What does FSBO mean?
FSBO literally means “for sale by owner”. It often refers to a property owner who elects to sell their home without the assistance of a realtor. It is also known as a FSBO sale. Websites such as Zillow and Craigslist have a large amount of FSBO listings. However, the best place to list your home if you’re a FSBO in Baltimore is the MLS. And if you have a relationship with a realtor they will list your home on the MLS for a discounted fee (Our price: $299). Listing your home on the MLS will increase your market reach. And, allow you to advertise your home to over 25,000 real estate agents and their clients.
Why would a property owner sell a home without hiring a realtor?
The short answer is money. A FSBO sale is a great way to save thousands of dollars. However, that is only if you have knowledge of the market, and have done proper research. The average real estate commission in Baltimore is 5% – 6% of the purchase price. This means if your home sold for $100,000, you could potentially save $5,000 – $6,000.
Keep in mind this is only true, if you are very knowledgeable about the market and sales. If you decide to jump into a FSBO before you have properly vetted the market, you have a great potential to fail. FSBO failures tend to fall into two different categories. The first category is the FSBO who overprices the home and won’t be able to get an offer. And the final category is a FSBO who will under price the home and leave thousands of dollars on the table. Knowledge is key. Therefore, please take the proper time to educate yourself before you attempt to become a FSBO in Baltimore.
What happens if the buyer has a real estate agent?
Even though, you don’t have a realtor, it doesn’t mean that your buyer won’t. In the event that your buyer has a realtor it is customary to offer the buyers agent 3% of the transaction or a reasonable flat fee if it’s an investment property. However, some FSBO listings do not offer a commission at all. If you elect not to pay the buyer’s agent commission, the buyer will have to pay the fee. Many times this can kill the deal. So when possible, if possible offer the buyer’s agent a commission. It will make everything a lot easier, I promise. Do everything you can to keep the deal alive. Buyers are precious and need to be protected at all cost. I mean…they only want to buy your house!
Who will handle my paperwork in a FSBO transaction in Baltimore?
In most FSBO transactions the property owner handles their own paperwork. This includes the contract of sale, federal disclosure forms, state disclosure forms, as well as, any and all addendums that are required for the sale.
Unless, you’re a realtor or married to a realtor many of these forms will be very hard to come by. In the event you can’t find these documents online or through your network, you can create your own sales contract, disclosures and addendums. However, this is NOT recommended. But, if you do decide to create your own real estate contract and forms, please have them reviewed by a real estate attorney. If they are not reviewed by an attorney, you could be leaving yourself open to hundreds of thousands of dollars of liability. Some real estate attorneys offer to handle your paperwork for a flat fee, or hourly rate. You can also hire a real estate agent to provide you with the standard state and local contracts, disclosure and addendums for a flat fee ($295).
Am I responsible for finding my own Inspectors, Appraisers, Title Companies, Lenders, and Surveyors?
Yes, you are. Remember, you are a FSBO. A simple Google search will reveal multiple licensed businesses that offer the services you seek. Jot down your top three and give them a call. Make sure this is a company you believe you can trust and would like to do business with.
If you don’t trust your list of contacts, our licensed Realtor will send you a list of Inspectors, Appraisers, Title Companies, Contractors and Surveyors who are all licensed in Maryland, and work in the Baltimore area.
What Tasks Must a FSBO Do To Sell Their House?
Everything, and when I say everything I mean everything. In a FSBO transaction, the broker is only responsible for creating the listing, scheduling open houses, and making updates to the listing. Every other task must be performed by the FSBO Whether you realize it or not, when you elect to sell your own home, you also elect to do everything that a real estate agent is trained to do. Some of those responsibilities include but are not limited to: respond to buyer leads, host open houses, schedule show tours, provide lockbox access, marketing, advertising, social media engagement, signage, escrow management, Contracts, Disclosures, Addendums, Negotiations, and Closing.
Realtors who are hired by property owners offer a bundle of services. These services include: educate seller about current local market, provide research and active/sold home comparables, help seller set a list price, advertise and market the property, list the property on the local BrightMLS, handle all buyer inquiries and show tour requests, schedule showings, host open houses, handle contracts and negotiate offers on the seller’s behalf. And lastly, managing the transaction and closing escrow.
There are also time restraints for inspections, financing, and etc. that must be considered. For instance, if a buyer receives an unsatisfactory inspection report, and has requested repairs to be completed by the seller; the seller has an allotted amount of time to respond to that request. If the seller does not respond within the allotted amount of time they could be on the hook for completing all of the requested repairs. For this reason, be vigilant and pay attention to details and deadlines.
How much does it cost to list a FSBO on the MLS?
We charge $299 to place a FSBO listing on the MLS. This can save you thousands of dollars and eliminate the need to hire a full time real estate agent. It can cost 5% – 6% in commission to hire a full time listing agent. This means if your home is purchased for $200,000, and you hire a full time realtor, it will cost you upwards of $12,000 plus closing cost. However, if you elect to list the property on the MLS, as a listing only, for sale by owner, you only have to pay $299. Excuse my French, but that’s a hell of a discount. In fact, it’s a 4000% discount in savings. To learn more about our MLS listing only price plans for FSBO’s in Baltimore, click here.
Flat fee MLS listing services usually charge anywhere from $99-$3000. Whoever you decide to choose, make sure to read the fine print. As the old adage goes, you get what you pay for. By this we mean, the cheaper the service, the more likely there will be add-on charges and limitations. Generally the add-on charges are used for, upgrading listing details, extending time period on the market, and increasing the amount of pictures.
Do I need to sign a contract if I would like to list my home on the MLS?
Yes you will be required to sign a listing contract. However the listing contract is used to protect the interest of the FSBO and the MLS listing agency. The listing contract identifies the name of the broker, the location of the brokerage, realtor name, time period on the MLS, online advertising preferences and commission (Listing Agent ($299), Buyer’s Agent (TBD).
Here are some other things a FSBO in Baltimore Is Contractually Responsible For when listing a home on the MLS:
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- Paying the Buyer’s Agent Commission (Optional, but recommended)
- Accurate and timely updates to the buyer and listing
- Disclosure requirements
- Fair Housing Laws (Federal & State)
- Release of any liability and damages (Listing Broker and Realtor)
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Keep in mind even if you don’t list your property on the MLS, you are still contractually responsible for the things mentioned above.
Paying the Buyer’s Agent
The Buyer’s agent typically makes 2.5% – 3% on any given real estate transaction. If the seller elects to pay the buyer’s agent commission all is well and this becomes one less term that needs to be negotiated. However, if the FSBO does not elect to pay the buyer’s agent commission, the buyer will be asked to pay it.
Timely Updates to the MLS
When/if your home is sold on the MLS the listing must be updated. If your home has been listed on the MLS for more than one week without any scheduled showings then your listing needs to be updated. If an offer has been accepted, the listing must be updated. You are contractually required to tell your listing agency about any updates or changes that need to be made to the listing.
Disclosure Requirements
If you know about it, and the buyer asks about it, you are legally obligated to tell them about it. By law, the seller has to disclose everything they know about a property including latent defects. Latent defects are defects in the home that are not visible to the naked eye. You are required to complete a disclosure/disclaimer form and present it to the buyer, as well as, answer any question that they may have pertaining to the condition and history of the home.
However, if you don’t know anything about the home, you can simply say “I’m not sure” or “Not to my knowledge.” So don’t feel pressured to give out an answer you don’t have. Therefore, if you are unaware of a roof leak, don’t go looking for one. Simply say “not to my knowledge” and keep it moving. On the flip side, if you know the roof is leaking and it hasn’t been replaced in 45 years, you are legally obligated to tell the buyer.
Fair Housing Laws
A FSBO in Baltimore is legally obligated by law and ethics to follow the fair housing and discrimination laws. This means you cannot discriminate on anyone on the basis of sex, race, color, religion, disability, national origin or familial status. When selling a home, it is best to have a come one, come all attitude. On the contrary, if you run afoul of fair housing laws intentionally or intentionally you could be seriously fined or possibly jailed.
Releasing Listing Broker of Liability and Damages
When a FSBO in Baltimore decides to list a home on the MLS, they have to also agree to release the listing broker and real estate agent of any liability and damage that may be forthcoming, as a result of this transaction. Essentially, the only function that the broker or real estate agent performs for a FSBO listing is listing the property. Everything else is the responsibility of the FSBO. Therefore, documentation must be signed to release the listing broker from any liability or damage that could arise if something goes wrong during the negotiations, settlement, etc. Lawsuits can also arise due to errors and omissions in the paper work, as well as, breach of contract issues.
What are the advantages of a FSBO transaction in Baltimore?
The biggest advantage is the ability to save money. The seller also has more control over how the property is marketed, advertised, toured, etc.
What are the disadvantages of a FSBO transaction in Baltimore?
Most of the FSBO complaints that you see online are due to limited marketing exposure. Most FSBO properties are not on the MLS. In Maryland, that means 25,000 real estate agents and their clients may never get a chance to see your home. Not to mention, when your home is listed on the MLS, it is also listed on the much-coveted Realtor.com, as well, as 100’s of other aggregate websites, including the popular Zillow.com.
Another disadvantage is pricing. Most FSBO’s do not know how to properly research and gauge the market. Therefore, they tend to overprice or underprice. When the home is over priced it will sit on the market with little to no offers. And, as time passes by it will become harder and harder to sell. New properties come onto the market everyday and eventually they will crowd out your home’s visibility.
When a home is underpriced you lose money. Money that could have been in your pocket had you been able to perform the proper market research. And when it comes to conducting proper research it can be a particularly hard task for a FSBO because they don’t have access to the tools and databases necessary to properly research their specific real estate market. Lastly, you will be liable if anything goes wrong. If any problem arises during this transaction, you are on the hook.
If you are a FSBO in Baltimore and would like to list your property on the MLS for $299 (click link for pricing plans details), give us a call today, or send us a short message on our contact us page.