For Sale By Owner Properties
For Sale By Owner (FSBO) real estate are not always foreclosure properties but can have comparable savings potential.
A FSBO property is simply one that is being sold without a broker or real estate agent. The homeowner is the one showing the property, negotiating a deal, and doing marketing on the home.
What Does it Mean?
There may come a time when you decide to put your home on the market. Should that happen, you have two basic options available to you:
- Hire a real estate agent to list your home and manage the sale
- Go the “for sale by owner” route, which gives you complete control
Since homeowners are the ones making all the profit from the sale of their home and they have no commission to pay to a real estate agent, these homeowners are often willing to offer their home for less because they still stand to make a larger profit from the sale. Some homes for sale by owner are also actually pre foreclosure properties.
The homeowner is selling because he or she is having trouble making payments on the home loan and needs to repay the lender. Obviously, in these cases FSBO homes are priced below market value because the seller is motivated to sell quickly.
How Does FSBO Work?
In an overall sense, FSBO is as simple as it sounds.
You could stick a sign in your yard with your phone number on it, wait for potential buyers to contact you, and open your doors when the time comes.
However, you drill down deeper; you’ll come to realize that there’s more to selling a home by owner than meets the eye.
Here are some details that will help you better understand how FSBO works:
- You’re in charge of pricing your home: It’s essential to get this right the first time. If you price your home too low, you could leave money on the table. But if you price it too high, you’ll scare people away from visiting your home.
- You can still list on the MLS: When you do this, your listing is syndicated to all the major online listing sites. As a result, it’s seen by a larger pool of buyers. Your options include a flat-fee MLS listing service and a limited-service real estate agent.
- You’re in charge of the paperwork: This is where things can get tricky. From offer letters to tax documents, you’ll manage all the paperwork associated with the sale and closing of your home. You can protect against risks by hiring a real estate attorney to provide professional guidance.
- It’s a time commitment: When you sell with a real estate agent, they do all the heavy lifting on your behalf. Your only responsibilities are keeping your home maintained and leaving when someone wants to see it. But when you opt to sell by owner, all of this falls on you.
- You’re the negotiator: With a clear idea of what your home is worth and what comparable properties have sold for, you’re in a better position to negotiate the sale price and associated terms and conditions confidently. Don’t let the buyer’s real estate agent push you around.
In simple terms, the FSBO process is managed by you and any outside help — such as an attorney — that you bring on board.
Benefits of FSBO
There are many benefits of selling by owner, so many people consider this option before listing with an agent.
Some of the top benefits include:
- Complete control: From the price to the staging to who you let in your home, you’re in charge of every aspect of the home selling process.
- More money in your pocket: If you don’t use an agent to sell your home, you don’t have to share your proceeds with them. Depending on the sales price, this could keep thousands of dollars in your pocket.
- You trust yourself: Even if you think you have a good relationship with a real estate agent, matters of trust may soon move to the forefront. When you’re in charge, there are no worries about this. You don’t have concerns about your agent going behind your back to do what’s best for them, not you.
- There is more help than ever: You’re not truly on your own when you list your home by owner. There are a variety of online services — such as MLS listing sites — that can provide you with guidance along the way. And of course, if worst comes to worst, you can always consult with a real estate lawyer.
- A sale on your time: Most people want to sell their home as quickly as possible. However, you don’t want to turn your life upside down to do so. With FSBO, you’re in charge of when you schedule showings and other meetings.
Downfalls of FSBO
Just as there are many benefits of FSBO, the same holds true of potential downfalls.
Here are several to keep in mind:
- Everything falls back on you: Just as it’s a benefit to have full control, it can also be a pitfall. You’re in charge of everything from pricing your home to showing your home to negotiating — and that’s just the start. This can place a lot of stress on you.
- Mistakes: There’s a lot that goes into selling a home. Do you know how to complete a real estate disclosure form? How about those associated with property taxes? Are there any liens on your property? You could be held liable for any mistake that you make.
- Less money: You decide to sell by owner to make more money on closing day. But in many cases, since you don’t have the experience pricing real estate and negotiating, you end up taking an offer you should decline.
Is FSBO Worth It?
Only you can answer this question. Some people are convinced that FSBO is the right strategy for them, while others are totally against it.
There are also the sellers in the middle who understand the pros and cons of both options.
The only way to make an informed decision is to arm yourself with every last bit of data.
This will allow you to answer questions such as:
- Are you comfortable managing the entire sales cycle?
- Would you instead work with a team of real estate professionals who can do most of the work for you?
- Are you looking to maximize the amount of money you earn on the sale?
- Do you have a plan for marketing your home?
- Are you open to the idea of working with a real estate law firm?
FSBO is worth it to some but not others. If nothing else, you should strongly consider the pros and cons as they pertain to your particular home, skillset, and financial circumstances.
What are FSBO Closing Costs?
It doesn’t matter if you’re selling your home by owner or with a real estate agent; there are certain costs you’re responsible for at closing.
Here’s the catch: when selling by owner, you don’t have to pay your agent for their service.
This generally saves you three percent of the sales price.
However, you’ll probably have to pay the buyer’s agent commission, which is also in the three percent range.
Other closing expenses associated with selling by owner include:
- Escrow fees
- Title fees
- Transfer taxes
- Recording fees
- Holding costs
- Home appraisal
Also, should you decide to consult with a real estate attorney — which is often necessary to manage the closing process — you’ll have another fee to add.
The way you save money with FSBO is by avoiding the three percent commission that goes to your agent.
For example, if you sell your home for 0,000 and an agent charges three percent, you can save ,000 from the start.
Avoiding FSBO Problems
The main drawback of buying FSBO homes or distressed properties sold by a homeowner is that there is no real estate agent to handle the paperwork and the transaction.
Since real estate laws and forms can be quite complex, you will want to hire an attorney or other professional to ensure that the purchase is legally sound.
If you are interested in For Sale By Owner properties or other distressed homes, DistressedPropertiesSale.com makes it easy for you to find homes for less in your area. Our daily updated listings list all sorts of foreclosures and distressed homes that can save you many thousands of dollars.