The term For Sale By Owner, which is abbreviated as FSBO, is a real estate term which describes the setting in which a property is offered for sale directly by its owner, and without that owner having to solicit the help of a real estate broker, implying that no real estate commission is associated with the sale.
In recent years, the term has been used more widely to describe the process of marketing, buying, and selling of real property without the representation of a real estate broker.
FSBO Trends In The US And Canada
A lot of sellers who choose to sell via FSBO do so to avoid paying commissions to a broker, which is generally 6% of the selling price of the property in many areas of the US . However, commissions can range between 5% and 7% in different markets across the U.S. as well as in Canada.
According to a recent survey by the National Association of Realtors (NAR), around 12% of 2006 US real estate transactions were done via FSBO, and 13% of 2005 US real estate transactions took place via FSBO, which were down from 14% in 2004.
Some FSBOs, who are willing to pay a reduced fee, may enter into an agreement with a broker to list their property on the Realtors' local Multiple Listing Service for a flat fee. This may be one of the fastest growing segments of the real estate industry. According to the Canadian Real Estate Association, which claims that 75% to 80% of homes in Canada were sold through brokers, it would appear that "Sale by Owner" share would account for around 20% or 25% of remainder of sales.
How To Do A FSBO
Embarking on a For Sale By Owner, without representation, is not that difficult if the market is moving fast and inventory is snapped up as soon as it becomes available for sale. However, for most FSBOs, finding buyers is typically a challenge. According to the National Association of Realtors, the majority of for sale by owners end up listing with a Realtor, partly because most buyers are represented by an agent. Other reasons are because owners who sell by themselves lack the expertise to price a home to sell and fall short on marketing knowledge. In selling a home without the help of a broker, try these helpful hints:
- Pricing a home to sell is part a hunch, research and market timing. You can't always depend on an agent's assessment of value, since sometimes agents take overpriced listings just to lure your business away from the competitors.
- Hold an open house, and remember that in most areas, Saturdays are just as popular as Sundays. Also, get the services of a good photographer to shoot a virtual tour of your house, and advertise the virtual tour link in your marketing website.
- Marketing your home should be geared towards increasing traffic to your home. Avoid marketing mistakes by being flexible with showings, offering incentives to buyers and getting buyer feedback or opinion.
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