Today everyone has seen the signs in the front yard that say "For sale by the owner," but what does this really mean? Will it be a legally correct deal for both parties? Does it really save money? The answer to both questions is yes, but it requires a bit more work on the part of everyone involved.
Sale by owner simply means that there will be no real estate agent involved in the process. The owner will take care of everything directly, from the presentation to the negotiations. There is a range of about 10 to 20 percent of homes sold with an FSBO sale and the number goes up and down from year to year.
Why would you sell with a For Sale By Owner (FSBO)?
From a sellers point of view, the cost of selling in this way is greatly reduced. When dealing with a real estate agent, the cost of the commission alone can be between 5-7% of the final sale price of the house. For example, if you had a house that sold for 200K at a 5% commission, it would be $ 10,000 in commissions. If the seller can sell their home without the use of a real estate agent, all that money would be saved.
Why buy an FSBO home?
From a buyers point of view, the buying process is very similar as long as you are an informed buyer and you know what is a good deal and what is not. The great benefit is that you have direct communication with the person who is selling the house. Because there are no intermediaries involved, you can call the seller directly without having to deal with a real estate agent as an intermediary. This means that buying this way can often take less time than if there is an agent involved.
Things to think about
For everyone involved, it is good to have a team of people helping with the sale, even if no agent is directly responsible. Having a real estate attorney on your side can go a long way and will usually only cost a couple hundred dollars, but it will be one of the best funds you spend in the entire process.
Another thing to keep in mind is the price. As a seller, it is easy for you to overvalue your home to get the most profit on the sale of your home. For the buyer, you need to remember that you will have to work harder yourself because there is no one to guide the process. It’s important for both parties to make sure you’ve done your homework in the local markets and make sure you have the right price on your home. Obtaining an appraisal report can help with the process and ensure that you are setting a good price for your home that will be competitive with the rest of the market.
Resources
A lot of information has been published lately on how to deal with the ins and outs of these types of deals. Sites like ForSaleByOwner.com and Zillow.com have a huge list of different FSBO homes and tips and advice to make the process easier. Going to the library or another bookstore will show you that there are also many books on the subject. Buying and selling a home is one of the largest financial transactions in most people’s lives, but it doesn’t require a real estate agent if you’re willing to do a little more of the work yourself.