For Sale By Owner , or FSBO (pronounced /ˈfɪzboʊ/ ), is the process of selling real estate without the representation of a real estate broker or real estate agent. Homeowners may employ the services of marketing or online listing companies or market their own property but do not pay a commission and represent themselves with the help of a lawyer throughout the sale.
Interaction with Real Estate Agents
One of the most popular reasons why homeowners choose to sell their house without the assistance of an agent is to avoid paying an agent's commission. In the US the agent's fee typically makes up 6% of the selling price of the property.
When a homeowner decides to sell their home without a real estate agent and a buyer who is not working with an agent wants to buy the home, the seller pays no commission because no real estate agents are involved.
If a buyer who is represented by an agent is interested in a FSBO home, that buyer's agent may request the owner pay him or her a commission, or finder's fee, for bringing the buyer. The seller may choose to either pay the fee or refuse. The seller is not legally obligated to pay any commission. If no agreement is in place with either the home buyer or the owner of the FSBO property, the buyers agent may not necessarily be compensated in the transaction.
Market Share
Canada
Separate reports from the Canadian Real Estate Association and CTV Consumer Reports state that between 20% and 25% of homes in Canada are sold through brokers each year. More than half of the homes sold in Quebec are sold without an agent.
UK
In the UK, the average commission rate is significantly lower than in Canada or the US. Properties for sale by owner are less common.
USA
FSBO Madison based in Madison, Wisconsin claims to be the largest FSBO in the United States with a reported 25% share of Madison home sales.
According to a press release by the National Association of Realtors (NAR) regarding their 2005 annual survey of real estate consumers, 2005 Profile of Home Buyers and Sellers :
- 12% of 2006 US real estate transactions were FSBO.
- 13% of 2005 US real estate transactions took place via FSBO (down from 14% in 2004).
- The record percentage of 20% of US real estate transactions (since tracking started in 1981) took place in 1987.
Some critics have pointed out that the National Association of Realtors report's suggestion that FSBO transactions are declining, may be misleading because NAR has also reported that flat-fee MLS now makes up 10% of transactions, and flat-fee MLS sellers are in substance FSBO sellers. Unlike traditional real estate agent clients, flat-fee sellers are not committed to paying a commission and still advertise their homes as being for sale by owner. Some critics of the report suggest that the true size of the U.S. FSBO market is closer to 22%.
References
- ^ a b CTV Consumer Alerts. "Canada AM Consumer Alert" . http://watch.ctv.ca/news/canada-am/consumer-alert/#clip161839 . Retrieved 2009-09-06 .
- ^ a b Ian Rose ( 2006-11-23 ). "BBC News Can you beat the estate agent" . http://news.bbc.co.uk/2/hi/business/6172846.stm . Retrieved 2009-09-06 .
- ^ Birger, Jon. "Feds Probe Real Estate Agents" CNN, Retrieved 2006-06-18
- ^ Adkin, David, "Conducting the ultimate yard sale", Globe and Mail (Toronto), Sept 25, 2004Retrieved 29 Jan 2008
- ^ Peter Diekmeyer (2009-11-16). "Realtors feel the heat - A Competition Bureau investigation could force changes on the real estate industry." . http://money.ca.msn.com//banking/bankrate/article.aspx?cp-documentid=22621587 . Retrieved 2009-11-17 .
- ^ Bailey, Jeff. "Owners' Web Site Gives Realtors Run for Money", New York Times , 2006-01-03. Retrieved on April 30, 2009.
- ^ National Association of Realtors, "Home Buyer & Seller Survey Shows Rising Use of Internet, Reliance on Agents", January 2006, Retrieved 19 Jun 2006
- ^ Arian Smedley, "Selling your own home in a tough market"
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