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Some may not know it, but a seller doesn’t need a real estate agent to list a home for sale. Whether or not it’s a good idea to sell a home without using an agent, many property owners do just that. The result is a for sale by owner home, known by the acronym FSBO (pronounced FIZZ-bow). If you’re in the market for a home, should you consider buying a FSBO? And if so, what should you be on the lookout for?
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FSBO Motivation
Real estate agents don’t work for free. They work on commission. The commission is often a percentage of the home’s sales price. The amount varies, based upon the level of participation by the agent and local custom.
Some agents can make special deals with the seller of a property and reduce their commission in order to get the listing. It’s up to the agent and the property owner.
For sellers who forgo an agent, the motivation is saving on commissions and increasing their net. For example, say an owner decides to sell a property for $400,000. If the listing agent’s commission is six percent, the seller will pay the agent six percent of $400,000, or $24,000. That’s a lot of money and the reason certain property owners decide to sell themselves. Is that a good idea?
Maybe, if homes in the area are selling quickly. But the owner may not be a licensed agent involved in the local real estate market. In that case, the seller could price the property too low, leaving a lot of money on the table. FSBOs also lack the marketing an agent can provide. That includes placing the home for sale in the multiple listing service (MLS), holding open houses and such. Regardless, the primary motivation for a FSBO is getting rid of an agent’s commission.
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What to Consider When Buying a For Sale by Owner Home
Okay, so the seller wants to save a little money. Should you be a little concerned buying a FSBO? There are a few things you need to consider but the first is your representation. If you’re a first time homebuyer you may not know how a buyer’s agent typically earns their pay.
Buyer-agent pay is negotiable. In a for-sale-by-owner purchase there is usually no listing agent. So agree in writing with your own agent on who pays them and how. The seller may agree to cover some or all of it, or you may pay it. Do not assume a standard percentage.
Most buyers shouldn’t get into a real estate transaction without the services of a real estate agent. There are just too many things that can go wrong without a professional at your side. Buyer’s agents look for properties based upon your criteria. These include price range, neighborhood, lifestyle, schools and a host of other personal preferences.
Really, only seasoned real estate investors should consider buying a FSBO home without using their own agent. In theory, an investor can pay less for a home if there are no agents involved.
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Most Buyers need Professional Guidance
Once you find a home, negotiating the sales contract is critical, and something a professional should do for you.
Okay, but say the owner isn’t willing to pay a commission to an agent to sell the home. Who pays the buyer’s agent then? Again, that’s negotiable, and you may end up paying it yourself. Some FSBOs offer a commission when an agent brings in a qualified buyer. But some don’t.
Ask the seller, or the listing agent if there is one, whether they will pay any part of your agent’s fee. MLS listings no longer show buyer-agent compensation offers.
If the property is not on the MLS, ask the owner. That is the only way to find out if they will in fact pay an agent to bring in a buyer. If the owner doesn’t pay a commission to anyone, an agent may not be all that excited to show you the home. In fact, it’s likely you may not even be aware of the FSBO unless you happened on it yourself.
Certainly, some buyers see a for sale by owner home and negotiate directly with the seller with no agent involvement whatsoever. It happens every day. But other things happen every day as well. These include blown contracts, lost earnest money deposits and paying too much for a home. You can buy directly without an agent, just be aware every step of the way.
Check your home buying eligibility. Start here (Nov 8th, 2026)
