For Sale By Owner, otherwise known as FSBO, is a cost saving method of listing a specific property for sale. A house under an FSBO listing means that the homeowner is selling their property without the involvement of any broker or real estate agent. Since both buyers and sellers have to end up paying thousands of dollars in commissions for real estate property transactions with a standard of around 5% to 6% of the total value of the property, some homeowners tend to list their homes themselves in order to save up on commissions.
Even though selling a property yourself sounds as easy as going on the internet and placing an ad of your house on a website, there are many other factors and legal risks involved that you assume responsibility for when choosing to make your own deal.
Responsibilities of FSBO Sellers
There are several types of real estate transactions that vary according to the type of the property and the status of the buyers and sellers. Brokers or Real Estate Agents are trained to handle all of the formalities and paperwork involved in the real estate transaction, however in their absence the seller needs to take care of all such formalities.
One key task involved in FSBO transactions is to determine the value of your property by assessing other similar properties in the neighborhood and comparing them with your property. Once you are able to assess the value of your home, you could analyze the specifications and condition of your own house and demand a fair price.
The seller must also conduct an in-depth analysis of their property and get necessary repairs in order to make it look more aesthetically pleasing to potential buyers and to get a better price on their property. Once the property is in tip top condition and ready to be shown to buyers, the seller must conduct their own marketing and advertise their home through brouchers, newspapers, flyers, or by listing the property online on a multiple listing service (MLS).
As difficult as it is to attract a potential buyer in the first place, it is equally as painstaking to schedule dozens of appointments and manage dozens of visits as well as give an outlook of the property’s features. Once you do find a buyer who is well interested in purchasing your property, you must have good negotiation skills in order to get a good price out of the property and settle on a deal.
The documentation part of an FSBO is where things get the most stressful as there is a list of paperwork that needs to be made such as a sales contract, property disclosure form, occupancy agreement, sanctioned plan, sales agreement and other documents depending on your state. A sales deed must also be made and signed between both parties in the presence of a third witness. The final closing of the deal must then be done with a real estate attorney or a title company.
Are The Savings Worth the Risk?
While saving hundreds and thousands of dollars in commission can be very tempting for any person, it is equally important to measure the risk of any mistakes that are highly likely if one is not familiar with selling properties and the adverse costs that come with them. Likewise, a very high demand for the property would make it difficult to sell and a quote price that is too low than the market would end up with the seller leaving the table with a lot less than he/she could’ve bagged on their property – the cost of which could exceed the commission savings they made through the FSBO process.
FSBO can also leave a potential risk of mistakes by the seller in legal documentations that are not properly drawn during the sale which can have serious consequences for both parties and can induce extra costs and fines. If the purchasers have a hired realtor on their side who knows that the home is an FSBO, they would be well aware that the seller is not experienced and they might try to pull tricks to land a bad deal for the seller. Realtors usually don’t recommend FSBO properties for their clients as they don’t get commission from the other party on the deal and they don’t want to be involved in the hassle of legally dealing with an inexperienced seller.
Professional Realtors are experienced in dealing with buyers and sellers, which makes them immune to being emotionally involved in a deal. However, in the absence of a realtor, a seller may be discouraged after dealing with a few clients that reject purchasing their property and end up decreasing the price of their property. Upon that it is important to remember that dealing in Real Estate is a full time job even if its just one property. It can be really difficult to manage your job and personal life while having a property to sell as you may need to be present on the property site at the most awkward of times to represent your property in front of a potential client.
Dealing in Real Estate is no easy task. It takes years of training and practice to become a successful real estate agent. Sellers that have previous experience in purchasing and selling real estate can go for the FSBO option but if you are unfamiliar with the process, it is highly recommended to go with the safer option of hiring a broker or an agent to take the headache of selling your property off your shoulders. Another option is to take a short and easy online course from a reliable real estate school such as the fortuneacademy.com in order to grasp the important factors involved in real estate dealing that would prepare you to make your own property deals and help save thousands of dollars in commission.