For Sale By Owner
When it comes to real estate buying and selling, most people depend on a professional licensed agent to handle the complicated details of their sale/purchase. However, there are some homeowners who try and sell their house themselves without the aid of an agent.
Homes sold by an unrepresented owner (no listing agent) are known as FSBOs or For Sale By Owner.
The main reason an owner would venture to sell their home directly is to save on agent commission fees at closing. Some owners believe that they can negotiate a better deal without an agent. However, for a typical buyer, many have the biased opinion that FSBO sellers are notoriously difficult to deal with or that there must be something wrong with the house being sold. While this can be true of some FSBOs, it is not necessarily the case of all FSBOs.
There are many reasons why an owner would choose to sell their own home, just as there are many reasons a buyer would consider a FSBO property. But whatever the reasons, both parties must have a clear understanding of the entire process. Here are the pros and cons for the seller and buyer with respect to FSBOs.
- avoid having to pay agent commission fees
- No listing contract binding an owner to one particular agent
- Must be responsible for the entire selling process, including marketing, pricing, scheduling viewing appointments, preparing documentation and coordinating closing date
- Must devote a lot of time throughout the selling process, as it can take up to 45-120 days to close
- Financial and legal risks to the owner escalate due to lack of familiarity with state and municipal laws/regulations
- Buyers most likely will not accept paying for their agent's commission and may still ask for seller assist with closing costs
- A buyer, with or without an agent, may be able to purchase a FSBO for less than market value
- An unrepresented buyer can negotiate directly with the owner for a better deal
- A represented buyer can insist that an owner cover their agent's commission
- The owner sells the property "as is" to avoid necessary repairs, which can jeopardize buyer financing
- The FBSO owner may not be willing to pay the commission of a buyer's agent
- An unrepresented buyer must be diligent in making sure their legal rights are protected, all documentation is processed correctly and that the owner does not violate any state and municipal laws/regulations
While it is possible for someone to sell their own home without the assistance of a real estate agent, the cons far outweigh outlined pros. It's just too much work for the average owner to handle. Agents are licensed at the state level and trained to oversee real estate transactions from a fiduciary, legal and financial standpoint. This is designed to protect sellers and buyers from making unecessary and costly mistakes.
If an owner still wishes to go forward and sell their home FSBO, there are various online resources such as FSBOGuide.com, Owners.com and RedFin.com that can provide owners the tools needed to navigate the selling process accurately. Further, owners can also choose to use an agent on a flat-fee basis for the preparation and execution of all documentation.