By Jeff Brown –
NEW YORK — Home prices are up and there aren’t enough homes on the market to meet buyer demand. It sounds like perfect conditions for the seller who wants to go it alone, saving the hefty real estate agent’s commission. The mechanics of the FSBO — for sale by owner — have become relatively simple, thanks to the Internet and various low-fee services to help sellers with the process. And many sellers who have completed FSBOs are thrilled with the savings, escaping the agent’s commission that typically runs to 6% of the sales price. But there are pitfalls.
So how do you know if you are a good candidate? The key consideration: Do you have enough time? Selling on your own means, of course, that you must have time to show the property. Although traffic is typically heaviest on weekends, the seller really has to be available during the week and on short notice.
More important, though, the seller should expect the process to take longer than if professional agents are involved, because traffic is likely to be much slower. Many buyers, already nervous about homebuying, think there are too many hassles and risks in working without a pro, so they won’t consider a FSBO property.
And, since most buyers have agents of their own, you will cut yourself off from those buyers unless you are willing to pay a buyer’s agent‘s commission, typically around 3 percent. So the FSBO is best for the seller who has no deadline.
Critics of FSBOs typically cite two other potential problems. First are legal risks. Doing something wrong in filling out the sales contract or disclosing issues with the property could cost you a sale or, worse, invite a lawsuit. But this need not be a major consideration.
For a few hundred dollars, a lawyer familiar with real estate can help you with the paperwork. And in many states it’s the title company, not the real estate agent, that does the heavy lifting, assuring the buyer that the seller has clear title to the property, and organizing the payments, escrow accounts, legal filings, tax payments and so forth. In most places, title companies can furnish the standard sales contract used in the area.
Services, found by searching “FSBO” on the Internet, can help with guidance and advertising, and even get your home on the multiple listing service, which feeds into many of the home-listing sites. Again, the cost is modest, depending on what services you order. One firm, ForSaleByOwner.com, charges $699 for the top-level package that includes MLS listings.
Critics’ second claim is that typical FSBOs sell for less than homes sold through an agent. But the data, especially that from the real estate industry, should be taken with a grain of salt, because many FSBOs are sales between family members at cut rates. Also, FSBOs are less common with high-end homes, reducing the average sales price for all FSBOs.
At any rate, average sales price nationwide are not very important to a seller. The question is what can you get? If you do good home-price research on sites such as Realtor.com,Trulia.com and Zillow.com [Realtor and Zillow are AOL Real Estate partners], you should have a pretty good idea what your home can fetch. And, for a few hundred dollars, you could hire an appraiser.
And remember, you can change your mind. If you’re not happy with the results after a month or two of going it alone, sign up a Realtor. Or take the halfway step of offering a 3 percent commission to the buyer’s agent. On that $300,000 home, you’d then pay $9,000 instead of $18,000.