FSBO is an acronym for "For Sale by Owner." Homeowners engaged in FSBO sell their real estate without the assistance of a realistate agent. Since the average realtor commission is approximately 6-percent of the sale price, both buyers and sellers can save thousands of dollars in agent fees by participating in FSBO real estate transactions.
People who buy or sell FSBO property should have some experience in real estate transactions. Those who do not have experience would be wise to assemble a team of real estate professionals who can review documents and offer advice.
Buying and selling real estate requires specific knowledge and legal expertise. While it can be tempting to "go it alone", FSBO can end up costing the buyer a tremendous amount of money if inspections, appraisals and land surveys must be conducted to ensure the property is worth the selling price.
At minimum, buyers and sellers should have a real estate attorney. Contracts must be drafted to protect all parties involved and to transfer the deed of trust. Some states require sellers to enlist the services of an escrow or title company when selling real estate.
Sellers of FSBO property should provide buyers with a disclosure statement; a legal document which outlines potential problems with the property. The disclosure statement protects buyers in the event the seller fails to inform them of undisclosed damage such as termite problems, electrical issues, water damage or other items which cannot be seen with the naked eye.
It is also a good idea to enlist the services of a reputable mortgage lender. This is particularly helpful for prequalifying prospective buyers. Individuals who are interested in buying FSBO property should obtain prequalified financing before entering into any agreements. Prequalification lets buyers know exactly how much they can afford and shows sellers they are motivated to buy.
Investing in FSBO realestate is no different than purchasing properties sold through a realtor. Both buyers and sellers should engage in market analysis to determine the appropriate property value. Real estate appraisals and repair cost estimates should be obtained by the buyer.
As long as buyers engage in due diligence, obtain a professional inspection and appraisal, and are provided with a disclosure statement, purchasing FSBO real estate can be as safe as buying real estate through a realtor. The primary difference is the amount of money which can be saved.
If you are interested in buying and selling real estate, we invite you to learn more about the numerous options in our FSBO article library.