FSBOs AND FSBRs

FSBOs  and  FSBRs: A Definition

FSBO and FSBR are acronyms for “For Sale By Owner” and “For Sale By Realtor,” respectively. These opportunities may be a great way to find an attractively priced home.

FSBOs

In an FSBO scenario, a homeowner chooses not to use a real estate agent to manage the sale of his or her property. The homeowner manages every aspect of the sale: marketing, sign displays, open houses, paperwork, etc. In return, the homeowner saves the commission that typically goes to the seller’s agent and to the buyer’s agent.

With FSBOs, buyers can use an agent to represent them in the process. But in this case, the buyer, not the seller, usually pays the buying agent’s three percent commission. This may add up to several thousands of dollars. If you choose not to use an agent to represent you in the process, you will have to manage all of the paperwork on your own. FSBO paperwork is readily available, but you have to be extremely diligent and careful in your research. With a purchase that can be worth hundreds of thousands of dollars, you want to make sure you cover all of the details in every contract and term sheet.

FSBOs present unique opportunities because they are usually priced a little bit below market value. Also, buyers sometimes have a little more negotiating room with an FSBO sale, as the seller is already saving thousands of dollars by foregoing the help of a real estate agent. CRN has thousands of listings of FSBO properties across the nation.

FSBRs

In an FSBR scenario, a real estate agent represents a seller in the sale of his or her home. This is the most common method of selling homes.

Selling agents receive a three percent commission on the sale of a home. Meanwhile, agents who represent a buyer also receive a three percent commission. All of the commission fees are paid by the seller out of the final purchase price.

With FSBRs, agents typically manage the negotiation and paperwork process; this is how they earn that three percent commission. You can get a lot of assistance and guidance by going the FSBR route. But, these sales can be at or above prevailing market value, as the selling agent is trying to maximize the purchase price. FSBRs can be simpler for a buyer, but they do not usually represent the same types of bargains and savings found in foreclosures and other real estate opportunities.