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There may be times when a person has to sell his or her property in a hurry. In such cases, a person will often choose to sell the house or apartment himself/herself, without the aid of an agent or broker. The property is said to be For Sale by Owner, or FSBO. Another reason for FSBO sales is to avoid having to pay the commission typically asked for by an agent. This often amounts to about 5-6% of the price of the house.
FSBO sales usually take place between people who already know each other. After all, a typical home-owner cannot be expected to have the networks and marketing resources of a real estate agent. The FSBO property is likely to go to a friend or acquaintance. As a result of the personal tie between himself/herself and the buyer, the seller may not be able to negotiate aggressively for a good price. The buyer is also likely to have seen the home before the seller was considering putting the home on the market, and so is likely to be unimpressed by tactics such as home staging. Whether or not you sell to a close friend, you are likely to get a lower price than an agent might, so the assertion that FSBO sales can save money by eliminating the broker's commission is highly debatable.
As we have seen, FSBO sales might not get you the best deal. However, it is arguable that the real danger is legal. The buyer and seller may not be sufficiently knowledgeable about real estate laws in their area of jurisdiction. They may fail to report the sale to the proper authorities, or may draw up faulty contracts. Before you even think about selling your own house in the FSBO way, read up on both national and federal law. If possible, try to get some information from your Department of State about what processes you should go through in order to sell a house properly.
If the buyer and seller do not know each other, it is also possible that one party is trying to cheat the other. Buying an FSBO house from a relative stranger without the intercession of a legitimate real estate firm can be dangerous, as you might end up being "stuck" with the bureaucratic and financial troubles of the house's former owner, who may just have been trying to find someone to unload these on before fleeing.
Coming up with statistics concerning the place of FSBO sales in the overall real estate market is rather complicated, given that some houses fall into a categorical gray area between being sold by their owners and being managed by a broker or firm. We refer here to houses marketed via flat rate multiple listing services. Here, owners can put their houses up on the listing service for a flat rate, instead of paying a commission based on the value of the property. They are using the help of a firm or service, but since no commission is paid, they can still say that the house is technically being sold by the owner. Such services may be a good "third option" for people who see the good points of both using a service and selling your house yourself.
About this Author
Beverly Manago is a freelance writer focused on the real estate industry. She is also a consultant for My Single Property Websites, a web 2.0 marketing tool that lets real estate agents create stunning virtual tours and single property sites easily, with a free version available for listing presentations. She also contributes to the Real Estate Marketing Blog there.
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