Calgary house with For Sale by Owner sign on lawn

Calgary For Sale by Owner (FSBO) vs. Realtor®

For Sale by Owner homes can be found in almost any market and are a often considered as a legitimate option for Sellers who wish to save money on commissions or pick up a deal. There are of course risks to selling (or buying) a For Sale by Owner property.

As a Real Estate company known for our low commissions, we totally understand the desire to save money and if after reading the following we lose a little business, that’s okay. In some cases, going it alone can be the only option. We pride ourselves on providing fair and honest information, without pressure, and let the chips fall where they may. We hope the following information will help you make an informed decision on what’s best for you.

Selling a House on Your Own

While clearly a For Sale by Owner method of selling is not what we would recommend in most cases, in some instances may be in your best interest as a last resort. One example would be if the equity in your home is not sufficient to be able to pay commissions, mortgages and the other costs involved.

A good Realtor will make sure you know, before listing your home for sale, how much money you’ll walk away with when all is said and done. If it ends up that you must sell For Sale by Owner, take care to be precise and honest when representing your home. Do not hide problems and disclose any issues that may involve significant expense to remedy.

If the Buyer is using a Realtor, understand that they will be advocating for their client not you. While they won’t help you get information to support a higher price or provide you any advice, they should at least provide you with contracts that should help the transaction close smoothly. Just be sure to read any contracts you're presented carefully and consult a lawyer who specializes in Real Estate law prior to signing it.

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Effectiveness of FSBO Marketing

To understand this, just think like a buyer. Let’s say you want a 4 level split style home, with 3 1/2 bathrooms, minimum 1200 square feet, built after 1990, with a fireplace, hardwood flooring and a walk out basement facing south. Now, go to any newspaper or For Sale by Owner website and try and find only those homes which exactly match this criteria. Chances are you’ll spend all day reading each listing, calling each owner and end up getting thoroughly frustrated. On the other hand, any Realtor can go to the MLS and produce a list of homes exactly matching the criteria in about 30 seconds.

Because it’s easier, more efficient and free, most buyers will use a Realtor. And because most Realtors never take their buyers to homes that are not listed on the MLS, the vast majority of potential buyers will never even see your house if it’s listed "For Sale by Owner". The more buyers looking at your house, the faster it will sell and the more likely it is you’ll find someone willing to pay your price and your commission expenses which are built into the price of the home.

Having a quality Realtor who charges a low commission helps.

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Buying a For Sale by Owner Property

If you have a good Realtor, For Sale by Owner homes can be purchased without concern although there may be a few inconveniences and extra costs. I would never suggest buying a For Sale by Owner property without a Realtor.

Your Realtor will ensure that you are properly protected when writing up the contracts but many FSBO Sellers are reluctant to pay commissions to your Realtor which will mean you may have to pay your Realtor’s commission directly.

The costs to you are the same. Any commission you must pay directly can just be deducted from your purchase price offered. The downside is that you’ll have to pony up that money right away as opposed to bundling it in as part of the mortgage. Some Real Estate companies, like ours, will offer Buyer Incentives which may ease that "up front" fee a bit.

Another downside is that some FSBO Sellers, without a professional to guide them, can do things that complicate and slow down the process.

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Consumer Protection and Liability

Real Estate transactions are typically in the hundreds of thousands of dollars and when people are dealing with that much money they tend to sue when things go wrong. One of the greatest benefits to using a Realtor vs. For Sale by Owner is that Realtors carry insurance to cover their mistakes.

So, for example, if you’re selling your home For Sale by Owner, and you mistakenly make an error on the square footage of the property or some other detail and subsequently get sued by the buyer for misrepresentation, you have no protection, whereas if you’re being represented by a Realtor, the Realtor would get sued and their Errors & Omissions insurance generally would cover any loss. A single mistake could end up costing you far more than a Real Estate commission.

If you attempt to sell on your own, be sure you also know enough about Real Estate law to know what you are legally obligated to disclose to the Buyer. Lack of permits for renovations, old basement leaks and similar undisclosed issues can quickly become a costly headache.

If you’ve managed to market the home and find a buyer, negotiate favorable terms, written a legally binding contract that protects your interests and tracked down a good lawyer who will work with you, you’re still not done.

Assuming the buyer is financing part of the purchase price, their mortgage company will want proof that the home is not sitting partially on someone else’s lot. Did you remember to get an updated Real Property Report and City of Calgary compliance? If you have a mortgage, did you remember to account for the penalties your mortgage company is going to hit you with when you pay it out early?

There are a number of steps in a Real Estate transaction, if done incorrectly, can complicate things, kill the deal or end up costing you big money. Be certain you know the process.

If you're not comfortable to undertake the process on your own, you should probably hire a qualified Realtor who offers a low commission.

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