What Should You Expect for FSBO (For Sale by Owner) Market for 2022?
Every seller has thought about conducting an FSBO (for sale by owner) transaction at some point. The idea is driven by the fact that you can save a significant amount of commission fee. Instead of relying on a real estate agent, a seller executes the sale process alone or with the help of family and friends. This is called an FSBO transaction. As tempting as it sounds, for sale by the owner is a risky decision.
If you have just entered the real estate market, you may not be familiar with the ins and outs of this industry. A small mistake, such as too high or too low asking price, or a defect in a house that goes unnoticed, can cost you legal penalties. That’s why it’s important to conduct market research before you consider an FSBO transaction. It’s best to hire FSBO attorneys for legal assistance. In the meantime, let’s see what the real estate market will look like in 2022.
FSBO Sales are Affordable
A recent report by Zillow highlighted the trends in for sale by owner transactions. Around 11% of all the real estate transactions executed in 2019 account for FSBO deals that involved no realtor or a listing agent. In fact, up to 63,000 homes in the US were sold by homeowners in September 2021 without any professional assistance. It is obvious that more and more homeowners are considering FSBO because of its affordability. Besides that, nobody knows your property better than people who have lived in it for years.
The real estate agent fee dropped to approx. five percent in 2020 from 6.1 percent in 1991. The fee is split between the buyer’s agent and the seller’s agent. So, a seller must pay the buyer’s agent whether they sell their home on their own or through a realtor. Most real estate agents charge a fee based on the property’s value. They charge a fixed percentage of the amount you earn from the sale. However, some realtors are willing to give you a discount and others charge a flat fee (which has nothing to do with your property’s value and your asking price). While you may save the agent’s commission by listing your property in the housing market on your own, chances are your house will be sold for a price lower than its market value.
Who’s Likely to Sell Homes Without a Realtor?
Only a small portion of homeowners consider listing their properties in the housing market without a realtor, but even this small percentage of FSBO transactions has a significant impact on the housing economy. Most homeowners who consider for sale by owner deals belong to the low-income group that lives in rural areas.
In 2021, 20% of homeowners in urban areas and 24% in the rural sector executed FSBO transactions. Additionally, a property listed by a real estate agent is priced 18% higher than the same property listed by a homeowner.
According to Zillow, people earning lower than $50,000 annually are highly likely to sell their properties on their own as compared to people with over a six-figure salary. The major difference between homes listed traditionally and through FSBO is the listing price. Not only in the rural sector but the FSBO homes are listed at a much lower rate than homes sold by a realtor across all markets. It includes homeowners in the metropolitan cities in the US. While FSBO transactions are used for nearly all types and sizes of homes, they are mainly popular for small houses, such as duplexes, mobile homes, townhomes, and manufactured homes.
FSBO Homes Sell for Less
Despite the growing trend of FSBO transactions, a vast majority of homeowners work with a real estate agent to close the deal efficiently. This explains why only 7% of homes were sold through FSBO transactions in 2020. There is only one thing about the FSBO sale that attracts homeowners’ attention — no agent commission. However, these transactions come with a set of risks.
As mentioned above, there is a big difference in the listing price of homes sold by an agent and homeowners. A realtor knows the market value of your property and how much you can get for your home given its condition, location, demand, and current market trends. Now that these homes are listed for lower than the agent-listed homes, they also sell faster than average homes. In fact, most of these homes are sold within 2-3 weeks of the listing.
It is either because the homeowners sell their homes to someone they know, or they keep the prices too low. If you are considering an FSBO transaction, make sure your listing price aligns with the current market trends. For instance, budget and air conditioning were the two crucial factors when buying a home in 2020.
In fact, home buyers were willing to compromise on the number of bedrooms and other features of the house for these factors. It’s important that people planning to sell their homes through FSBO transaction research the current real estate trends.
Work with FSBO Lawyers
A real estate agent knows a few things about the legal aspects of the real estate market. If you are selling your property without a realtor, working with a real estate attorney for a FSBO transaction becomes a necessity. Skilled real estate lawyers give you insights into the property laws, fair pricing, and the closing process.
They will help you draft the closing contract and go over the agreements signed between the buyer and seller to ensure everything is conducted legally. Hiring a real estate attorney is not optional if you don’t want to end up with legal penalties after closing the home deal. With an attorney by your side, you can have peace of mind knowing that they will handle all legal aspects of the FSBO transaction efficiently.
Are you planning an FSBO sale? Contact FSBO Legal Services. From listing your property in the housing market to checking the closing documents, she will handle everything.