FSBO What Does It Mean? What Does It Mean for Buyers?
FSBO is an acronym used by realtors and sellers alike; simply put, it means for sale by owner. Definition aside, it indicates that the property owners want to sell it by themselves without using a realtor.
Sometimes, an owner will do this because they believe by not using a selling agent that they will not have to pay extra fees and, therefore, can make more money on their property. In some cases, this can be true, but it is a little more complex than that.
How Sellers Believe They Will Save
Traditionally, when a home up for sale, the realtor you hire is paid a percentage of the sale price. This price can vary quite a bit, but it falls between 5-6 % of the sale cost of the property on average. Therefore, the commission a realtor would gain on a house that sells for $500,000, with a percentage of 5%, would be $25,000.
Now, while sellers may believe that they are saving themselves the 5%, they may not realize that they must take on all the tasks that the realtor would typically handle without a realtor. These tasks can add up in cost and extra responsibilities, so it’s a gamble.
But what does this mean for the buyer of the property?
FSBO what does it mean? > How does this effect the Buyer?
Since FSBO homes are not listed the traditional way, such as through a real estate website like MLS or even through a realtor’s site, buyers may not realize that a house is for sale unless they are willing to do a deeper search, such a through a newspaper.
As the seller has decided to list the property without using a realtor, many buyers often wonder if they can use the help of a realtor themselves? The answer is yes, and by doing so, they can help themselves greatly in the process.
Often, in the situation of FSBO, the seller may not know all the ins and outs that an agent would. By having a buyer’s realtor, they can tell you whether or not a home is posted at a reasonable cost, and if any negotiation problems arise, you’ve got a realtor to help you through them.
Who Pays My Agent’s Fees?
FSBO what does it mean when it comes to agent fees? The question then becomes, who is going to pay the buyer’s realtor? Typically, the cost of commission is divided between both the seller’s realtor and the buyer’s, but as this is an FSBO, will the seller cover the cost of your realtor?
A complex issue, but here is where your realtor will help you greatly. There are a couple of different options you can try. First, ask the seller if they would be willing to cover the cost of your realtor. Often, many sellers will agree to this because they see the benefit of having a qualified agent to help with the technical side of things; and, they are still saving on half of the commission.
If, however, the seller does not agree to cover your realtor’s costs, see if you can include the price of their commission into your offer. By doing this, the fee will be paid through the proceeds at the time of closing and will not require you to pay more than you want.
If you are a buyer and choose not to use an agent, many problems can arise. First, the FSBO sellers may have overpriced their house, so make sure you look at comparable prices. Second, make sure you have a home inspection as you may not notice any potential warning signs that a realtor is trained to do.
And lastly, unless you or the seller are well versed in creating contracts, you may want to acquire some help in this situation. Overall, FSBO can still mean the possibility of buying your dream home but make sure you know the facts and have some help on your side with a qualified realtor.