling agent but you would still have to compromise with the buyer that will try to bargain with you. Did I mention the paperwork problem is still on your hand? I didn't? Well it is, and so is the legal stuff (yikes).
Although monitor of FSBO data in Canada is limited, here’s our neighbour below (U.S) showing the fruits of FSBO.
As of 2018, 8% of all real estate sales were by FSBO, the sell price of FSBO was $217,900 whereas the agents sold for $295,000. Difference of $77,000. (Listing agents would take 1-3% off selling price, 3% of 295,000 is $8,850, buying agent would take 2-5%. 5% of $295,000 is $14,750. $8,850 + $14,750= 23,600. Selling difference of $77,000 - the commissions of $23,600= $53,400 which the seller could have made with the agent as profit, and sell the house at a much quicker time without the hassle of paperwork and full time duty.
Methods of FSBO sellers to market their homes:
Yard Sign: 25%
Friends, relatives, or neighbours: 22%
Open House: 11%
Social networking: 14%
Online classified ads: 5%
FSBO websites: 5%
News paper: 1%
Direct Mail: 1%
No advertisement: 46%
Most difficult tasks for FSBO home sellers:
Getting the right selling price: 9%
Selling within planned length of time: 6%
Understanding and managing paperwork: 10%
Preparing the house for sale (decor, cleanliness, visual appeal etc.): 12%
Time to devote to selling: 5%
Source: 2020 National Association of REALTORS® Profile of Home Buyers and Sellers