Nowadays everyone has seen the signs in the front yard that say "For Sale By Owner," but what does this really mean? Is it going to be a legally correct deal for both parties? Does it really save money? The answer to both of these questions is, yes, but it does require a little bit more work from everyone involved.
For Sale By Owner means simply that there is not going to be a Realtor involved in the process. The owner will handle everything directly from showing to negotiations. There is a range of about 10-20 percent of homes sold with a 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 the sellers point of view the cost involved with selling this way are greatly reduced. When you deal with a real estate agent the commission cost alone can be between 5-7% of the final sale price of the house. As an example, if you had a home selling for 200K at 5% commission it would be $10,000 in commission fees. If the seller is able to sell their home without the use of a Realtor they would save all of that money.
Why Buy A FSBO Home?
From the buyers point of view the process of buying is much the same as long as you are an informed buyer and know what is a good deal and what is not. The one big benefit is that you have direct communication with the person selling the home. Because there is no middle man involved you can call the seller directly without having to deal with a real estate agent as a go-between. This means that buying this way can often take less time then 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 lawyer on your side can help a great deal and will typically only cost a couple hundred dollars, but it will be some of the best money you spend in the entire process.
Another thing to keep in mind is the price. As a seller it is easy for you to overprice your house to get the greatest profit on the sale of your home. For the buyer you have to remember that you will have to do more work yourself because there is no one guiding the process. For both parties it is important to ensure that you have done your homework on the local markets and ensured that you have the correct price on your home. Getting a valuation report can help the process and ensure that you are setting a good price for your home that will be competitive with the rest of the market.
As of late there has been a lot of information put out about how to deal with the ins and outs of this type of deal. 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 library or other book store will show you that there are a lot of books on the subject as well. Buying and selling a home is one of the biggest financial transactions of most peoples lives but it does not require a real estate agent if you are willing to do some more of the work yourself.