Im contemplating on selling my house for sale by owner but not sure on the process it takes or the legal paperwork where would i get these documents? I have heard and read a lot of the pros and cons of doing a FSBO but still cant make up my mind. I spoke to 2 Realtors and they both brought down the fee to 5%. and possibly 4% if the seller brings the buyer. but yet that is still a lot of $$$ to pay out if I can try and do it my self?
Im in Ventura County, City of Moorpark, California.
Any advice or tips?
Thanks in advance for your input.
FSBO is not an easy task, especially if you're trying to get your price-point, and for a beginner, it may also be a challenge understanding the escrow process. Your main focus should be on pricing the property right and getting as much exposure as possible. Typically, a FSBO would market through Craigslist, yard sign, open house, FSBO website (which may require a fee), and social media platforms. I would recommend using as many of these resources as possible. One issue you may run into is getting low-ball offers. You should google "selling home FSBO vs using a Realtor®." Statistics will show that it's more likely, using an agent will get your property sold closer to the market value and sold sooner than doing FSBO. That doesn't mean it's always the case. Like I mentioned, I would research the data.
If you're going to sell FSBO, one way that I like selling a house, which doesn't require an agent, is to make flyers or door hangers for your open house. Include your list price, pictures, and property description. I would then go door to door inviting all my neighbors to my open house (about 2-3 block radius). I prefer handing out the flyers door to door as opposed to door hangers because then, as I'm handing the flyer to the neighbor and inviting them to my open house, I can mention that if they know someone, who is interested in in moving into the neighborhood, please bring them along. Best case scenario for any FSBO situation is getting an acceptable offer from a cash buyer with no contingencies because then it'll make the escrow process a lot less confusing. Once you start escrow with a buyer, who's using a loan and/or a Realtor®, then you start getting into disclosures, contingencies, appraisal, inspection, and termite reports, and making sure your buyer and the property meet the lender's guidelines, and ultimately close on time.
FSBO process in general and based on my experience:
1. Buyer and Seller sign Purchase Agreement/Contract. If it's a cash buyer, contract doesn't have to be the state template used by California Association of Realtors (CAR), although it's preferred. When selling through FSBO, I've never sold to a buyer, who was using a lender, so I'm not 100%, but I'm sure the lender would require the CAR state contract because they have to approve the loan, appraisal, inspection, termite, and title reports, which are contingencies in the contract.
2. Buyer and Seller meet at title/escrow company and submit contract, escrow instructions, and earnest money deposit (EMD), at which time escrow is opened.
3. I might be a little vague here, but from my understanding, Escrow officer pulls Preliminary Title Report to make sure there are no liens or encumbrances (unpaid taxes) that both parties are not aware of. To make sure the title is clear the seller (usually) pays for Title Insurance, guaranteeing clear title. The title/escrow company makes sure that the property cannot change possession without a clear title.
4. If buyer is coming in with a lender, then the seller has the responsibility to make sure the buyer is following through with the lender’s conditions. Most likely, the lender orders the appraisal, which the buyer pays for. The buyer arranges the inspection and pays for that too. Usually, the seller has already done a termite report and submits to buyer or lender upon request. Once the lender approves those conditions, then the buyer can remove the contingencies form escrow instructions and proceed closer to finalizing escrow. In order to close and fund, the buyer has to go through the approval process again with the lender’s underwriter to make sure nothing from the buyer’s financial standpoint has changed since the originator first approved them for the loan.
5. Closing, recording , and funding.
This may be overwhelming for you so you may want to consider the agent option. You mentioned that you spoke to a couple of agents about listing your property. I think that was a right move. One of the pros when using an agent is that your property gets more exposure to buyers through the MSL and other hubs like Realtor.com, Redfin, Trulia, and Zillow. You would not be able to do so on your own. Agents may also include a broker’s open, broker’s caravan, and other marketing techniques. They can do a market analysis report to show you comparable sales in your area, which helps determine your price-point. They’ll also be able to ensure the escrow process is moving along, that you know every disclosure you signed, and can even help you pre-approve a buyer. Also keep in mind, like any other profession, not all agents/brokers are the same. One last thing, I would not dilly dally with the commission you’d be paying out. You’ll end up losing more money trying to save on commissions. I know this is a lot to digest, but I hope it was helpful. Good luck!
If you just want help with the paperwork, contact Debbie at Town 2 Country Realty, Inc. in Ventura. She is the Broker and can set her own rates. Her # is 805-290-0828. She can do a discounted fee to help you with the paperwork, but remember that doesn't include the other services (e.g., listing the property on the MLS [you would be responsible for marketing the property], doing open houses, screening potential buyers, etc.) that you would normally get from a realtor. Most all realtors representing buyers will want to use the CARS forms which are available only to realtors. Just call Debbie... I am sure she can walk you through the options...good luck.
Thank you @Tony Morgan,
I will definitely call her tomorrow morning to speak to her in regards to the process and what her fee would be to help me out in the paperwork side of things and as for the listing and advertising part I shall take care of that via Forsalebyowner.com unless someone advices me not to? or is there a better way to get on all the major listing websites and the MLS?
FSBO is not an easy task, especially if you're trying to get your price-point, and for a beginner, it may also be a challenge understanding the escrow process. Your main focus should be on pricing the property right and getting as much exposure as possible. Typically, a FSBO would market through Craigslist, yard sign, open house, FSBO website (which may require a fee), and social media platforms. I would recommend using as many of these resources as possible. One issue you may run into is getting low-ball offers. You should google "selling home FSBO vs using a Realtor®." Statistics will show that it's more likely, using an agent will get your property sold closer to the market value and sold sooner than doing FSBO. That doesn't mean it's always the case. Like I mentioned, I would research the data.
If you're going to sell FSBO, one way that I like selling a house, which doesn't require an agent, is to make flyers or door hangers for your open house. Include your list price, pictures, and property description. I would then go door to door inviting all my neighbors to my open house (about 2-3 block radius). I prefer handing out the flyers door to door as opposed to door hangers because then, as I'm handing the flyer to the neighbor and inviting them to my open house, I can mention that if they know someone, who is interested in in moving into the neighborhood, please bring them along. Best case scenario for any FSBO situation is getting an acceptable offer from a cash buyer with no contingencies because then it'll make the escrow process a lot less confusing. Once you start escrow with a buyer, who's using a loan and/or a Realtor®, then you start getting into disclosures, contingencies, appraisal, inspection, and termite reports, and making sure your buyer and the property meet the lender's guidelines, and ultimately close on time.
FSBO process in general and based on my experience:
1. Buyer and Seller sign Purchase Agreement/Contract. If it's a cash buyer, contract doesn't have to be the state template used by California Association of Realtors (CAR), although it's preferred. When selling through FSBO, I've never sold to a buyer, who was using a lender, so I'm not 100%, but I'm sure the lender would require the CAR state contract because they have to approve the loan, appraisal, inspection, termite, and title reports, which are contingencies in the contract.
2. Buyer and Seller meet at title/escrow company and submit contract, escrow instructions, and earnest money deposit (EMD), at which time escrow is opened.
3. I might be a little vague here, but from my understanding, Escrow officer pulls Preliminary Title Report to make sure there are no liens or encumbrances (unpaid taxes) that both parties are not aware of. To make sure the title is clear the seller (usually) pays for Title Insurance, guaranteeing clear title. The title/escrow company makes sure that the property cannot change possession without a clear title.
4. If buyer is coming in with a lender, then the seller has the responsibility to make sure the buyer is following through with the lender’s conditions. Most likely, the lender orders the appraisal, which the buyer pays for. The buyer arranges the inspection and pays for that too. Usually, the seller has already done a termite report and submits to buyer or lender upon request. Once the lender approves those conditions, then the buyer can remove the contingencies form escrow instructions and proceed closer to finalizing escrow. In order to close and fund, the buyer has to go through the approval process again with the lender’s underwriter to make sure nothing from the buyer’s financial standpoint has changed since the originator first approved them for the loan.
5. Closing, recording , and funding.
This may be overwhelming for you so you may want to consider the agent option. You mentioned that you spoke to a couple of agents about listing your property. I think that was a right move. One of the pros when using an agent is that your property gets more exposure to buyers through the MSL and other hubs like Realtor.com, Redfin, Trulia, and Zillow. You would not be able to do so on your own. Agents may also include a broker’s open, broker’s caravan, and other marketing techniques. They can do a market analysis report to show you comparable sales in your area, which helps determine your price-point. They’ll also be able to ensure the escrow process is moving along, that you know every disclosure you signed, and can even help you pre-approve a buyer. Also keep in mind, like any other profession, not all agents/brokers are the same. One last thing, I would not dilly dally with the commission you’d be paying out. You’ll end up losing more money trying to save on commissions. I know this is a lot to digest, but I hope it was helpful. Good luck!
Check out Postlets.com to "list the property". If you are trying to save on commissions I would look for an investor friendly agent. You could also use a flat fee listing service.
in a very savvy real estate market like CA were the buyers are pretty sharp by and large.. when you FSBO the first thing out of their mouth will be that they want to discount the price 6% because your not using an agent.. !! so be prepped for that one. but if the market is hot enough you may be able to pull it off.
you can hire an attorney for the paper work will be cheaper than a broker most likely. and I say that as a 40 year CA RE broker... but most FSBO have a pretty tough time of it. no matter how hot the market is.
@Tim Soto
Wow cant tell you how much I truly appreciate your input in this FSBO question of mine. I have done some research on selling with adents vs FSBO and their are mixed view but for the most part they say that Realtors do not pay for them selves because they don't sell your house for more money or for 5% more than the asking price (hope I didn't offend anyone). Yet they do sell it quicker, And since I am not in a rush to sell or don't have to sell, this is why I am contemplating doing the FSBO. I have also looked at ForSaleByOwner.com and they offer a good variety of packages to chose from https://www.forsalebyowner.com/sellyourhome/packag...
They offer to put the listing on MLS, zillow,Yahoo, Trulia, etc... it even comes with listings with photos too many things to list.
The Manufacture home I currently live in is my 3rd purchase and in this one I actually took the time in reading every little document that was handed to me and the Real Estate Agent was actually impressed on how much I knew and how precise and kept everyone on track including talking to escrow / title... Well I am surely not saying I know as much as a realtor that is a fact that i don't! Plus you gave me a great list of things to look for and what it entitles to sell a FSBO. I did have the realtors pull some comps for me and they both gave me a different strategy and list price so Im still thinking about all of this.
Would it be a good Idea if I find a buyer and do an Owner Finance? to receive monthly cash flow? What are the pros and cons?
@Ryan D
I will look at that website when i get a chance.
I did actually consider lowering the price about 4% than market value to accommodate the 5% realtor fees. I can tell you that the marker is actually slowing down in my neighborhood before i posted this forum so I may just wait because to sell after all if it doesn't pick up. A few other home have been sitting and are a bit over priced in my opinion. but if i market well low enough I think I will have the leg up on the other properties because my property is a bit more updated than most of the home on the market now...
Hard days of thinking hard lay ahead of me and I want to thank every one that has posten something.
Jose Tamayo Jr.
this makes me giggle every time...
http://business.time.com/2011/08/17/fsbo-com-founder-sells-condo-using-real-estate-agent/
I won't beat a dead horse as the others have already given good advice, If you are willing to drop the price to cover a commission, why not just use the realtor? I hate seeing that commission leave my HUD as much as the next person but feel listing with an agent will net a higher sales price, sell quicker, and free you up to handle your business. I've sold home on my own and I didn't find it that difficult. However, I spent a lot of time doing it and took a while too. I don't try to negotiate commissions anymore. They have a lot of expenses and usually split with the selling agent and their broker, not leaving a lot of meat on the bone. If you find a good agent, they are well worth the 6%.
If I were to be sued or charged with a crime, I wouldn't go to court without a lawyer (unless it's traffic court). Sure it would save me money not to hire one, but some things are more important than the money I'd save by not hiring a professional.
If you fail to disclose something, or fill out an important form incorrectly, and a transaction falls through due to your negligence, you could be liable. If you have an agent, and they fill something out incorrectly, both of you could be sued. But you can turn around and sue the agent for whatever you were sued for. This system basically makes the agent your legal scapegoat. Because of this we are required to have errors and ommissions insurance, which is basically malpractice insurance for agents.
Real estate agents used to spend a lot of time finding and marketing properties. Both of those things are a lot easier to do now. So dodging red tape, and navigating the everchanging legal landscape of real estate has become the most important part of the game.
@Jose Tamayo
Ive successfully sold 2 homes with FSBO and others with a realtor. Success with it depends on lots of things but the market in that local area has a lot to do with it as does the price. If you have the time to devote to showing and marketing then try it yourself for a month or 2 if you have the time to do it. Both FSBO houses I sold very quickly and of course the house was completely redone and I priced it to sell not to get rich. I used a lawyer experienced in real estate. He provided ALL of the paperwork and helped to craft the deal in my favor :). All for 800$ total. I would have paid a realtor many thousands more. But I've also been very willing to use a realtor to sell and I always use one when one I buy. There have just been a couple of instances where I had the time and the profit point was just too close so I did it myself. Its a lot of work and a good realtor is the way to go most of the time. Don't forget to post for free on Zillow and I do believe there is a website where you can pay to post your house on the mls but sorry I haven't done that in a while so you'd have to look that up to be sure! Good luck. GS
Sales and Negiotation with the buyer needs to be a strength. Your profits can quickly dwendle if you are weak at either and do not have good representation. If you do not have a strong agent in the escrow process you will feel like your being slapped around.
Frank
@Jose Tamayo Jr
Like the poster above said if you are thinking of lowering your price by 4% in FSBO I see no reason I would not use a agent in the case.
Also you made a point that caught my attention was that the market was slowing down and that FSBO takes longer. So in a slowing market why would you not want to use a agent and sell faster.
If I am the buyer the longer the property stays on the market the higher the discount I would look for. So how many days on the market will play a role on how much you can get. Good luck.
little over the top on your doom and gloom scenario LOL... NO question E and O is important..
However in a FSBO situation and in a red hot market one can hire an attorney to do the paper work .. even at billable hours of 2 ro 3 hours to do it correctly that's only 1500 bucks or so and NOW you have the Attornies E and O which is better than an agents e and o
@Dawn Brenengen Great article, Bad news for FSBO.com because Colby Sambrotto could not do for him self what his company offers to others... Hmm Thanks again, Im now leaning towards the Realtors 5%... because of all these great comments from everyone.
@Michael Hicks good point if I am willing to droop the price already that means im willing to pay a realtor and receive more for my buck!
@Scott Reiley good way to look at it from a legal perspective Ill rather pay to have a professional / lawyer when im getting sued than represent my self.
@Gavin Srone I would like to sell to get the experience but I feel as a new investor/ wholesaler / newbie i need to learn a bit more before I can feel more comfortable. & Honestly you bring up a good point, "if I have time to show it" well I work 12 hour days and work 22 miles away from home. So I think the answer to that is "I don't"! Thanks
@Frank R. I do have some good sales background and I feel strong in that aspect, but the escrow process is my weakness as I don't know much about it.
@Radhika Miriyala Yes the market is slowing down but like I also mentioned I do not need to sell or need to move, I want to test the market but now that I see it slowing I might have missed the timing.
@Jay Hinrichs Definitely not a red hot market like it was about 1 month ago when I stumbled on bigger pockets and started to change the way I think and started to work towards my new life. This is where I began to think on the market conditions and my equity and what I could do with it if I had it ETC...
To Everyone : I a lso forgot to mentioned that I'm not completely finished with all the repairs / upgrades.
The A/C is going in Next Monday
The Windows still need to be Installed next week.
The Landscape (my fathers business) needs finish Next week after everything else is done.
So I am looking at 2 weeks before the house is even ready to consider putting it out on the market and staging it.... OMG... after reading every one of your comments I believe that I am going to wait till I finish all Repairs / Upgrades and then Put it on the Market with a realtor if the market picks up, If its slowed down I will keep my house a bit more.
Thanks again,
Jose Tamayo
@Jose Tamayo Jr Hi buddy I want to first welcome you to BP and I hope you get a lot out of this site, it's a great place to get lots of good info about REI. I would say as far as For Sale Buy Owner goes, it's not easier, but you do stand the chance of saving some money doing it on your own, but you will have to work for that money and you may need to spend some money marketing your home to get the word out enough so that you get some traffic. My neighbor is selling FSBO and he has a buyer under contract, now if it goes to closing is another story. we'll see what happens. He did put some signs up around the neighborhood and a info packet holder on his sign in front of his house so anyone can just pull up and take a information sheet. I hope this helps along with all the other info here. Best of luck, NIck
FSBO can be tough, as most (88%) buyers have an agent and that agent is typically not going to show your home unless you are offering a commission on the MLS.
We are fans of listing on the MLS for a flat fee (e.g. $100) and then using a flat fee attorney for any paperwork. IMO that is going to be your best result with the lowest costs.
In general, the big things you want to look for in a flat fee listing are:
1. The listing MUST be on the local MLS.
There are dozens of MLSs in California. Sellers want to be on the MLS that covers the area where their home is located, so they can offer a commission to LOCAL buyer agents.
2. Cost to list + changes to listing.
Can range from $100-$400 for the exact same listing on the MLS. Watch out for fine print that requires an additional fee at closing. Make sure you are able to make changes to the listing after it has been posted for a nominal fee.
3. Photos on MLS.
Make sure you can upload at least a dozen photos. Some services offer a great price, but it's only for 1 photo - which is not useful for most properties.
4. Length of Listing.
Get at least a six month listing and be sure that there is no charge for cancellation.
5. Fine print.
You should never be required to use any closing service (e.g. escrow) provided by the flat fee service agent. This is a violation of federal law.
Ultimately, we've found that the three most important things when listing a home are 1) price, 2) pro photos, and 3) offering a fair buyer agent commission on the MLS (typically 2.5%).
FSBO's will attract all kinds of low-ball offers, wasting your time. The reality is that the real estate agents control the marketplace, so you will be hurting yourself if you do not use one.
I tried it once, and it did not go well for me. I didn't get much exposure to buyers, even with lising it on several online websites. I did end up getting almost endless calls from Agents offering to list it for me. After a month or so I listed it regularly with an agent.
Another thing I tried with better success was using a flat fee listing (that one was not in CA) but I paid about $200 for the broker to place it on the MLS & put a supra box on the door. I was offering 3% to the buyers agent & ended up paying my broker a $1000 fee to handle all of the escrow paperwork. I took the pictures, made the flyers & created the remarks for the listing. It was a pretty good savings considering it was a $430,000 sale.
FSBO don't work. Not in CA, not anywhere else. only 3-5 FSBO in 100 are successful.
95.97% of all properties sell through the MLS.
So your best bet is to post it to the MLS through one of the Entry Only services (Flat Fee) and save the listing side of the commission.
@Ty Zemlok mentioned SoldBot - beware that this company advertises that they are free, but they obligate you (the seller to use a specific Escrow Company which cut them a fee for their referral ... hardly ethical in my opinion because they don't mention this anywhere in their website ... sellers are blindsided after the fact. I prefer upfront models like @Jonathan Minerick's company: HomeCoin that is truly "no strings attached" for a low fee.
Always ask for the small print upfront.
Hi all, this is Mark From SoldBot.com. I want to address Jorge Zea's incorrect information regarding SoldBot's services. SoldBot provides escrow services in CA only, which CA law allows real estate brokers to provide. We don't force anyone to use our escrow services. Forcing someone to use a settlement service is illegal in the U.S. per RESPA. If you use our free brokerage service, we ask that you use our escrow services in return for the full-service real estate brokerage experience. We also charge the same or lower fees than the average escrow company in CA. We are not taking a "cut" of an escrow fee as a referral to some other escrow service provider as Jorge claims. We are the escrow service and we do a magnificent job as our hundreds of testimonials state which are posted on our website. Instead of providing investors with the truth about our service, Jorge prefers to pump up a friend of his, HomeCoin, which provide the usual menu of many services (like ForSaleByOwner.com) that up sell a home seller for every small service like completing the purchase contract or having a full-service brokerage experience. Very "upfront" of you Jorge. As an investor, you should ask yourself, "Why should I pay for companies like Homecoin and then in addition to their fee pay for my escrow services when I can obtain all of Homecoin's services, plus a full-service broker managing my entire sale, plus completion of the purchase contract for free using SoldBot?" So get your facts straight Jorge before you post something negative about another company which is not true.
Hi all, this is Mark From SoldBot.com. I want to address Jorge Zea's incorrect information regarding SoldBot's services. SoldBot provides escrow services in CA only, which CA law allows real estate brokers to provide. We don't force anyone to use our escrow services. Forcing someone to use a settlement service is illegal in the U.S. per RESPA. If you use our free brokerage service, we ask that you use our escrow services in return for the full-service real estate brokerage experience. We also charge the same or lower fees than the average escrow company in CA. We are not taking a "cut" of an escrow fee as a referral to some other escrow service provider as Jorge claims. We are the escrow service and we do a magnificent job as our hundreds of testimonials state which are posted on our website. Instead of providing investors with the truth about our service, Jorge prefers to pump up a friend of his, HomeCoin, which provide the usual menu of many services (like ForSaleByOwner.com) that up sell a home seller for every small service like completing the purchase contract or having a full-service brokerage experience. Very "upfront" of you Jorge. As an investor, you should ask yourself, "Why should I pay for companies like Homecoin and then in addition to their fee pay for my escrow services when I can obtain all of Homecoin's services, plus a full-service broker managing my entire sale, plus completion of the purchase contract for free using SoldBot?" So get your facts straight Jorge before you post something negative about another company which is not true.
@Mark Jacob - In recent months I’ve attempted to reach out to your company through your website, via email, and the phone number that shows on your yelp page. No one ever got back to me. Not sure if your staff are overwhelmed, or you’re out of business or what. Are you able to shed any light?
My background is finance and sold my financial firm Integrity trading to Lightspeed financial that I built from the ground up in 2007.
I started www.shopprop.com, flip properties and I am a realtor licensed in 4 states. When I sell a home along with every other investor I know we list in the MLS. We also offer a commission to the agent that represents the buyer because bottom line you get the most exposure. FYI every Realtor that I know that list their own home or investment property for sale does the same thing.
As far as paying a listing fee, for clients that don't want full service we don't charge a dime to list in the MLS, not sure why this is a big deal. We have been doing it for years, but Full Service is more than simply doing paperwork when you get an offer. Selling a house and working to get top dollar is a bit more involved than that.
Calling back agents that showed the property. Probing them for an offer.
Talking to buyers about the property.
Answering agent questions, going over comps and sending them for their clients to look at.
When you do get offers working as long as it takes to get the deal done.
Work through inspection issues and other issues that pop up throughout a transaction.
The list can go on and on...
Full Service is not about just listing on the MLS and filling out some paperwork. If you as a seller believe you can do the above then list with anyone that offers Free listing in the MLS. There are plenty out there.