What Does For Sale By Owner Mean?
When spring is in the air it means that not only is summer right around the corner but that the real estate market is about to pick up, and a serious amount of houses are going to be bought and sold over the next few months. The first question that is usually going to come up when someone starts to think about selling their home is if they should use a real estate agent or if they should try to sell the for sale by owner.
When spring is in the air it means that not only is summer right around the corner but that the real estate market is about to pick up, and a serious amount of houses are going to be bought and sold over the next few months. The first question that is usually going to come up when someone starts to think about selling their home is if they should use a real estate agent or if they should try to sell the for sale by owner. In this article we will talk about what for sale by owner really is all about and if it is the right pick for your situation.
What Does FSBO Mean?
For sale by owner encompasses any sales transaction in which the seller represents himself during the process. The home is not represented by a real estate agent, Realtor, broker, or other real estate professional during the sale. In the United States, an agent is not required during the home sale process, although varying states will require a real estate attorney to be present during the closing agreement.
The FSBO route can be done through a variety of methods. The majority of homeowners in the U.S. use the traditional for sale by owner process in which they mimic the process of an agent but become the agent of their own home. However, that is not the only method. FSBO sellers can sell their home during a home sale auction, trade the home with another owner, or sell directly to an investor.
The Upside To FSBO
The most enticing advantage of FSBO is the savings of a real estate commission fee. When working with a real estate professional, they usually charge between 5 to 8 percent of the purchase of a home upon closing. This can be quite a significant amount for many homeowners. For example, if your home sold for $300,000 using a real estate agent, that would mean that you would forgo $15,000 to a real estate agent at the conservative percentage of 5 percent. That is thousands of dollars, even tens of thousands for many owners, that is taken out of the profit of selling a home that could be used for a vacation, college funds, and retirement savings. So why use a real estate agent if you don't have to?
The Disadvantages of FSBO
The reason that many owners end up using a real estate agent is because frankly, selling a house privately is tough. You will be in charge of listing the home, marketing the home to buyers, conducting showings, evaluating offers, and dealing directly with the buyer when selling your home. The buyer may ask you questions about financing, contingencies, and other home details and you might not know how to answer them in the right way.
Those wanting to sell in this way must put in the time and effort to be well-versed in the real estate process themselves and willing to do what it takes to get their home sold. Sellers that are unable to commit the time may have a house that stays on the market for months before the owner breaks down and uses a real estate agent. Thus, if you have full time job or business, a huge family, or an otherwise full life or going through a large life change, it will be difficult to sell your home on your own--not impossible, just difficult.
What FSBO does not mean.
The good news is that just because you are selling your home on your own doesn't mean that you have to do everything yourself necessarily. For a flat fee you can get a listing agent to help you with the process of listing your home. An appraiser can give you an evaluation of the best price for you to list at. A real estate attorney can help guide you through many steps of the process all the way through the closing. Even though you are selling your home by yourself you can still find professionals to help you along the way. This will obviously cost your money upfront but it will still be lower then a real estate agent's commission fee.
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