Historically, For Sale By Owner (FSBO) meant that an owner was selling their home outside of the multiple listing service (MLS) and free of commissions or agents. Today, most sellers who do choose to represent themselves without an agent and go FSBO, get their homes into the MLS these days too via a lower cost broker.
Earlier we explained that the MLS is the best platform to get a good price for your house, due to its monopoly status and dominant market share in every single housing market in the U.S. And while it is possible to not get a good price in the MLS by underpricing, any seller who is intending to maximize their net proceeds on a home sale should include the MLS as part of their strategy.
The only downside to the MLS is that many brokers require buyers agent commissions, in addition to their listing fees. A For Sale By Owner (FSBO) company directly lists your home in the MLS, often for a nominal fixed fee of $500, but with the traditional buyer's agent commission. You can ask around at FSBO brokers to see if they are flexible enough to list your home without a conforming buyers agent commission, but be aware that like Redfin, these brokers make their money on the buy side and will often advise against it.
The risks to the FSBO-MLS route is that you’ll need to do a lot more work on pricing, deal with demanding buyer’s agent negotiations, and accurately complete necessary real estate forms to ensure a smooth transaction. It can add much risk for the seller and they often still end up paying a 3% commission out of their net proceeds as part of the FSBO package for a buyers agent. In summary, the FSBO route is usually 100% more work and only half the cost of a traditional agent that might charge 5 to 6%.