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Who Pays What When Selling a Home FSBO – Everything You Need to Know

For Sale by Owner (FSBO) transactions are an increasingly popular choice among buyers and sellers. For sellers, FSBO can offer more control and potentially higher profits. For buyers, the process can lead to possible discounts, as FSBO homes are typically sold for less than those represented by agents. But in a FSBO sale, who pays for what? Here’s a breakdown of the financial responsibilities that come with a FSBO sale.

A FSBO Seller’s Responsibilities

In any home sale, ‘closing costs’ are the various fees and expenses due at the closing of the real estate transaction. Traditionally, both buyers and sellers have their own set of closing costs. In a FSBO sale, without the guidance of a real estate agent, understanding and negotiating these costs becomes the responsibility of the seller.

When selling a property, several financial obligations fall on the shoulders of the seller. These costs can impact the net proceeds from the sale and understanding them is crucial for any FSBO seller. Here are some key expenses typically covered by the seller:

Title Search and Insurance. The seller is typically responsible for providing clear title to the buyer, including paying for the title search and title insurance, ensuring the property is free of liens or other encumbrances.

Property Taxes. Sellers must prorate property taxes up to the date of the sale, paying any owed taxes up until the property changes hands.

Attorney Fees. While not mandatory in all states (particularly Florida), hiring an attorney for a FSBO transaction is highly advisable. Attorney fees, in this case, would be the seller’s responsibility, ensuring legal compliance and protection throughout the sale. At Boss Law, you have access to attorneys for no additional fee.

Mortgage Payoff and Prepayment Penalties. If there’s an existing mortgage on the property, the seller must pay it off. Be mindful of any prepayment penalties that might apply.

A FSBO Buyer’s Responsibilities

For the buyer, the process of purchasing a home comes with certain costs. These expenses are typically related to securing financing, performing due diligence, and protecting their future investment. Here’s a breakdown of common expenses buyers are expected to cover:

Loan Fees. If the buyer is financing the purchase, they will have lender-related fees, including loan origination and processing fees.

Appraisal and Inspection Fees. Buyers typically pay for the property appraisal and any inspections, such as home, pest, or radon inspections.

Homeowner’s Insurance. Buyers are usually required to purchase homeowner’s insurance before closing, which is their financial responsibility.

Additional Cost Considerations

Aside from standard closing costs, there are other financial aspects to consider in a FSBO transaction. These can vary based on the specifics of the deal and local regulations. Being aware of them can help in better financial planning and negotiation.

Home Warranty. Sometimes, sellers opt to purchase a home warranty as an incentive for buyers, covering repair or replacement costs of home appliances and systems for a certain period after the sale.

Agent Commissions. In FSBO sales, if the buyer has an agent, the seller might negotiate to cover the buyer’s agent commission. This isn’t a legal obligation, but it can be a strategic move to expand the pool of potential buyers.

Transfer Taxes and Recording Fees. These costs are often split between the buyer and seller, but they can vary based on local laws and negotiation.

 

Make the Most of Your FSBO Experience With the Help of Boss Law

Every successful FSBO sale requires a keen understanding of the costs involved and the ability to negotiate terms that are favorable yet fair. The team of property law experts at Boss Law helps buyers and sellers alike understand and manage the legal and financial intricacies of FSBO sales. Contact us today at (727) 877-3188 to discuss your FSBO journey with our experienced team.

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