At Bogin, Munns & Munns, our real estate attorneys help clients who want to sell their homes through For Sale By Owner (FSBO) transactions. However, many home sellers often don’t know where to begin. While an attorney can prepare legal documents and make sure the transaction runs smoothly, homeowners are still responsible for preparing their homes for sale and marketing their listed property.
This guide serves to show you the basics and key information you need to know if you want to sell a house For Sale By Owner and avoid dealing with a real estate agent.
What does “For Sale By Owner” Mean?
FSBO transactions are an option for homeowners to sell their homes without involving a real estate agent, which can help save costs through the sale. For example, sellers don’t have to pay a listing commission if they don’t sell their homes through an agent.
Still, the flip side of the trade means homeowners have to organize the transaction, marketing, and home’s preparation on their own.
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The Pros of FSBO Transactions
Some of the advantages of FSBO transactions include:
You Won’t Have to Pay a Real Estate Agent a Listing Commission
If you don’t hire a real estate agent to organize a sale for your home, then you won’t have to pay their commission. In Florida, the average real estate commission can range between five and six percent of a home’s listing price. You’ll still have to pay the buyer’s agent commission, but you would save half the cost in listing commission fees.
You Can Sell Directly to Your Friends, Family, or Specific Buyers
If you already have a specific buyer in mind, an FSBO transaction can be an effective, direct method for selling a home. Here, you can skip listing your home on the public market, hosting an open house, and advertising the home to potential buyers.
The Cons of FSBO Transactions
Some disadvantages of FSCO transactions include:
The House Selling Process Can Be Long
When you forgo hiring a professional real estate agent to manage the home selling process, it is up to you to facilitate the FSBO transaction.
This means you have to repair your home, pass inspections, stage your home for photos, and do several other steps before any prospective buyers come forward. If you’re in a rush to sell, you might want an agent.
You Might Undervalue Your Home if You don’t Know It’s Worth
Real estate agents get appraisals on their client’s homes and then do a comparative market analysis (CMA) to reach value estimates for the properties. This way, you won’t list and sell your home for less than it’s worth.
Also, on top of calculating your property’s market value, you also have to consider how much mortgage you owe if you are still making payments. Failure to do appropriate research on your home’s value can cut into your sales profits.
How to Know if You Should Sell Your House Without a Realtor
Not sure if organizing an FSBO transaction is right for you? Here are some signs that indicate whether you should sell your house without a realtor:
- You don’t want to list your home in the public market because you already have a potential buyer in mind.
- If you don’t have a buyer in mind, you’re willing to take the time you need to sell your home properly. No rushing for you.
- You would like to save as much money as possible in the home-selling process, which includes avoiding the realtor commission.
- You have experience with selling a home, so you are familiar with what the process requires you to do.
- You want to take advantage of the seller’s market while it’s hot, especially if you live in an area that’s in high demand with few properties available.
Alternatively, you can work with a discount broker or a flat-rate multiple listing service MLS company. This allows you to skip hiring a realtor while still having a third party organize some aspects of the sales process for you.
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How does FSBO Work?
For an FSBO transaction to be legitimate, homeowners must abide by Floridian real estate laws before they can facilitate the closing process. Some key costs and information to factor in before initiating the closing process include:
The Title and Survey
When drafting a contractual agreement for the buyer, you must determine which party is responsible for getting title insurance, how long the discovery period for issues within the house can be, and how long a buyer has to notify you about their final decision.
Home Sales Costs
Some major costs you may be held responsible for covering during the home selling process include:
- Title insurance
- The buyer’s agent commission
- Your real estate attorney’s fees
- Governmental fees (e.g., recording fees)
- Title or survey defect resolution costs
- Non-governmental fees
You may want to consider these costs when setting a sales price for your home.
Duty to Disclose
In Florida, homeowners have an affirmative duty to inform prospective buyers about any potential hazards or defects related to the property, as this can affect the sale’s potential.
You may be obligated to disclose the property’s tax summary, coastal protection regulations, the potential for erosion in the future, radon gas risks, and lead-related risks.
Mineral and Water Rights
Per Florida Statutes § 704.05, whoever retains the mineral rights of the property has the right of entry, meaning they have the right to mine the subsurface of the property. Prospective buyers are not always guaranteed mineral rights through a home sale, so you should disclose whether they or another party retains these rights in the contractual agreement.
Negotiation During the Closing Process
As you navigate the closing process, you will be able to negotiate the transaction. However, this might extend the closing process if both parties find it difficult to reach an agreement on the sales price.
You Can Hire a Title Company to Facilitate the Closing Process
Many people who decide on going through with an FSBO transaction opt to hire a title company to fulfill the transaction and a real estate attorney to protect them during the process.
Title companies can organize communications during the closing process and finalize the deal. The company will collect payment for any costs during the sales process and submit paperwork to validate the FSBO deal.
Who Draws Up a Contract in an FSBO Transaction?
Many FSBO transactions use one of the following template forms from Florida Realtors to finalize the deal:
However, if you have additional terms to include in the contractual agreement, you can hire a real estate attorney to draft a contract that describes these points. You can then send this draft to the buyer to negotiate terms, then finalize the sale.
How to List a House For Sale By Owner
Listing a house for sale involves a few steps, but they can take some time, depending on where you are in the home selling process. To list your home for sale, make sure to:
- Have a licensed appraiser visit your home for its evaluation:Having a licensed appraiser evaluate your home will ensure you do not undervalue its property value. You can also get a legal document to verify your home’s appraisal, which may help you during negotiations. Home appraisals in Florida can range between $300 and $380.
- Purchase a flat-fee MLS package: Listing your home on a multiple listing service allows you to market your home on several platforms, which can be cost-effective if your budget for advertising your home is small or even non-existent. This allows multiple buyers from different markets to be aware of your home’s listing without much work on your end. However, if you want to target a specific market, you may need to target those buyers with specific ads.
- List your home on online home listing websites: Some home listing websites, like Zillow or OpenDoor, allow homeowners to list their property on their company websites for free or a nominal fee. These platforms are usually social media-friendly, which can boost word-of-mouth advertising for your property.
How To Sell a House FSBO
Before you worry about the closing process, you must first make sure your home is ready to be sold in the first place or make it clear that the property is to be sold “as is.”
Below is a brief checklist of the important steps you should take to sell your house:
- Inspect your home and make appropriate repairs: Whether you need to do a deep clean of the property or repair foundational elements, you may need to perform repairs to get a good price on the property. Otherwise, you must disclose which repairs need to be done to potential buyers.
- Stage your home and market it on social media: While taking photos of each room with your cellphone will be enough for some buyers, having a professional photographer come in and stage your home can make the place look more marketable. Higher quality photos can bring higher-paying clients, which may raise your home’s potential sales price.
- List your home: You can opt to list your property through an MLS company or on online listing platforms, such as Zillow. There is often a fee to list your home for sale.
- Manage open house or private showings for the property: Without a real estate agent, you will have to organize when prospective buyers can come to the property to look at it. You can set up a calendar for private showings or post open house dates on the website(s) you listed the home on.
- Consider hiring a real estate attorney to prepare paperwork: As you come closer to selecting a buyer, you can hire an attorney to begin drafting legal paperwork on your behalf and review other important documents, such as the house deed, affidavit of title, property tax forms, and agreements.
- Accept a buyer’s offer for your property: Finally, after fulfilling all of the above steps, you can review bids for your home and select a buyer’s offer to fulfill the transaction. Your lawyer or the title company can guide you from this point.
How a Real Estate Attorney Can Help an FSBO Transaction
If you want to go forward with an FSBO transaction, a real estate lawyer from Bogin, Munns & Munns can protect your closing deal by reviewing legal documents and advocating for your rights as a seller. In fact, real estate attorneys can bring you comfort during a deal, especially if this is your first time selling a home through an FSBO deal.
At Bogin, Munns & Munns, our attorneys provide several services to our clients to streamline the home selling process. These services include:
- Preparing contractual agreements between the home seller and buyer
- Managing signatures and transaction payments
- Managing the financing of the FSBO sale
- Handling “quiet” titles, which occurs when a claimant challenges the owner’s claim to the property title
- Handling issues with the property’s prior deeds, such as errors in public records, forged deeds, and missing heirs to the property
- Managing any challenged or unknown liens related to the property
- Providing legal guidance about the FSBO transaction, which you may not be able to receive from the title company (e.g., what terms mean in a non-standard closing contract)
Our team will review and explain each document so that you understand its wording and can accept a deal with peace of mind. The home selling process can be overwhelming and convoluted, but our goal is to ensure you protect your assets throughout the sale.
Can I Hire a Real Estate Attorney to Help with FSBO?
Yes. It can also be more cost-effective to hire a real estate attorney for your FSBO transaction, as our closing fees are less than realtor fees in Florida.
Should You Hire a Real Estate Lawyer to Buy a House in an FSBO Transaction?
Can homebuyers also hire a real estate lawyer to protect themselves during an FSBO transaction? Yes! While the home seller is often the person who facilitates where the closing process takes place (usually through a title company), homebuyers sometimes take this responsibility. In these cases, they can hire a lawyer to explain aspects of the FSBO sale that they wouldn’t receive from the title company.
Other reasons why buyers might hire legal representation include:
- The home seller is asking way too much money for their home, as in way above what the market value calls for.
- The buyer may be having difficulty getting the seller to perform repairs or cover closing costs before the transaction is finalized.
- The seller remains vague about home disclosures, making the buyer uncomfortable with purchasing the property.
- The buyer would like to have a lawyer draft a contractual agreement or negotiate terms in the seller’s contract.
Looking for an FSBO Lawyer in Florida? Call Bogin, Munns & Munns
If you are trying to organize a For Sale By Owner transaction with a buyer in Florida, you can hire a real estate attorney from Bogin, Munns & Munns. FSBO transactions can be confusing for most first-time home sellers, so working with an attorney can help ensure that you fulfill the legal requirements to sell your house in Florida without any issues.
Call us today to learn more.