Sometimes homeowners decide to sell their homes on their own instead of hiring a real estate broker to help them. Such a sale is called a "For Sale by Owner" or "FSBO," pronounced as "fizzbo." There are advantages and disadvantages of FSBOs. There are also additional considerations that sellers should know about before selling their homes by themselves.
Selling your home yourself has some advantages, including:
You have control over all of the decisions that have to be made. You can set the price of the home, do the advertising and marketing, select the buyer and decide the terms and conditions of sale.
You can take your home off of the market without breaching any terms of a listing agreement.
It's cheaper than hiring a real estate broker because you do not have to pay a commission.
You won't have to spend time meeting with your broker regarding your sale.
Selling your home yourself also has some disadvantages, including:
- You won't have an experienced real estate broker to help you decide many matters like the price of your home, where and how to advertise, whether the buyer can afford to buy your home, and how to handle inspections and negotiations.
- Your home won't be part of a multiple listing service, so it won't get the same exposure to prospective buyers.
- You'll probably have to hire a lawyer to draft a sales contract, or to review a contract presented to you by a buyer.
- You'll have to do everything yourself, such as showing your home, arranging financial transactions, and arranging for closing the sale.
Many considerations go into the assessment of the need for a real estate broker or agent. You may not be aware of some of them:
- Under the doctrine of "caveat emptor" or "let the buyer beware" a seller has an obligation to disclose only those defects known by the seller that could not be readily discovered by a reasonable inspection. The duty falls on the buyer to make inquiry and examination. However, this rule does not usually apply to those buyers dealing with a real estate licensee. If a broker is questioned about specific defects or if he knows of specific defects that affect health and safety and the defect is not readily observable, the broker has a duty to disclose the defect.
- A real estate broker earns a commission only when the broker produces a buyer who is ready, willing and able to buy. Brokers become very good at determining whether prospective buyers will be able to afford to purchase property, and will take care of screening prospective buyers before showing them your home. Most homeowners who are selling their home themselves do not have this experience, and they run into problems if the buyer cannot come up with the financing.
- Real estate brokers are aware of the increasing popularity of the Web, and they often advertise their listings on their own Web sites. If your listing is posted on an agency Web site, it will be available to many potential buyers. Brokers are prohibited from advertising property listed with another broker without the express permission of the other broker or of the seller.
- Real estate brokers also have the ability to post the listings of a multiple listing service (MLS) on their Web site and allow clients who register with their company online to view the listings. Listings like this get a lot of exposure to potential buyers.
- Sellers of real estate should be aware of potential environmental claims against them. Many states have laws requiring sellers to complete disclosure statements and provide them to buyers. Failure to disclose an environmental problem before the sale has closed may lead to legal claims against the seller, even after closing the sale.
Questions for Your Attorney
- What is the nature of the real estate companies that offer to put your home into the local multiple listing service, but require you to do much of the work connected to selling a home, such as showing the home to potential buyers?
- If I put my house up for sale and a real estate broker approaches me with a buyer, what commission would I owe if the buyer bought my house?
- Do I have to tell a potential buyer about the soil erosion on my property? How about former problems or defects that I believe have been properly fixed?