Selling Your Colorado Home Without an Agent: For Sale By Owner (FSBO)
Are you thinking about selling your home? Have you ever wondered what the process would look like without an agent? If you even need one? Between 2014 and 2022, median housing prices in Colorado have skyrocketed 153%, far outpacing the national average. With the rising costs of homes, that also means that the cost of hiring a real estate agent have risen tremendously. Many buyers and sellers have chosen to forego the agent altogether.
What does FSBO mean and why do people take that route?
FSBO is an acronym for “for sale by owner,” and the process of working directly with the seller could save you thousands of dollars in broker fees. Often times, if you’re considering selling to a friend, family member, or business partner, then there is no need to hire someone to scout out potential buyers for you. The rise in services like Zillow and Redfin have made the FSBO process much more accessible to the general public. While having an agent can be useful, the percentage of the overall sale price that a seller is forced to pay can become more than it’s worth, so long as the seller is pointed in the right direction with competent advice.
What are my concerns if I sell my home without the help of an agent?
Your concerns in selling your home will generally be focused on the same thing with or without an agent, you want to get the best deal for your property with the least amount of hassle. The difference is the expertise you have at your disposal. First, regardless if you are the buyer or the seller, you should come to an agreement with the other party about the material concerns—the meat of the contract. This includes the purchase price, the earnest money and down payment, the buyer’s financing requirements, and any other issues such as appraisals, inspections, surveys, and contingencies. Then filling out the contract, which can be more complicated than the seemingly fill-in-the-blank nature of the Colorado Real Estate Commission (CREC) approved form. Finally, you’ll need to find the right title company.
Scheduling a one hour consultation with GLO can help ensure peace of mind while going through one of the biggest sales in a person’s life. An attorney, like GLO, can help review written offers, prepare the seller’s disclosure, and provide counsel and guidance on the complicated process of selling home. Additionally, having a preexisting relationship is helpful for any potential issues that arise during the closing processs, where time is of the essence.
If I am selling my home without an agent, why do I need a real estate attorney?
Even though you may not need an agent, you should still hire an experienced real estate attorney for three reasons: (1) a real estate attorney can ensure you get the deal you want, (2) a real estate contract is a complex legal document, and (3) hiring a real estate attorney in lieu of an agent is far less expensive than hiring a realtor.
First, a real estate agent is limited in what they can do. Real estate brokers typically charge a 3% commission on the sale price of the property. Imagine a home worth $500,000; an agent’s fee would be $15,000! In addition, other than providing some non-legal services such as finding buyers or sellers, a real estate broker can only draft a real estate contract using the CREC form. On the other hand, a real estate lawyer can help you draft the contract as well as make significant addendums or additional clauses that go beyond the CREC form. This way, your attorney can ensure you get the deal you want.
Second, a real estate contract is a complex, legal document—even if you use the CREC approved form. The CREC even states a warning at the top: “THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING”, and section 19 is entirely dedicated to the “RECOMMENDATION OF LEGAL AND TAX COUNSEL.” There are many things involved in the purchase of a home that are unfamiliar, such as title insurance, what disclosures are required by Colorado law (e.g., lead paint), property inspections, transactional paperwork, closing obligations, and negotiations.
Third, hiring a real estate attorney will save you more money in the long run—not only because they are less expensive than a broker, but they can also help you avoid liabilities down the road and walk you through the tax considerations implicated in buying a home. Without the assistance of an agent, buyers should seek help with the contract, title, and closing to ensure an effective process.
How can GLO help?
If you are planning on selling your home to a friend, family member, or another already known party, then save thousands of dollars by skipping a real estate agent and hiring GLO, a law firm with extensive experience in owners selling their homes.
If you have a high valued property that won’t last long on the market and also want to save by not paying an agent’s percentage, GLO can help prepare and review any proposed offers, and get you connected with the right title companies.
Even if you decide you want to pay for the assistance of a real estate agent, GLO can still help ensure this process goes as smoothly as possible for you. GLO can help you review the sale and purchase offer, draft a favorable contract with any necessary addendums to accommodate special circumstances or demands, and most of all, help you in the negotiation and closing of the transactions.
Please fill out an Intake Form to inquire about working with GLO.
GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients through a specific fee agreement. GLO does not guarantee any results.