FSBOStartups.com: FAQs

Frequently Asked
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Q: How much does a website license cost?
A: If you live outside of California, the fee for a website license is $3,000, plus $50 per month. The monthly fee covers hosting, data backups, and regular website upgrades. If you live in California, please contact us to discuss becoming a member of our team.
Q: Does the license fee include a domain name?
A: No. Domain names are extra. You can reserve one for less than $10 by going to a website like GoDaddy.com, though many of the good names are already taken. We have a large inventory of FSBO domain names that we're willing to sell for reasonable prices. Another good source of domain names is Afternic.com.
Q: How much are your domain names?
A: The prices vary. If you also buy a website license from us, we would sell you FSBOAA.com (for Ann Arbor) for $200, or FSBOAkron.com for $1,000.

Q: What's included in your website packages?
A: The package includes a license to operate a website similar to FSBOSonoma.com. After your purchase, we'll customize your website to incorporate your domain name, then send you a username and password that will allow you to administer it. You'll be able to change prices, add advertising, add services, provide information about your local area, and so forth. We'll set up the website so that all revenue generated from it goes straight to you. The website package also includes a license to use our logo, marketing materials, and sign and flyer templates.

Q: Are there any restrictions on how I operate the website?
A: To retain your license, you must adhere to our licensing agreement. We will not, for example, allow licensees to use their websites to intercept buyers so they can capture buyers' agents' commissions. Nor will we allow traditional agents to use their websites to generate leads for undiscounted listing contracts.
Q: Are website package buyers assigned specific territories?
A: No. The purchaser of FSBODelta.com, for example, would be free to operate wherever he or she chooses.
Q: Are other local FSBO businesses doing well?
A: Several local FSBO businesses in other states are doing quite well. For example, two women launched FSBOMadison.com from a spare bedroom in 1998. They had 333 listings the first year, 777 the second, and 2,000 for each of the next three. In 2005, their revenue from listings alone was about $300,000. Other well-established local websites include FSBOBend.com, TidewaterFSBO.com, FSBOLansing.com, and FSBOJackson.com.
Q: How can I earn money from a FSBO website?
A: FSBOSonoma.com offers free web page listings to FSBO sellers and makes money by renting signs and lockboxes, taking still photographs, designing and producing flyers, and creating virtual tours. You could also make money by charging service providers a fee to advertise on your site, or by offering still more services, like document scanning, fax machine rentals, digital floor plans, home staging, notary services, and fee-based FSBO seminars.
As a FSBO business operator, you'll also want to get a real estate license. This will allow you to list FSBO properties on the Multiple Listing Service (MLS), rent electronic lockboxes, and offer discount representation to sellers and/or buyers.
Q: How much can I expect to earn?
A: This is a brand new industry, so it's hard to predict how much money you'll make over time. But don't count on making much during your first year. It will take many months and a lot of hard work to establish a customer base. You may also have to spend much of your first year setting up your business and acquiring various skills. This will prevent you from recruiting and serving customers.
The good news is that FSBO website businesses aren't as susceptible to "boom and bust" cycles as traditional real estate brokerages. Traditional brokerages make almost all of their income from commissions, and they can only get commissions if homes sell. FSBO businesses can make money even in slow markets by renting signs and offering marketing services.
But even FSBO businesses suffer during downturns. Once you're established, it's likely that a good share of your income will come from fees that are payable only if properties sell. In our service areas, for example, we offer sellers discount representation from contract to close of escrow for $3,400. When homes aren't selling, this source of income dries up.
We believe, though, that a downturn is an ideal time to launch a FSBO website business. It will take you at least a year to master many of the skills you'll need, establish a good reputation in your service area, and get a real estate license. It will also take some time to get good search engine placement for your new website. By the time you're up and running, the housing market may be on the upswing.
Q: What are the risks?
A: Here are some of them: (1) Other FSBO and MLS flat-fee website businesses may compete with you for customers, and perhaps engage you in a price war; (2) Another FSBO website might become dominant in your area; (3) The idea of selling FSBO might not catch on with sellers in your area; (4) The real estate industry might challenge the ability of FSBO websites to offer services to buyers and sellers; (5) You might make a legal mistake and get sued; (6) Real estate agents in your local area might (illegally) arrange a buyer agent boycott of FSBO customers; (6) Unethical real estate agents and mortgage brokers might set up phony FSBO websites in your area to generate leads, thereby discrediting legitimate FSBO businesses.
Q: What's the upside potential?
A: We believe that the next housing market recovery may cause a big change in the way real estate is bought and sold. Up to now, most real estate agents have resisted adapting to changes in information technology and rising home prices. Many continue to charge high prices and offer mediocre services. You may have noticed, for example, that photos for $8 trinkets on eBay are often better than those for $800,000 homes on Realtor.com.
Over the past two years, a number of well-funded startups--like Redfin.com and BuySideRealty.com--have emerged. These companies are willing to offer services at much lower prices than traditional brokerages. When the housing market recovers, we believe these companies will spend lots of advertising dollars convincing sellers that real estate service providers should be doing more and charging less. TV programs like 60 Minutes and 20/20 have already done stories about the advantages of using discount brokerages.
If this happens, there will be a terrific opportunity for FSBO businesses to grow. We believe that while sellers will be attracted to the low prices offered by the big national companies, many will want the sort of quality, personalized services that only a small, local company can offer.
We also believe that the first FSBO business in any area will have a huge advantage over any latecomers. There are lots of economies of scale in this business. If you have lots of customers, you'll be able to get better quantity discounts on your signs, brochures, and other supplies. You'll also find more opportunities to conserve on driving time, in that you'll be able to schedule multiple appointments in the same area. These advantages will allow you to keep your prices low.
Q: Why will people want to sell FSBO? If there's a shake-up in the industry, won't traditional brokerages just lower their prices and improve their service?
A: We believe FSBO will eventually emerge as a popular way to sell real estate for several reasons:
(1) According to a poll taken by the National Association of Realtors, people who have sold their homes FSBO have reported a higher level of satisfaction with the process than those who have sold their homes through agents. (The NAR, of course, hasn't publicized this much.)
(2) FSBO sellers (in most states) can now get their homes listed on the Multiple Listing Service (MLS) and get help with the paperwork, all for a small fraction of what traditional brokers charge for a full-service listing. This wasn't possible a few years ago, and it makes it much easier to sell FSBO.
(3) Buyers who go through discount brokerages tend to prefer FSBO properties. Buyers are beginning to discover that they can capture most of the buyers' agents' commission by finding homes on their own and hiring a broker just to do the paperwork. Unfortunately, it's harder for a buyer to do this if a property is listed with a traditional broker. (See our sister website SixHomes.com to find out why.) By contrast, it's easy for a buyer to view a FSBO home and then buy it through a discount brokerage.
(4) Some states won't allow (or strongly discourage) discount brokerages. Though these laws are intended to protect powerful real estate lobbies, we believe that they will instead create a strong impetus for homeowners to sell FSBO.
(5) Though state laws may vary, brokerages with traditional "exclusive right to sell" listing contracts usually only get paid if the deal closes. This is a risky proposition for them, since they spend lots of time and money on some listings but end up getting nothing for their efforts. As a result, they need to charge more. FSBO businesses don't face this problem, in that they can charge sellers upfront for marketing services, and then charge charge up front for won't be able to offer the low prices and quality services that FSBO business can.
Q: Will FSBO sellers want to buy any marketing services? Very few real estate agents in my area use professional photographers and virtual tours.
A: Listing agents in real estate offices have little incentive to spend money on marketing their clients' homes. If a virtual tour and quality photos were to raise a home's sales price by $10,000, the listing agent would only stand to gain about $125-$150 (assuming a 5-6% commission that's split between the listing agent and the buyer's agent, and then split again between these agents and their brokers). A FSBO seller has much more to gain from an increase in a home's sales price, and therefore a much stronger incentive to buy services like quality photos and flyers, virtual tours and digital floor plans.
Q: How can a small, local FSBO website compete with a huge national website, like fsbo.com, owners.com, or forsalebyowner.com?
A: We believe that local, not national, FSBO websites are in a better position to serve buyers and sellers. They can better serve sellers since they can deliver and install heavy, high-quality signs to customers and, during that visit, provide other services like taking still photos, creating virtual tours, and chatting with the sellers about marketing. They can better serve buyers because they can generate more local listings than the national websites and because they can provide more complete information about local neighborhoods.
The national websites have another problem: Zillow.com. Zillow allows FSBO sellers to list on its website for free, and we believe it will eventually become the go-to resource for buyers who are looking for FSBO properties. The national FSBO websites have to compete with Zillow, but local FSBO websites can grow along with Zillow by offering complementary services.
Q: Can I move the website software onto my own server?
A:   No. All of our FSBO websites need to be on the same server since they share the same database of property listings. We've set it up that way so that buyers who visit, say, FSBOVentura.com, will also be able to search FSBO listings that were generated by nearby FSBOSantaBarbara.com.
Q: Can I collect referral fees from service providers, like real estate agents or mortgage lenders?
A: Our licensing agreement won't allow you to violate the Real Estate Settlement Procedures Act (RESPA), which "prohibits a person from giving or accepting anything of value for referrals of settlement service business related to a federally related mortgage loan." The law prohibits most people from accepting referral fees or gifts from many kinds of service providers, like real estate agents, lawyers, pest inspectors, mortgage lenders, and appraisers.
Q: Can service providers advertise on my site?
A: Yes, and we expect that ads will eventually become an important source of revenue for website operators. Our licensing agreement won't allow you to sell click-through ads to certain service providers (because they may violate RESPA), but you can sell them banner ads or directory listings. You're also free to sell ad space to Google and other ad brokers.
Q: How much does it cost to launch this sort of business?
A: It depends upon how many services you'd like to provide your customers. Some of the things you might need include camera equipment, a computer, a color laser jet printer, a scanner (for onsite document scanning), an inventory of signs and combination lockboxes, a vinyl cutter (for making custom sign riders), vinyl, graphic design software, stationery and business cards, office supplies, a cordless drill, and a posthole digger. You'll also need a vehicle large enough to carry heavy signs, space to store your equipment and inventory, a high-speed internet connection and a cell phone. If you offer licensed real estate services (like MLS listings), you'll also need to join one or more local MLS associations. You may also need permits and licenses in order to operate a business in your area.  Assuming you already have a vehicle, computer, and workspace, you should budget at least $10,000 - $20,000 to set up the business over and above the cost of our website package and your labor. Advertising will cost still more.
Q: What if I don't know anything about photography?
A: If you're computer literate, a hard worker and a quick learner, you should do fine. We plan to host a workshop in 2010 that will give FSBO business operators the skills and knowledge they'll need to launch a business quickly.
Q: How long does the license last?
A: Your license will continue as long as you pay the monthly fee. You're free to cancel at any time. If you cancel, you'll be able to retain your domain name and logo, and to transfer copies of any listings your website generated to a new website. Our website network, however, will have the right to continue displaying any listings you generated while on our server.
Q: Can I sell my website?
A. Yes, but anyone who takes over your license will need to sign our licensing agreement. Alternatively, you could sell your domain name and listings to a third party, but forfeit the ability to use the website, marketing materials, and trademarks.
Q: Do I need a broker's license to run a FSBO business?
A: As this article explains, a federal district court judge ruled in November 2004 that it's not necessary (in California at least) to have a real estate broker's license in order to post FSBO ads online. You do, however, need a license to put FSBO listings on the multiple listing service (MLS) so that they can be put on MLS-affiliated websites like Realtor.com. We recommend that you get a broker's license so you can do this yourself. Until you get this license, you may want to work with a discount flat-fee MLS broker.
Q: What's to prevent other FSBO businesses from encroaching on the territory where I want to do business?
A: Nothing. The best way to "stake your claim" to a territory is to get as many listings there as quickly as possible.
Q: What makes for a good FSBO domain name?
A. The best-known local FSBO websites in the country have this format: FSBOplacename.com. "FSBO" (pronounced FIZZ-boh) has become the standard abbreviation for "for sale by owner" real estate offerings.
Having a name that follows the traditional format will help you convince prospective clients that your business is serious and likely to succeed. After all, where would you rather list your home: FSBONapa.com or HomesbyownerNapa.biz?
It's also a good idea to have a short name. Our websites allow users to create custom web pages with addresses like this: FSBONapa.com/12340.   A name like HomesbyownerNapa.biz/012340 won't easily fit on a sign rider or in a classified ad.
Finally, it's a good idea to select a name that covers a fairly large area. We believe that a new FSBO website business needs to serve a somewhat densely populated area of at least 100,000 people to operate efficiently.
Q: What will you teach at the workshop?
A: We'll bring in guest speakers who will talk about how to launch a FSBO business, how to administer the website, how and where to advertise, how to create a database of likely FSBO sellers, how to host FSBO seminars, how to take good photographs, how to create virtual tours, how to edit photos in Photoshop®, how to scan documents, how to make signs cheaply, where to buy supplies, legal do's and don'ts, the basics of brokering, and other topics.
You won't, of course, be able to acquire all of the skills you'll need in a short workshop. For example, it will take many months for you to become proficient enough in graphic editing to be able to create quality photos, flyers and virtual tours. If you want to be able to offer your customers these services right away, you can take the photos yourself (we'll teach you how at the workshop) and pay us a fee to process them.
Q: Can I attend the workshop before deciding whether to get a license?
A: Yes.
Q: Why should I get a website from you instead of, say, hiring someone else to create a website for me?
A: (1) We're cheaper. (2) We've spent over 18 months designing, debugging, and upgrading our websites. (3) By joining our network of websites, you'll also have lots of links pointing to your website from its inception, which will help you achieve high search engine placement. (4) By joining our network of websites, you'll have more opportunities to share problems and solutions with fellow FSBO business operators.
Q: Can you send me more information?
A: Send us an e-mail with your name and mailing address and we'll send you a packet of materials in early September about our licenses and workshop.