Nowadays everyone has seen the signs in the front yard that say "For sale by owner," but what does this really mean? Is it going to be a legally correct deal for both parties? Does it really save money? The answer to both questions is yes, but it requires a bit more work from everyone involved.

For Sale By Owner simply means that there will be no real estate agent involved in the process. The owner will take care of everything directly, from the exhibition to the negotiations. There is a range of about 10 to 20 percent of homes sold with a FSBO sale and the number goes up and down from year to year.

Why would you sell with a For Sale By Owner (FSBO)?

From the seller’s point of view, the cost involved with selling in this way is greatly reduced. When dealing with a real estate agent, the cost of the commission alone can range from 5-7% of the final sale price of the home. As an example, if you had a house that sold for 200K at a 5% commission, that would be $10,000 in commission fees. If the seller can sell their house without the use of a real estate agent, they would save all that money.

Why buy a FSBO home?

From a buyer’s point of view, the buying process is much the same as long as you’re an informed shopper and know what’s a good deal and what’s not. The great benefit is that you have direct communication with the person selling the house. Because there are no middlemen involved, you can call the seller directly without having to deal with a real estate agent as a middleman. This means that buying this way can often take less time than if an agent is involved.

things to think about

It’s good for everyone involved to have a team of people to help with the sale, even if no agent is directly responsible. Having a real estate attorney on your side can help a lot and will usually only cost a couple of hundred dollars, but it will be some of the best money you will spend in the entire process.

Another thing to consider is the price. As a seller, it’s easy for you to overvalue your home to get the most profit from your home sale. For the buyer, you have to remember that you will have to do more work yourself because there is no one to guide the process. It’s important for both parties to make sure you’ve done your homework on the local markets and make sure you have the right price on your home. Obtaining an appraisal report can help in the process and ensure that you are setting a good price for your home that is competitive with the rest of the market.

Resources

A lot of information has been published lately about how to deal with the ins and outs of these kinds of deals. Sites like ForSaleByOwner.com and Zillow.com have a huge list of different FSBO homes and tips and advice to make the process easier. Going to the library or another bookstore will show you that there are also many books on the subject. Buying and selling a home is one of the biggest financial transactions of most people’s lives, but it doesn’t require a real estate agent if you’re willing to do a little more of the work yourself.