For Sale By Owner (FSBO) Key Terms

Understand the key elements of selling property without an agent

By Michelle Cramer

Listing your house or commercial property as for sale by owner (FSBO) means that you are not hiring a real estate agent to help you. This keeps you from having to pay a commission when you sell your property. It also gives you the opportunity to take control of the sale, giving it the desired exposure through newspaper website listings, fliers, open houses and word of mouth.

Before you tackle FSBO, it's important to know what you're getting yourself into. While the process may save you money, it can still be a lot of work. The key elements of FSBO in this guide will help get you on your way to placing your property on the market.

Staging

Staging is the process of getting rid of the clutter and personal effects in a house or property in order to make it more appealing to the buyer. The idea is to neutralize the house so potential buyers can see their personal effects, family members or businesses within the property.
Try: The National Association of Realtors provides a field guide for staging a house, with several articles and other resources to assist you.

Disclosures

The law requires sellers to disclose any and all defects that a property may have that could cause problems for the buyer in the future. Examples of disclosures include cracks in the wall or driveway, past water damage or rodent problems, to name a few.
Try: Obtain more information on disclosures and why the law requires them on ForSaleByOwner.

Escrow

Escrow is where a third party agent holds funds to ensure that the buyer and seller complete their requirements of the purchase agreement before the release of funds. Typically the buyer provides the escrow deposit and the seller provides the escrow instructions.
Try: Access Total Real Estate Solutions for more details on the escrow process.

Purchase agreement

The purchase agreement, also known as the earnest money agreement or residential offer, is the contract between the seller and buyer regarding a property. When selling your property FSBO, it's best to hire a real estate attorney to draw up or look over the purchase agreement before you finalize the sale.
Try: Visit Martindale-Hubbell's Lawyers website for a list of everything the purchase agreement must cover.

Inspection

An inspection, done by a professional, is a thorough look at all aspects of the property's structure and systems from roof to foundation. If you request a house inspection prior to listing your property FSBO, and provide that information to any interested buyers, it attests to your trustworthiness and gives buyers peace of mind. Additionally, the buyer has the right to request an inspection of the property at any time during the contract process.
Try: Read the frequently asked questions of the American Society of Home Inspectors for a better understanding of house inspections. Money-zine describes six important items on an inspection list and what a buyer can request if there are problems.

Closing

At the closing, also known as the settlement, of an FSBO, the property officially changes ownership from the seller to the buyer. Everyone signs the final paperwork, the seller receives the purchasing funds and the buyer receives the deed and the keys to the property.
Try: The Home Buying Institute provides several articles that detail the closing process and what you can expect from it, including closing costs, which the seller my sometimes be responsible for.