For Sale By Owners Typical Misconceptions

When the home owner enters into a contract with a Real Estate Agent, it's still a "For sale by owner." The Brokerage is actually contracted or hired as an employee by the seller/owner to represent the best interests of the owner/client in a fiduciary relationship. The owner is still the seller and only being represented by the Agent. However, For Sale by Owner, Fisbo or FSBO is generally used to describe a home owner who is selling property without the service of a Real Estate Agent.

There is another general misconception if a seller is represented by an Agent. Many Buyers assume that commissions are always entered into the asking price and therefore the price is inflated by the additional commission.

Many buyers think that the asking price will be lower if there isn't a Real Estate Agent representing the Seller. Many Buyers assume they can generally save 6 or 7%. That assumption is generally incorrect.

There is no set commission rate. In fact, it is illegal under the Sherman Anti-Trust Act and other Real Estate Laws to fix or conspire to set a fixed commission rate. Some Brokers /Agents offer their services for low commissions and also flat rate structures. Many times the discounted commission is tied to discounted services. All sellers have the right to discuss any fees, commissions, and services before entering into any listing agreements.

Trying to sell your home yourself to save the real estate commission?
This may work for you if you are prepared to place your own ads, answer phone calls, schedule appointments to show your home to strangers, have strangers show up at your door when you least expect it, negotiate with potential buyers, comply with all the disclosures required by law, schedule required inspections, and secure necessary title services to close the transaction. If you choose not to use a professional Real Estate Agent, representation by an attorney is strongly suggested. The transfer of ownership of a home is a major transaction for both buyers and sellers and legal and tax implications should be thoroughly checked.

For most people, a For-Sale-By-Owner (FSBO) transaction is more difficult than it seems. Owners must research and understand the law and the legal ramifications to protect themselves. Remember, this may be the biggest investment and most complicated transaction in your life time.

Some people are able to sell their own property without the services of a real estate agent. Some are experienced home sellers. Some are transferring ownership of their property to a family member or a tenant who's already living in the home. Some are just plain brilliant. Those circumstances are the exceptions.

Here are a few things to contemplate.
In a typical real estate sale, the buyer's agent receives a percentage of the commission that the seller pays the listing agent. Without a listing agreement, there's no guarantee that the buyer's agent will be paid for services, unless the buyer has signed a buyer's brokerage agreement that provides for a fee for services. Even if a FSBO offers to pay the buyer's side of the commission, many agents won't enter a transaction with an unsophisticated seller.

FSBOs cannot get visibility in many big search engines and Real Estate Web sites and must market independently at their own expense (yard signs, local newspapers, web pages, flyers, etc). They must also answer calls and make appointments, many times with unqualified buyers. Pre-qualifying a potential buyer is just another job skill to learn for first time sellers. FSBO's get a great deal of "just looking appointments."

Most FSBOs believe their own home is worth more than comparable homes in the same neighborhood. Many times they are wrong. A real estate agent can provide a comparable market analysis for the likely selling price of the home, an update on local market conditions, tips for improving the home's selling appeal, information on lenders. Overpricing a For Sale By Owner Property is the number one complaint of potential Buyers.

Potential Buyers usually spend less time in a for-sale home if the owner is present during the showing. They are usually wary about discussing their opinions even with their own agent, if the owner is within hearing distance. Buyers generally are less inclined to make a legitimate offer when negotiating directly with the seller. FSBO's generally are not adept at negotiating and often take a low offer as an insult. They lose a sale because they are personally attached to their property and fail to understand the Buyers motives. An agent is the buffer between the seller and buyer. You must have a strategy to overcome this obstacle.

Real estate transactions are fraught with potential liability for unwary Sellers, particularly in states that have extensive disclosure requirements (lead based paint, radon, asbestos, etc.). A FSBO who overlooks a required form or legally mandated disclosure could face an expensive buyer lawsuit after the transaction closes. If your are a FSBO always consult with a Real Estate Attorney or Licensed Real Estate Professional before entering into verbal or written agreements.

Your goal is to sell your home for the most money, and in the shortest amount of time. And for the least amount of hassles and distractions. Unfortunately, the way many Sellers go about selling their property leaves them wide open to the very problems they were trying to avoid.