FSBO

[CarlHungus]

On the buyers end, how does for sale by owner work? Having never bought a home, my limited knowledge of the process is that the buying and selling agent each get a commission. So, if there is no commission to be had, would you need to hire a real estate attorney as a buyer instead or pay a realtor out of your own pocket?

 

[Me State]

We bought our house FSBO. The previous owners used their attorney (they owned a business) to create all the legal paperwork for the transaction. WE got our loan through Wells Fargo and they approved all the paperwork to make sure it was correct before anything was made official. Just make sure your lender is going to check over all the paperwork and you shouldn't have any additional costs. It was a very smooth process and we are going to be selling our house in about a month and plan on listing it FSBO.

 

[IowaRealEstate]

Good question. The answer depends on the situation. I am never a fan of asking a buyer to pay my commission. I think this should be handled by the seller. 80% of fsbo's roughly will cooperate and agree to pay a buyer's agent their share of the commission. This is often a win-win as the seller saves half of a typical commission and still gets to pay the buyer's agent their fair share for the work they will do on behalf of the buyer to close that deal.

There will always be the people out there who had a successful FSBO transaction and will say how easy it is, but for every one of those there are two that went poorly for the parties involved.

I know many people will laugh at this but buying or selling a home is a better process when handled by a professional who does it every day. Just like a lawsuit is better handled by a lawyer and an injury is better handled by a doctor. In both cases, you pay more, but you know you are getting the care and attention of a professional. Why should real estate be any different?

So, my best advice is this. If you have a home in mind that is FSBO contact an agent to help (If it is local you can call me) and ask them to reach out to that FSBO for you. Best case, they will work with your agent which is great. Worst case, they won't but at least you tried to go that route first.

 

[IowaRealEstate]

Important thing to remember is that most lenders have zero clue on market value. They do loans, but they are not in the field every day buying and selling homes. They can make sure the contract looks ok but they will not know if the price on that contract is good or bad.
I understand that many people think agents are paid too much or can be worked around, but their market knowledge, if they are a true professional with years of experience, cannot be disregarded as being unimportant.

 

[clone52]

Good question. The answer depends on the situation. I am never a fan of asking a buyer to pay my commission. I think this should be handled by the seller. 80% of fsbo's roughly will cooperate and agree to pay a buyer's agent their share of the commission. This is often a win-win as the seller saves half of a typical commission and still gets to pay the buyer's agent their fair share for the work they will do on behalf of the buyer to close that deal.

There will always be the people out there who had a successful FSBO transaction and will say how easy it is, but for every one of those there are two that went poorly for the parties involved.

I know many people will laugh at this but buying or selling a home is a better process when handled by a professional who does it every day. Just like a lawsuit is better handled by a lawyer and an injury is better handled by a doctor. In both cases, you pay more, but you know you are getting the care and attention of a professional. Why should real estate be any different?

So, my best advice is this. If you have a home in mind that is FSBO contact an agent to help (If it is local you can call me) and ask them to reach out to that FSBO for you. Best case, they will work with your agent which is great. Worst case, they won't but at least you tried to go that route first.

We are selling our house by owner with a company that does for sale by owner. They are handling all the paperwork/legal stuff for a relatively small fee (compared to a comission). What we don't get it them putting up the legwork to drum up interest in our home, or offering tips of how to set it up, decorate it to make it more showable, that kind of stuff. They list it on zillow and their own website and thats it. We have to coordinate showings, advertise in papers, plan and hold open houses. I'm sure a realtor could drum up more interest, but for a very small initial investment we're giving it a shot. We got super lucky and had an offer within 2.5 weeks of listing it. However, if we had no interest and were unable to drum up any interest, all we would have been out was an up front cost of less than $200. We could have decided 6 months from now to go with a realtor and we wouldn't have been out much

In addition, for an even smaller fee, the same company is going to handle the paperwork/legal stuff for the purchase of our new house. We actually are making an offer on a house that is for sale by owner. The same company is doing the paperwork for a purchase agreement and the stuff we need as a buyer. The cost for them to help us with that isn't too bad either.

I can definitely see how fsbo could be frustrating if you aren't getting interest in your house, but if you're not in a super hurry to sell and are willing to wait a little bit, for an initial investment of very little, you might save a few thousand. Our buyer has an agent so we are paying their commission, but even with that, we are going to end up saving a few thousand on the sale of our home and were able to make a lower offer on the house we are buying because that seller won't be paying our agent.

 

[clone52]

Important thing to remember is that most lenders have zero clue on market value. They do loans, but they are not in the field every day buying and selling homes. They can make sure the contract looks ok but they will not know if the price on that contract is good or bad.
I understand that many people think agents are paid too much or can be worked around, but their market knowledge, if they are a true professional with years of experience, cannot be disregarded as being unimportant.

Thats a really good point. The company we did our fsbo with sent us a list of all similar homes that were currently for sale, had sale pending or were sold in the last year in our home. It was everything from about 80% of what we planned to list at to 120% of what we planned to list at. With that information, we were able to feel very comfortable with what we planned to list it at. We could have hired an appraiser to get a better ides of market value as well. As it turns out, I can point to about $6000 dollars in savings for our sale and purchase of a home because we went fsbo and didn't have an agent. The home we are selling isn't very high priced and I'm 100% confident that we didn't underprice our home by near that amount.

We found that Zillow is pretty handy to do some rudimentary market research on your own as well by analyzing past sales.

Nothing is probably better than a good agent who prides themselves on doing really good work. However, if you're working with an agent, that entire commission doens't go to them, the company they work for is going to get part of it. So if both the buyer and seller have an agent, the commission for the selling agent is about 3.5%. If they sell a house for $250,000 or for $200,000, the difference in take home pay for that agent is probably on a few hundred dollars, so you'd probably want to make sure you get a good recommendation on an agent because there might not be a huge incentive for them to get you your top dollar.

When buying, an agent can get you information on homes being listed for sale a day or 2 quicker than you might find if you are searching by yourself. That is a benefit too.

I've never had a bad experience with an agent, though. I bought my first home with agent and he was great. The agent our buyer is using is fantastic as well. I would definitely recommend both of them to anyone looking for an agent.