For sale by owner, often abbreviated as FSBO, is when a homeowner lists their home without the assistance of a professional real estate agent. When selling on your own, you are responsible for the process from start to finish, including pricing, staging, listing, negotiating, drawing up paperwork, and closing.
Why sell FSBO? Most sellers decide to go it alone to avoid paying the standard 6% commission fee to the real estate agents involved in the sale. While most FSBO sellers are trying to keep more of their profit in their pocket, it is important to note that a local real estate agent likely has more expertise in pricing strategy, so it is possible that the net profit you earn from a FSBO could end up being lower than if you had listed with an agent.
Can your REALTOR® represent you in a FSBO transaction? The answer is yes. If your REALTOR® has been showing you houses and you stumble upon a home that is not listed, do not ditch your REALTOR®. Many private sellers are willing to co-operate with Buyers’ Agents. They know the paperwork will be handled correctly and that the buyers have been properly qualified to make the purchase. If the private seller is unwilling to pay a commission, you will need to pay your Buyers’ Agent. But you can do so with the assurance that he/she is working for you and that the deal will be constructed with your best interests as the foundation.
So how does this work? Your agent approaches the owner and asks for permission to show the property, represent you and get paid by the owner. Your agent should already know this! The seller and the agent will come to an agreement as per commission and if you are ready to make an offer, the agent will process everything as if it was a listed property. Just because the property is not listed, does not mean you cannot get financing, do inspections and have your REALTOR® represent you until closing.
So why would you have your REALTOR® represent you? There are several reasons. They understand fair market value and pricing strategy. They will guide you to make sure you don’t pay too much. They will do all the paperwork, contact the attorney and inspectors. Your REALTOR® will discuss your inspections with you and help you make a list of items that need repaired. They will keep you updated throughout the entire process.
However, if you have the knowledge and expertise in buying real estate you may not need a REALTOR®. You would need to know market value and how to negotiate price. You would need to have a purchase agreement that would protect you. You would need to know which title attorney to hire and which inspector is good. You would need to know if you should do a radon or mold inspection. You would need to do all of this and your day job and make sure you are protected in the process. If this is too much for you, don’t ditch your REALTOR®.
Spring is right around the corner! Let’s have a great week and remember to do good things!
Stephanie Lemley, 2021 MBOR President