Bargain Property

For Sale By Owner, FSBO

For Sale By Owner, or FSBO, 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 buyer's agent may not necessarily be compensated in the transaction, or may be compensated by the buyer.

Market Share

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. MSN Money suggests that 30% of homes are sold without using a real estate agent.

More than half of the homes sold in Quebec are sold without an agent.

In the UK, the average commission rate is significantly lower than in Canada or the US. Properties for sale by owner are less common.

According to a press release by the National Association of Realtors (NAR) regarding their 2009 annual survey of real estate consumers, 2009 Profile of Home Buyers and Sellers, 11% of 2009 US real estate transactions were FSBO, down from 13% in 2008, and a previous peak of 18% in 1997. The record percentage of 20% of US real estate transactions (since tracking started in 1981) took place in 1987.

Some critics of the National Association of Realtors' report believe those statistics may be misleading and suggest that the true size of the U.S. FSBO market is closer to 22% because the report also found that flat-fee MLS now makes up 10% of transactions. They argue that 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.