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What Is An FSBO?

By Colleen Colkitt

For Sale By Owner, or FSBO, is when an individual sells a property on his or her own. This can be tricky, because typically experienced real estate brokers handle this job after many years of experience and training. A For Sale By Owner is done without the help of a real estate broker or agent, and it is when a homeowner becomes his or her own representative during the process of selling his or her home.

Downside To FSBO

Even though the home owner represents themselves, they might also use help from a lawyer or solicitor, which may cost an additional fee. Also, there is a great deal of paperwork to tackle, which is usually done by an experienced real estate agent. The challenge of handling contracts, inspections, offers, and titles might take a negative toll on the seller if the homeowner does not have knowledge in these fields. Sometimes an FSBO seller resorts to hiring an attorney to help with the documents, and even though this can cost less than an agent's commission, the charge will cut into net profit in the end.

It can also be difficult to find a buyer who is willing to make a transaction without dealing with an agent. This disadvantage comes from the lack of expertise that an agent or professional would provide. The FSBO homeowner will miss out on the knowledge of pricing, marketing, negotiating and contract work that an agent would have experience with.

One more disadvantage is that only licensed agents can post properties on the Multiple Listing Service, which is used by most real estate agents. Agents with experience have access to resources such as lawn signs, open houses and newspaper ads to help with marketing.

Advantages Of FSBO

There are also benefits to this type of sale as well. It is clearly a financial advantage to not have to worry about paying an agent or broker, as well as possibly pay commission out to a co-broker. The elimination of the real estate's commission fee is the main motivation behind most FSBO sales. Average real estate agent's in the U.S. make at least 4% commission (half of that if co-brokering) for the property's selling price. Eliminating this commission may save the seller thousands of dollars. Sometimes foregoing on the help from an agent and eliminating commission fees is the difference between being able to sell, and being forced to remain with a property.

Being in control of the selling price, the homeowner has complete say over what the asking price is set at. Although an agent may be able to price it higher, an owner will have more knowledge of the property, and can market the home's advantageous qualities more. The homeowner is the expert for the specific property, which may help more when showing the house to prospective buyers. Also, in an attractive area with an appealing home, it may be easy and more affordable to sell the home if it is in such a great area.

Is It Right For Me?

It's important to understand how to price your home objectively on the market. An FSBO takes a great deal of time and energy to pull off. A homeowner must be available at most times of the day, and be able to take time to learn the process of the sale. If your net total for the sale and entire process is not higher than what it would be if an agent or broker helped, then maybe rethink doing this on your own. If you are a fast learning homeowner who is comfortable negotiating and able to comply with Federal and State requirements, then an FSBO might be right for you!

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