FSBO Sales

For Sale by Owner, or just FSBO, is the process of a selling a piece of real estate without using the representation of a real estate agent or a real estate broker. A homeowner may decide to use various marketing services or different companies with online listings. They can also market the sale of their real estate on their own, allowing them to avoid paying any commission fees to a real estate agent or broker. The only commission that is typically paid is to the lawyer who provides his or her services.

FSBO is popular with homeowners because choosing to sell the home in that fashion prevents payment of a commission, which is usually around 6% of the property’s selling price. When a homeowner decides to do a FSBO, and a buyer that is not working with real estate agent decides to purchase the property, the seller does not have to pay a commission since real estate agents were not involved in the FSBO process.

In the situation where a buyer represented by real estate agent is interested in a FSBO property, the buyer's agent may ask the owner to pay the agent a finder's fee or commission for locating a buyer for the property. The seller has the option to either pay or instead refuse to pay the fee.

The seller is in no way legally obligated to pay a commission to the agent. If there is no agreement between the owner of the FSBO property and the potential home buyer, the agent of the buyer may not receive compensation in the transaction, or instead may be compensated by the buyer.

According to the National Association of Realtors’ 2009 press release of their annual survey of real estate consumers, 11% of US real estate transactions in 2009 were FSBO, a two percent decrease from the previous year as well as a seven percent decrease from 1997. The record for highest percentage of FSBO sales since tracking began in 1981 was in 1987, where 20% of transactions were FSBO.

The advantages of FSBO include:

• No commission or brokerage fee.

• The homeowner totally controls the transaction.

• The homeowner does not have to be responsible for other people’s mistakes.

• A homeowner can conduct showings or answer inquiries at any time.

The disadvantages of FSBO include:

• The seller is responsible for advertising and marketing costs.

• Without paying, a buer will not be included in the Multiple listing service.

• A seller may accidently overprice or underprice a property.

• A lack of negotiation skills can greatly hurt the seller.

• A seller is responsible for all necessary legal forms and documents.

• Buyers will often think that they should receive the savings as opposed to the buyer.

• A seller must know the financial and legal issues to be sell the home effectively.