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For Sale By Owner - FSBO
For Sale By Owner (FSBO)
For Sale By Owner (FSBO – dubbed “Fizbo”) is a term used to describe people(s) who sell their property themselves and don't use the services of a real estate company.
FSBO represents a growing trend in the real estate industry as many people are demonstrating their do-it-yourself spirit rather than pay the commission fees (usually 6%) of real estate agents or brokers for their role in selling their property. In most cases, the commission fee represents thousands of dollars - quite a considerable sum of money that many owners feel would be more beneficial towards their own purposes.
The rise of the internet has revolutionized the entire real estate industry, including making FSBO a more popular option. The internet has given birth to numerous real estate services that offer to market and list FSBO properties at a small price compared to what a commission fee would cost. The National Association of Realtors estimates that thirteen percent of real estate sales nationwide are done without any involvement from an agent or broker.
Here are some reasons why many people choose to sell their properties on their own rather than using a real estate agent:
There are many proponents of FSBO sales, including the vast multitudes of online real estate companies dedicated to helping owners list, market, and sell their properties.
Real estate agents sell the house for you - handle the advertising, take the phone calls, do the showings. But for all that money, many people feel it's worth trying to do it on their own. Also, many people choose to go the FSBO route because they have a strong desire to be actively involved and control the whole selling process.
Tips for FSBO
Exposure - A successful FSBO sale is very dependent on exposure. It is very rare these days for an owner to sell their own property simply by putting a “For Sale” sign on his yard. One of the advantages with going with a real estate agent or a realtor is that you’ll be able to assess the Multiple Listing Service, which is only available to these professionals. The MLS is a powerful and far-reaching tool, but it can be easily overcome with some rigorous listing and advertising work. Obviously listing your property in the local papers is a good start, but you can also investigate online options that specialize in selling FSBO properties. Also, there are services that will allow your property to be listed on the MLS without the use of a real estate agent, but expect some hefty fees and a contract should you do this. Be warned that FSBO are the arch-nemesis of real estate agents and realtors, so they often won’t show their clients FSBO homes. The good news is that prospective buyers are more computer-savvy, with the majority investigating to see what’s available online.
Be Realistic With the Sale Price – One of the main knocks against FSBO is that the owners will often times have a high asking price, which will inevitably scare away any prospective buyers. This is mainly due to the fact that the seller has no concept of market value. Due to this oversight interest in the property may not be great. So to overcome this problem, invest some time and energy in really understanding the real estate market. Hire an appraiser to give you some indication of what the property is worth at the current time. Investigate on your own by looking to see what the sale prices of properties in and around your area is listed at. Get an independent broker to perform a comparative market analysis to determine what the market value of your property is. Remember, selling real estate is a competitive business, so you’ve got to have a realistic sale price in order to compete effectively with the big boys.
Know Your Property Intimately - Most owners going the FSBO route spend far more time sprucing up their property than they do gathering information about it. But if your goal is to be a successful, you’ve got to obtain pertinent facts and figures that prospective buyers will want to know when they view your property. Some tips include measuring the square footage of the house, and completing a property fact and amenities sheet. While you can obtain a sample from most stationery stores, a better bet would be the listing form used by the real estate agents in your area.
Do the Due Diligence - Before the house hits the market, it’s imperative to do the “due diligence” fact finding for many important reasons. Incomplete and/or erroneous information bears the highest liability for you as the seller and could cause a sale to fall, or worse yet, a lawsuit from the buyer. Some information you must obtain includes getting the legal description and tax information on your property; getting a property disclosure form. You can obtain a form from a real state licensee or from the Real Estate Commission/Division office in your state; Get your mortgage pay-off information from the lender; Investigate public records to determine if any liens (i.e. federal income tax, etc.) or other legal actions are posted against the property. You don’t want to be surprised here since it could prevent you from selling the property; and get information about your current homeowner’s insurance (premium paid, exceptions to coverage, etc.). This is especially important if real estate in an area is tough to insure (as in Florida and California). Or perhaps the individual house is a potentially higher insurance risk since a buyer may be able to obtain insurance coverage quicker and at cost savings if they use your current carrier.
All the information you can find from going over the aforementioned tips will be important not only for yourself, but also the prospective buyer. They can use the information to perform their own comparative market analysis to determine an adequate proposal for you. Additionally, gathering the facts you need can make a difference in the quality of buyer you attract, how quickly the sale closes as well as what you’ll net in the sale. The term “information is power” can make the difference between getting what you want and taking what you’ll get as a seller.
Difficulties with FSBO
FSBO is not for everybody, especially if have relatively little knowledge about selling real estate. Unless you’re willing to invest some serious time and energy simply researching and understanding the many real estate resources online, than you’ll come across many pitfalls in your sales attempt. Generally, selling FSBO is a time-consuming and laborious task particularly if you’ve got a full-time job you also have to attend too. That is why the bulk of sellers choose to go with real estate agents since they already have the know-how and the connections to make the selling process relatively smooth and easy.
Think of taking on selling your own property as a part-time job for a period of time. The investment of time is the primary reason many people list their property with a real estate agent. If you can’t spare the time to gather information thoroughly up front, it may indicate that you need the help of a full-service real estate agent or should hire a real estate consultant to assist you on an a la carte basis for the services you need. Because of this, most FSBO are usually not successful. According to the National Association of Realtors (NAR), up to 80-percent of FSBO sellers will end up choosing a real estate agent and listing their home on the MLS, usually within 6-8 weeks.
In fact, many real estate agents see FSBO owners as potential clients and will cleverly and aggressively attempt to persuade them to enlist their services. In a sense, it is hard to argue with them. These professionals will obviously be more knowledgeable and sophisticated marketing, to their knowledge of paperwork and disclosures, and of course having access to the powerful Multiple Listing Service. The NAR are quick to point out that over 80-percent of FSBO sellers indicate they would not sell on their own in the future.
Also, FSBO sellers tend to get lower offer proposals for their properties, and some are forced to sell at a lower price than they had hoped for. Properties that are FSBO generally attract bargain hunters or investors who don't want to pay top dollar. Real estate agents will often net sellers more money because of the myriad other marketing actions they have at their disposal, and the wide reach of the MLS for qualified buyers willing to pay market value.