Every once in a while, we get questions about how a “For Sale By Owner” (FSBO) home sale works and if we will be the buyer’s agent for a FSBO (short answer – Yes!). Like the name implies, a FSBO is a way for homeowners to sell their home without the assistance of an agent or broker agency. This allows them to avoid paying commission on the sale of the home and have more control over the process.
While the seller may have decided they can handle the details of the sale on their own, many homebuyers, especially first time homebuyers, would prefer to use a buyer’s agent for their end of the deal. After all, for most people buying a home is the largest financial investment they’ll make and they want to get it right.
Who Pays Commission on FSBO?
This is the most common question, of course. Generally, the purchase offer will ask the seller to either pay the commission directly to the agent and their broker, or apply a “credit” to the buyer so that the buyer can pay the commission. On a FSBO home, the customary commission is approximately half of the standard amount because there is only one agent involved.
Buyer’s Agent Role on FSBO?
If the buyer “finds” the house, why pay a real estate agent at all? Knowing the market and helping a buyer find the perfect property is an important part of a real estate agent’s job, but it’s actually just the tip of the iceberg.
A buyer’s agent represents your interests when things get “real” and you need to make decisions. Specifically, your agent will go through the home with you and scout for potential issues. If everything is good to go, the agent will research home prices in the area and help you settle on a good price to offer. The agent will then write the offer and present it to the homeowner, making sure you are protected in a variety of contingencies.
This part of the process also includes negotiating any counter offers with the homeowner. Price negotiations on a FSBO can be challenging since the homeowner tends to have more of an emotional investment in the home.
The buyer’s agent also handles the closing details for the buyer, making sure all legal and financial transactions are handled correctly and on time. Any missing paperwork or missed deadlines at the closing can be expensive mistakes to correct.
Will Homeowner Fully Disclose?
Legally, all sellers are required to fully disclose the condition of the property but other than that the seller is looking out for their own interests, not the buyers. For example, upcoming changes to school district boundaries can have a large impact on your decision to live in a particular area but the homeowner isn’t required to disclose something that might happen in the future, especially if it might kill the deal. A buyer’s agent can fill you in on the particulars of living in a specific city or neighborhood, current events and upcoming changes that the homeowner is under no legal obligation to share with you.
If you are buying or selling a home in the Iowa City/Coralville area or surrounding communities, let the expert real estate agents at The Johnson Team help. We’d love to hear from you.