Thinking of selling a home or other property on your own? If so, you need to know about FSBO (short for “For Sale by Owner”), often called “Fizbo.”
A Fizbo property is any piece of real estate sold without the help of an agent or broker. Selling property this way has pitfalls as well as advantages, so before you list a house yourself, you need to make sure you understand the laws surrounding For Sale By Owner properties.
Why Go Fizbo?
Agents and brokers offer many benefits. They provide sales experience and real estate expertise, and they can help sellers handle transactions, listings, and marketing. But these benefits come with a price tag. An agent or broker typically charges a commission fee of anywhere from 4 to 7 percent of a purchase price. Depending on the value of your property, that works out to be a hefty chunk of change.
Selling a property on a Fizbo basis allows an owner to skip the commission fee. Often, the owner is able to pass some of these savings on to the buyer, which in turn incentivizes the buyer to move quickly. After all, he or she is getting a significant price reduction.
If you’re uncomfortable with negotiations, selling a property yourself probably isn’t the best option; however, an organized, confident seller who has a good attorney can save a lot of money by going Fizbo.
What Do You Need to Know?
To avoid For Sale By Owner pitfalls, follow these best practices when selling your property:
- Enlist an experienced attorney. A lawyer can prepare a purchase agreement and assist with seller’s disclosure forms, lead paint disclosures, and any negotiations. Your attorney’s fees will likely be between $1,000 and $3,500, depending upon his or her level of involvement.
- Do market research. Arm yourself with information about comparable sales. You should know what other houses in your neighborhood are going for so you can price your place competitively.
- Use internet marketing tools and social media. If you don’t have an agent helping you sell your home, you have to get the word out using other means. Sites like Zillow and Trulia allow you to list your home where buyers will see it, and posting your house on social media uses your existing network to do the same. To broaden your reach, ask friends to share your listing with their friends.
- Host open houses. Keeping your home ready for showings and scheduling multiple time slots can be a headache. Open houses allow you to get a lot of foot traffic at once, which saves you time and energy. They also encourage buyers to act fast before your place gets snapped up by someone else at the open house.
- Choose an experienced title company. A title company verifies your property title and issues title insurance, which protects you and your buyer from title disputes. Ask your attorney to recommend a reputable and experienced title company before your sale.
What happens if your buyer already has a Realtor?
Even when you sell a property yourself, you may still deal with agents. Many buyers will be working with Realtors, and these Realtors expect to earn a commission for bringing buyers to your house.
Generally, any agent who brings a client to your house will ask you to sign a one-time show agreement. This prevents you from negotiating directly with the buyer in an attempt to avoid the agent’s commission. A three percent commission fee is customary, although you can always attempt to negotiate that.
You’re also free to decide you don’t want to cooperate with agents at all; however, if you don’t sign a one-time show agreement or cooperate with agents, those agents won’t bring buyers to see your house.
The Bottom Line
Selling without an experienced Realtor can be challenging, but it can also save you thousands of dollars. If you’re organized and you have a good lawyer, don’t be afraid to try selling on your own for two months before hiring an agent. The savings may be well worth your time.
To learn more or get help with a For Sale By Owner transaction, contact Stuart Boehning at 765-742-9066.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.