While most people hire a real estate agent to sell their home, some prefer to make the sale on their own. Private home sales are often called for-sale-by-owner, or FSBO. There are pros and cons to private home sales, and some buyers are wary of making such a large investment without the guidance of a real estate agent. However, private sales offer a chance to deal directly with the owner, among other benefits.
Benefits of Private Home Sales: for the Buyer
As the buyer of home sold by a private party, you have direct access to the owners who possess all the ready facts, information, and history about the home. By contrast, real estate agents often are unable to answer all your questions. For example, What exactly has been done to the various rooms, floors, or walls? And what might be included in the offer, as well as possible possession dates?
The owners have lived in the house and therefore have personal knowledge of the house and neighborhood. They can tell you useful details, such as which rooms get the most natural light, the average cost of utilities in winter and summer, and what kinds of people live in the neighborhood.
Finally, buyers should benefit from the cost savings of not using an agent, which is often reflected in a lower purchase price. Owners do not have an automatic reason to inflate the asking price to cover an agent’s commission.
Benefits of Private Home Sales: for the Seller
The primary reason people sell their own homes is, of course, the cost savings. Real estate commissions for a home sale typically range between 5 and 6 percent of the final purchase price. For example, the total commission for a $400,000 home is about $20,000 to $24,000.
That money comes right off the top of the seller's proceeds. The commission typically is split between the seller's agent and the buyer's agent, assuming both parties use an agent.
Another benefit to selling your own home is having complete control of the pricing, listing, advertising, and showing of the home. For sellers who have the time and motivation to actively promote their home sale, this can be an advantage over hiring an agent who may have many listings at once and therefore cannot devote the same amount of time to any single client.
Private home sales are getting easier all the time. Just as the internet has changed the face of booking travel (no one uses travel agents anymore) and want ads (thanks to Craigslist), owners selling their homes have many online resources for listing their properties and getting help with the selling process. Private sellers can list their homes on websites like Zilllow.com, and they can get location-specific information and professional help through sites like FSBO.com.
At the end of the day, all real estate transactions must be done through the buyer's and seller’s lawyers. The lawyers are therefore the key players in the actual real estate transaction, ensuring everything is done properly and that both parties are equally protected under the law.
Whether you purchase your next home privately or through an agent, just remember that you need to ensure that you feel right about your purchase, that you've completed all the necessary inspections, and that you have a good lawyer to see you through the final sale.