In real estate, FSBO (pronounced Fizbo) stands for a property that is “for sale by owner”. This implies that the current owners of the house don’t have a real estate agent to help them sell their house.
It is worthwhile to know that FSBO homes aren’t sold in the same manner that a real estate agent sells a home. The process is a little different for both these kind of homes. Even buyers don’t follow the traditional route to buying a home when an FSBO home is involved. There are some things that you need to know if you get in buying an FSBO home.
Why people go for FSBO
Why would you avoid the hassle of hiring a real estate agent and try to sell your house on your own? For obvious reasons, of course: you want to save your hard earned money. Sellers are the ones who bear the brunt of the commissions of the real estate agents that they hire. If their home isn’t sold for the value that they had in mind, these commissions become a heavy burden on those who just sold the home.
Although commissions differ from sale to sale in real estate, you can expect to pay anywhere from 6% onwards as commission on the home you sold if you went for a real estate agent. This is a significant chunk of your money as a house sold for A$ 600,000, would mean that the real estate agent’s commission would total A$ 36,000 at a rate of 6%, if you agreed to pay more, then this number would be higher. This amount is usually distributed between listing and buying agents (the buyer may also have an agent).
Another possible reason why homeowners may opt for an FSBO is that they anticipate that the housing market is doing pretty well and the house will practically sell on its own.
FSBO is Gaining Popularity Worldwide
If you just gasped at the figure that you’re paying the real estate agent, you’re not alone. No one likes their financial goals being impeded by anyone. You could have had plans to buy another house and save up for retirement or go for a vacation. That huge A$ 36,000 chunk is something that you could have utilized for yourself.
The vast amount of technology around us has prompted companies like buymyplace.com.au to step up to the plate and provide people a platform to buy and sell houses direct with other buyers and sellers, eliminating the middle man. FSBO houses happen only because the buyers and sellers themselves are educated and know their way around selling houses. In the US, FSBO houses account for 8% of total sales, while in France that percentage is a whopping 34%. That’s right, almost one in 3 houses are bought and sold as FSBO.
There’s more good news, you can possibly hit your price targets more consistently if you opted to sell through FSBO. Additionally, you may not even have to compromise on your prices before closing as you’ll be in direct contact with the buyer.