For Sale By Owner (FSBO)
In the hyper-competitive Bay Area real estate market, buyers and sellers are constantly looking for ways to make the transaction process more efficient. While using a real estate agent is the traditional way to buy or sell a home in California, there are many situations where completing an off-market sale, sometimes referred to as a For Sale By Owner (FSBO) transaction, may offer significant advantages. The real estate attorneys at Brewer Offord & Pedersen combine deep transactional experience with acute industry knowledge to help clients successfully complete these off-market sales, often resulting in considerable savings and faster closings.
Completing a FSBO Transaction vs. a Traditional Sale with a Licensed Broker
In a typical purchase or sale of real property in California, each side will enlist the help of a real estate agent. On the seller side, listing agents assist their clients with marketing the property, deciding on a price, selecting an offer, completing inspections, and closing escrow. Buyer’s agents help with setting up property tours, reviewing disclosures, arranging inspections and navigating their clients through the closing process. Once escrow is closed, the agents on both sides receive their commission from the proceeds of the sale. A For Sale By Owner transaction follows a similar process, but with some key differences.
FSBO Transaction Process
During an off-market transaction, the FSBO attorney will help marshal the transaction from start to finish on behalf of one party. That includes:
- drafting the purchase agreement
- opening escrow with a title company
- overseeing earnest money deposit(s)
- assisting in disclosures (preparation and/or review)
- managing contingencies and related deadlines
- drafting addenda as necessary
- coordinating the receipt of title insurance
- reviewing closing costs and title papers
- assisting with any necessary final paperwork
- reviewing deed and associated documents
Through the entire process, the FSBO attorney will spotlight potential hazards and utilize best practices to avoid common pitfalls and issues. Should any disputes or problems arise during the transaction – such as the buyer backing out, appraisal issues, disputes over contingencies, non-disclosed issues discovered, or concerns with financing – the FSBO attorney is well situated to mitigate the issues while protecting the legal interests and rights of the client. This is in large part due to the attorney’s experience in disputes that arise during transactions, something the lawyers at Brewer Offord & Pedersen have extensive experience with.
Benefits of an Attorney-Broker in FSBO Transactions
Every attorney at Brewer Offord & Pedersen that works on a FSBO transaction is also a licensed California real estate broker. Because real estate attorneys are heavily involved in real estate transactions, the California Department of Real Estate offers a streamlined way for licensed California attorneys to become brokers. Attorneys must still take the broker exam and have two years of real estate experience, but they are exempt from other prerequisite requirements.
Having an attorney who is also a real estate broker offers several advantages to the transaction:
- Understanding the legal side and the business side of real estate transactions
- Deep industry knowledge
- Strong negotiation skills
- Keen awareness of potential pitfalls and common issues
- Diligent protection of legal rights and interests throughout the process
- Substantial experience with transactions and contracts
- Ability to anticipate potential exposures to parties to the transaction
- Knowledge of ways to avoid liability and avoid or resolve disputes mid-transaction
The attorney-brokers at Brewer Offord & Pedersen have the experience and expertise required to complete For Sale By Owner transactions in an effective and efficient way.
Frequently Asked Questions about FSBO
Does the other side have to have an attorney or real estate agent?
The other party does not need to have an attorney or REALTOR® represent them, although they can if they wish. Our firm will prepare documents and communicate with the other party regarding deadlines and obligations, and guide the buyer to do what they need to do to successfully complete the transaction.
Our firm will not, under any circumstance, represent both parties.
Do you only represent sellers in FSBO transactions?
Our firm can represent either party during a FSBO transaction.
For sellers, we will prepare disclosures and examine any and all relevant reports and amendments to the purchase contract. Once the seller communicates with the buyer to determine deadlines for financing, appraisals, inspections, etc., our firm will facilitate a successful completion of the transaction.
What can an attorney do for a home buyer in a FSBO?
For buyers, our firm can write the offer (purchase contract) and advise as to the terms that may need to be included in the offer to best reflect the buyer’s interests. During the FSBO process, we will review all the disclosures and inspection reports on behalf of the buyer or seller, and provide advice and guidance throughout the closing process. It is important to communicate with the seller to determine deadlines for financing, appraisals, inspects, etc.
As part of our firm’s regular practice, we are called on to assist in disputes mid-transaction or post-transaction. As we have a keen knowledge of what can become a dispute, and lengthy experience in resolving or litigating said disputes, we have a strong sense of how to avoid such conflicts or otherwise resolve them before they become a bigger issue or the deal blows up. This can be extremely useful and a benefit one may not receive in a traditional sale.
Can your firm represent both sides in the transaction?
A purchase and sale, by its very nature, necessarily involves a conflict of interest between the buyer and seller. The seller wants to get the most money possible, and the buyer wants to pay the least money possible.
Given this conflict, our office generally will not represent both sides of a transaction to avoid any potential conflict.
What happens if the deal does not close?
Our firm charges a fee upfront before providing representation in a FSBO transaction. If the deal does not close, or falls through at any point, our firm will retain any fees accrued based on attorney time spent on the matter, and will provide a 6-month window for using our services again to exhaust the rest of the fee already paid.