How do for Sale by Owner homes work?
Do you think real estate commissions are quite expensive to pay for? If your home was worth $87,000, you’ll need to pay your agent around 5%-6% of that. That’s about $4,350-$5,220. That price alone can already pay 4-5 months of your next home’s mortgage! But how can you sell a home without an agent?
In the real estate world, we call it For Sale By Owner or FSBO. And this is one of two solutions that will help you sell your home without being required to pay for commission. So relax and know more about FSBO in this article.
What is For Sale By Owner?
As the name suggests, For Sale By Owner is when a homeowner opts to sell a home by himself. Yes, you can sell your home by yourself either on the market or off the market. On-The-Market FSBO means that you broadcast your sale usually through a Multiple Listing Service so more people will know about it. On the other hand, Off-The-Market FSBO means that you only tell a few selected people about your sale.
Traditionally, only licensed real estate agents are permitted to post in a Multiple Listing Service (MLS). However, today, there are already MLS’s that are open to the general public. All you need to do is pay a flat fee. Be cautious though, some open MLS’s require homeowners to set a buyer’s commission fee. Yes, if your buyer has an agent, the commission fee will be deducted from the total purchase price.
Advantages of For Sale By Owner?
FSBO sounds like a whole lot of work. This may be true, but there are some advantages that make your it worth your effort. Here are three (3) of these benefits:
Lower Commission Fee
If you do an off-the-market sale on your own, you won’t have to pay any commission fee at all. However, as mentioned in the earlier paragraphs, there’s a different kind of FSBO that still requires homeowners to pay commission which happens when you list your home in one of the open Multiple Listing Services.
The average total commission fee in an agent-assisted home sale transaction is between 5%-6%. This is divided between your agent and your buyer’s agent. Basically, your agent receives 3%, and your buyer’s agent receives the other 3%. If you list in an open MLS, you’ll still have to pay the buyer’s agent which is worth 2%-3% of the total purchase price.
Even so, you will be able to save the other 3% that is supposed to be for your seller’s agent.
More Control Over The Schedule
Agents have the responsibility to bring in as many interested buyers as possible. This means that you need to be available anytime in case a buyer pops in. If you won’t work with an agent, you’ll have more control over who you are going to entertain or not.
No Need to Screen Agents
Some agents are great, truthful, and reliable. Some can also be the opposite. It can be difficult to find an agent because you wouldn’t only want someone who is experienced and knowledgeable, but you also would want someone who perfectly understands your personality, plans, and situation.
Disadvantages of For Sale By Owner?
Like any other ways to sell a home, FSBO also has its disadvantages. Try to see if any of these are manageable for you or not.
Contracts, Disclosures, Other Requirements
Some of the documents involved in selling a home include the Sale and Purchase Contract and the Seller’s Disclosure. If you don’t work with an agent, you’ll have to draft or prepare these documents yourself. In FSBO, the Sales Contract is called the For Sale By Owner Contract.
- Name of the Parties
- Description of the Property
- Payment Terms
No Security From Bogus Buyers
Agents are there to pre-qualify interested buyers. Some buyers only ask without a serious intent of buying any house and you wouldn’t want to deal with these people because they will just waste your time. A good real estate agent will be able to tell you which inquirer is seriously interested to buy your home.
Marketing Requires More Time & Effort
To sell your home faster, you’ll need to do both traditional and digital marketing practices. The traditional way of marketing a home is by putting up signages and print ads. Digital marketing on the other hand involves posting your sale online through a website, social media pages, or emailing potential buyers. This is why FSBO is best for people who have some time to spare.
Need to Hire a Real Estate Attorney
In Georgia, an attorney is required to facilitate or handle a real estate closing. You can search for real estate attorney services online. Or better yet, perhaps you know someone who recently sold or bought a home — ask them who their real estate attorney was.
Don’t get us wrong, a slow sale doesn’t apply to all FSBO sales. Some FSBOs close in as fast as 2 weeks. With everything mentioned above, you may want to prepare though for a slow sale, especially when you’re a busy person yourself.
If you neither want to work with a real estate agent nor do you want to sell your home on your own, you have another option. And that is to sell your house to a professional home buyer like Spire Property Solutions. People come to us if they want to sell their house privately, quickly, and without any hassle. We buy houses fast, as-is, and for cash in Georgia — you wouldn’t need to do anything more than give us the necessary documents and sign the papers that our attorney provides!
Learn more about what you can get from selling your home to us by calling (678) 318 – 1801.