For sale by owner

Last updated
A house for sale by its owner. For Sale By Owner (5678413086).jpg
A house for sale by its owner.

For sale by owner (FSBO) is the process of selling real estate without the representation of a broker or agent. This is where the homeowner sells directly to a new homeowner. Homeowners may still employ the services of marketing, online listing companies, but can also market their own property.

Contents

Typically, they represent themselves with the help of a lawyer or solicitor throughout the sale. As in most areas, there are detailed legal requirements pertaining to sellers and disclosures they must make. [1] [2]

Varieties

Some options available to the FSBO seller include:

  1. Selling alone. The owner sets a price and prepares the house ready for sale. They may hold an open house, open escrow and transfer the keys to a new owner. [3] Websites are available to list properties. Since there is no agent, no commission is paid. The two parties can obtain contractual assistance from their own lawyers or hire one lawyer to facilitate the transaction.
  2. Partial assistance. Several "flat fee" listing services exist that host an owner's property on a multiple listing service so it is marketed to real estate agents locally and nationwide. [4] In exchange for this, the FSBO seller must pay a commission to any agent that brings a buyer. The end result is that sellers spend about half of what they would have paid with a regular listing.[ citation needed ] The agent who brings in the buyer may also prepare the majority of the paperwork for the sale. Since the agent is representing the buyer, not the seller, the seller may hire an attorney to review the transaction and ensure all required disclosures are made.
  3. Flat-fee and hourly home selling. Alternatively, a home seller can either pay a flat-fee or hourly fee to a real estate agent. This can be a one time payment, or an ongoing hourly home selling agreement. These allow the FSBO seller to avoid commissions but still receive a la-carte real estate agent assistance.

Market share

United States

In the USA, the popularity of FSBO has been increasing since the late 1980s, with real estate website Zillow reporting a doubling of listings between 2012 and 2014 (up to 4%). ForSaleByOwner.com saw 24% growth in 2013, and StreetEasy reports that New York City FSBO listings increased by nearly 30% in that same period. [5] The record percentage of 20% of US real estate transactions (since tracking started in 1981) took place in 1987. According to a 2016 report by the National Association of Realtors (NAR) regarding home buyer and seller trends, Home Buyer and Seller Generational Trends Report 2016, 8% of surveyed real estate transactions between July 2014 and June 2015 were FSBO. [6] The NAR's 2015 report found that the median age for FSBO sellers in the United States is 54 years. 77% of FSBO sales were by married couples that have a median income of $104,100. FSBO homes typically sold more quickly than agent-assisted homes; 67% of them being completed in less than two weeks. Of sellers who personally knew the buyer, 71% were satisfied with the process of selling their home. [7]

Some critics of the National Association of Realtors' report believe those statistics may be misleading and suggest that the true market share of FSBO is higher than the NAR's reports suggest. This claim is in part because flat-fee MLS now makes up 10% of transactions. [8] They argue that flat-fee MLS sellers are in effect FSBO sellers.

For-sale-by-owner listing sites include Zillow, ForSaleByOwner.com, Facebook Marketplace and OfferMarket. [9]

Canada

Separate reports from the Canadian Real Estate Association and CTV Consumer Reports state that between 20% and 25% of homes in Canada are not sold through brokers each year (as of 2004). [10] MSN Money suggested in 2009 that 30% of homes are sold without using a real estate agent. [11] In that same year, more than half of the homes sold in Quebec were sold without an agent. [12]

United Kingdom

In the UK, the average commission rate is significantly lower than in Canada or the US, meaning that FSBO is less common. [13] By law, all sales of property must be supervised and handled by an independent solicitor, who acts as a mediator and holds the buyer's money until the purchase is complete. [14] [ failed verification ]

Australia

In Australia, FSBO is still relatively niche market. As of 2014, privately sold houses in Canberra spent about 34 days on the market, according to RP Data – the second shortest period in the country. Canberra houses sold by private treaty spent the same time on the market as those in Melbourne; a week longer than Sydney, where houses are on the market for an average of 27 days. Privately sold units in Canberra spend an average of 54 days on the market, third only to Sydney (23 days) and Melbourne (37 days) when compared with other capital cities. [15]

See also

Related Research Articles

This aims to be a complete list of the articles on real estate.

A multiple listing service is an organization with a suite of services that real estate brokers use to establish contractual offers of cooperation and compensation and accumulate and disseminate information to enable appraisals. A multiple listing service's database and software is used by real estate brokers in real estate, representing sellers under a listing contract to widely share information about properties with other brokers who may represent potential buyers or wish to work with a seller's broker in finding a buyer for the property or asset. The listing data stored in a multiple listing service's database is the proprietary information of the broker who has obtained a listing agreement with a property's seller.

<span class="mw-page-title-main">National Association of Realtors</span> American trade association for real estate brokers

The National Association of Realtors (NAR) is an American trade association for those who work in the real estate industry. As of December 2023, it had over 1.5 million members, making it the largest trade association in the United States including NAR's institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries. The organization holds a U.S. trademark over the term "Realtor". NAR also functions as a self-regulatory organization for real estate brokerage. The organization is headquartered in Chicago.

<span class="mw-page-title-main">Real estate agent</span> Person who acts as an intermediary between sellers and buyers of real estate for a commission

Real estate agents and real estate brokers are people who represents sellers or buyers of real estate or real property. While a broker may work independently, an agent usually works under a licensed broker to represent clients. Brokers and agents are licensed by the state to negotiate sales agreements and manage the documentation required for closing real estate transactions. Buyers and sellers are generally advised to consult a licensed real estate professional for a written definition of an individual state's laws of agency.

Closing costs are fees paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed (transferred) to the buyer. Closing costs are incurred by either the buyer or the seller.

A listing contract is a contract between a real estate broker and an owner of real property granting the broker the authority to act as the owner's agent in the sale of the property.

<span class="mw-page-title-main">Business broker</span>

Business brokers, also called business transfer agents, or intermediaries, assist buyers and sellers of privately held businesses in the buying and selling process. They typically estimate the value of the business; advertise it for sale with or without disclosing its identity; handle the initial potential buyer interviews, discussions, and negotiations with prospective buyers; facilitate the progress of the due diligence investigation and generally assist with the business sale.

Home staging is the preparation of a private residence for sale in the real estate marketplace. The goal of staging is to make a home appealing to the highest number of potential buyers, thereby selling a property more swiftly and for more money. Staging techniques focus on improving a property's appeal by insuring it is a welcoming, attractive product that any buyer can see themself living in and, thus, desire to purchase.

<span class="mw-page-title-main">Zillow</span> American real estate website

Zillow Group, Inc., or simply Zillow, is an American tech real-estate marketplace company that was founded in 2006 by Rich Barton, Zillow's current CEO, and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia; Spencer Rascoff, a co-founder of Hotwire.com; David Beitel, Zillow's current chief technology officer; and Kristin Acker, Zillow's current technology leadership advisor.

Flat-fee multiple listing service or flat-fee MLS refers to the practice in the real estate industry of a seller entering into an "à la carte service agreement" with a real estate broker who accepts a flat fee rather than a percentage of the sale price for the listing side of the transaction. A flat-fee MLS brokerage typically unbundles the services a traditional real estate brokerage offers and lists the property for sale in the local multiple listing service (MLS) à la carte without requiring the seller to use all services.

An electronic version of the real estate industry, Internet real estate is the concept of publishing housing estates for sale or rent online, and for consumers seeking to buy or rent properties through such platforms. Often, Internet real estate properties are listed and managed by landlords themselves. However, there are few exceptions where an online real estate agent would exist, still dealing via the World Wide Web and often stating a flat fee and not a commission based on the percentage of total sales. Internet real estate platforms surfaced around 1999 when technology advanced and statistics prove that more than 1 million homes were sold by the owners themselves in the United States alone in 2000. Some of the primary Internet real estate platforms include Zillow, Trulia, Yahoo! Real Estate, Redfin and Realtor.com.

A real estate trend is any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This phenomenon can be a result of the economy, a change in mortgage rates, consumer speculations, or other fundamental and non-fundamental reasons.

Days on market is a measurement of the age of a real estate listing. The statistic is defined as the total number of days the listing is on the active market before either an offer is accepted or the agreement between real estate broker and seller ends.

<span class="mw-page-title-main">Assist-2-Sell</span>

Assist-2-Sell is an American real estate franchise organization operating in the United States and Canada. It was founded in 1987 by Mary LaMeres-Pomin and Lyle E. Martin and is based in Reno, Nevada.

A real estate transaction is the process whereby rights in a unit of property are transferred between two or more parties, e.g. in the case of conveyance one party being the seller(s) and the other being the buyer(s). It can often be quite complicated due to the complexity of the property rights being transferred, the amount of money being exchanged, and government regulations. Conventions and requirements also vary considerably among different countries of the world and smaller legal entities (jurisdictions).

A chain-free property is a property that is being sold by a vendor who does not need to purchase a new property after they sell. Only 10% of all property transactions in the United Kingdom are chain-free.

<span class="mw-page-title-main">Realtor.com</span> Real estate website

Realtor.com is a real estate listings website operated by the News Corp subsidiary Move, Inc. and based in Santa Clara, California. It is the second most visited real estate listings website in the United States as of 2021, with over 100 million monthly active users.

A private transfer fee covenant is a legal instrument that is filed in the real property records, which imposes an assessment payable in connection with a series of future transfers of title to certain real property. The assessment can be for a fixed amount or a percentage of the sales price, and typically runs for a limited term. Unlike a transfer tax a private transfer fee assessment is payable to an identified third-party, often a community association, the real estate developer, and/or an environmental or charitable organization. According to the Coalition to Save Community Benefits, private transfer fee covenants of some kind encumber approximately eleven million homes in the United States. Although encumbering a statistically small percentage of the estimated 135 million homes nationwide, increased use of private transfer fee assessments, particularly by real estate developers beginning around 2007, when financing became difficult to obtain on commercially reasonable terms, lead to increased regulation at both the federal and state level.

Forsalebyowner.com is the United States largest "by owner" real estate website. It provides a real estate advertising and information service that charges a flat fee to property owners who advertise their property on the company’s Website. It created a business model that competed directly with traditional real estate firms, connecting buyers and sellers without the use of brokers. Property sellers devise and customize the content and format of their advertisement. ForSaleByOwner.com then charged to the owners a listing fee that is directly proportional to the length of the advertisement and the period of time it appears on its Web site. For an additional fee, property owners can have also list their properties on the MLS with a real estate agent affiliated with ForSaleByOwner.com. Interested buyers can use the service to search listed properties for free. However, ForSaleByOwner.com does not represent or negotiate on behalf of either the seller or the buyer. On its Website, a disclaimer clearly states that it is not a real estate agent and is legally prohibited from taking part in the actual sales transaction.

Instant buyer is a real estate transaction model wherein companies purchase residential properties directly from private sellers, to eventually re-sell them.

References

  1. ↑ California Civil Code Sections. 1102, 1102.2, 1102.3. State of California, Civil Codes. 2016.
  2. ↑ "Disclosures in Real Property Transactions" (PDF). Department of Real Estate. State of California. 2005. Retrieved 20 December 2017.
  3. ↑ "Real Estate Guides, For Sale By Owner". Realty Trac. April 2, 2016. Retrieved April 2, 2016.
  4. ↑ "Nationwide Search of Listings". Discover Your Perfect Home. National Association of Realtors. April 2, 2016. Retrieved April 2, 2016.
  5. ↑ "FSBO: Pros and Cons of Selling a Home Without a Real Estate Agent". Yahoo Finance. April 2, 2016. Retrieved April 2, 2016.
  6. ↑ "Home Buyer and Seller Generational Trends Report 2016". National Association of Realtors. March 9, 2016.
  7. ↑ "Highlights From the 2015 Profile of Home Buyers and Sellers". National Association of Realtors. December 2016. Retrieved April 2, 2016.
  8. ↑ "Trelora founder promises a real estate industry shake-up". Denver Post Newspaper. November 3, 2013. Retrieved April 2, 2016.
  9. ↑ Williams, Seth. "50 Websites To Post Your Real Estate Listings For FREE". REtipster.
  10. ↑ Akin, David (2004-09-25). "Conducting the ultimate yard sale". The Globe and Mail . Retrieved 2014-06-10.
  11. ↑ Kerry Gold (2009-12-12). "Do you really need a real estate agent?". MSN Money. Archived from the original on 2014-03-04. Retrieved 2014-06-10.
  12. ↑ Peter Diekmeyer (2009-11-16). "Realtors feel the heat - A Competition Bureau investigation could force changes on the real estate industry". Archived from the original on 2009-11-20. Retrieved 2009-11-17.
  13. ↑ Ian Rose (2006-11-23). "BBC News Can you beat the estate agent" . Retrieved 2009-09-06.
  14. ↑ "Buying or selling your home".
  15. ↑ "Private house sales in Sydney quickest in country". Seek Estate. 1 June 2014. Archived from the original on 2014-06-02.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.