How For Sale By Owner Works
If you’re wondering how FSBO sites work, you’re not alone. “For Sale by Owner” makes good sense to many sellers in today’s healthy real estate market.
Most people remember the commonly held belief that selling your property always required a professional real estate broker. The seller paid a commission for the service, usually about six percent of proceeds from the sale. In real estate bull markets, the seller usually came out ahead. Sometimes, it was worth the commission to have an experienced seller to do the hard work of marketing and selling your home.
You Might Not Need a Realtor
It’s not always necessary to hire a real estate professional. For instance, the supply of available homes may have dropped in your market. You may have received unsolicited indications of interest from one or more people who want to know “When are you planning to sell this house?”
The idea of selling your home without paying the selling agent’s commission is tempting for several reasons. It’s not just about the money, but the money is an important consideration. For instance, if you sell your house for $250,000 without a selling agent, you could save $15,000 to use elsewhere. Just realize an important caveat. Successful FSBO sellers know they’ve got to do the marketing, staging, and photography to introduce their home to potential buyers.
FSBO isn’t All about Money
Let’s face it. Many homeowners don’t trust real estate salespeople. Some real estate agents seem quite new at their work. Others are so busy it’s challenging to get them on the phone.
Successful real estate agents might not have the seller’s best interests at heart. He or she might be less interested in getting top dollar for your property. The immediate goal is to get qualified buyers to the table as quickly as possible. A higher sale price won’t substantially change his or her commission. The time value of when the agent gets his or her cut is very important as well.
Realize that selling your home without a real estate salesperson will take more work:
- Research homes in your area. You must properly price the home to your market.
- Avoid overpricing your home—it will take longer to sell and undermine leverage in negotiating a sale later.
- Stay flexible. Prospective buyers are likely to have the highest interest in the first few weeks on offer. Continue to gauge the market and lower your price if necessary to attract interested buyers.
- Spend for a professional appraisal.
- Visit open houses to get a better idea of current prices. Ask open house agents about how long the property has been on market and if there’ve been price reductions.
- Use the Internet to further your research about housing prices.
How to Use for Sale by Owner (FSBO) Sites
- The homeowner decides to list a home for sale without a real estate agent. He or she decides to sell directly to prospective buyers.
- When the buyer and seller reach an agreement, the parties prepare a contract to detail the agreement. Both parties should consult an experienced real estate attorney to follow the agreement.
- Parties in the agreement schedule a closing to transfer title, ownership, and possession of the property as per the agreement.
The seller should understand that most buyers must obtain a mortgage. Fewer buyers will have cash to pay for the home in full. The mortgage lender will protect its interests. The process will include home inspections:
- If repairs are necessary, the buyer will ask for repairs before proceeding with the purchase.
- The seller will be required to make reasonable accommodations for these steps to be performed. He or she should consider whether it’s in his or her best interest to make repairs desired by the buyer.
Closing is usually dictated by the buyer’s mortgagee. That is, when the lender makes the money available to close the home purchase, the buyer, seller, attorneys, and lender representatives convene to complete the closing.
Considerations of FSBO
There are plenty of reasons to use a professional real estate agent. For example, you’ll need to consider liability, proper disclosure, and state and local ordinances involving the sale of your home before opening the door to prospective buyers.
Determining the fair market value of your home is a complex topic. Your next door neighbor might have gotten top dollar for his home because a realtor tirelessly performed all the steps necessary to get the word out. He or she did the social media marketing, staged the home, made a video to post online, and used a large firm database to invite prospective buyers to the open house gatherings.
You may also ask, “How do I know if I’m getting a fair deal?” or “How do I know if the terms of my contract are met?” You might lose sleep at night if luck of the draw presents a disgruntled buyer. Understanding your legal obligations and options is one of the best reasons to hire a real estate lawyer to protect your interests in the sale.
It may be in your best interest to hire a real estate agent. However, before you agree to list with anyone, ask lots of questions. Check out your prospective agent’s track record. Read reviews. When in doubt, ask him or her for a few references—and then call each one before making a decision.
Popular FSBO Sites
Owners have a wide range of FSBO site options. If you’re ready to do the work necessary to market your home to prospective buyers, check out some of the For Sale by Owner sites:
- com self-bills as the “leading by owner site.” Use the site’s ready mobile application to reach buyers on the go. Access printable flyers, a ready-to-use Open House Scheduler, and secure message center.
- com helps agents list MLS properties with several flat fee packages.
- com offers flat-fee MLS and several listing options.
- com is a popular site for FSBO users. The format makes it easy for buyers to get in direct touch with sellers after finding the right home.