Whether your business needs a new location or is ready to expand, you may find available properties that are listed as for sale by owner (FSBO). If you are in the business of flipping houses, your next prospect may be FSBO. Dealing with this type of sale often raises the question of hiring a real estate lawyer vs. real estate agent. For help growing your business's portfolio with FSBO properties, consider calling (504) 446-6506 to consult with an experienced Louisiana real estate attorney with Business Law Group.

When Property Is Listed FSBO

When a property owner takes on the responsibility of selling his or her property without contracting a broker, the property is for sale by owner (FSBO). This may be an appealing option for sellers who want to save money by avoiding commissions that would normally go to a seller's agent. The property owner may have more control over the process and may be able to maximize profits. However, there are risks involved in taking on this task without professional training. Sellers may attract fewer potential buyers, have difficulties negotiating a fair price or terms of the purchase agreement, make decisions predominantly based on emotion, and struggle to comply with legal requirements.

The process of FSBO can be complex and has unique challenges. Most sellers know they will need to advertise their property and negotiate with potential buyers. Many sellers, however, are not prepared to draft the required legal documents and perform the various tasks necessary for preparing those documents for closing. There are several important steps to ensure a successful sale, and real estate agents and real estate attorneys have the training and experience to ensure that each step is completed properly.

What Is the Role of a Real Estate Agent in a FSBO Transaction?

A real estate agent or broker has a traditional role in real estate transactions that utilizes his or her industry knowledge and network of potential buyers. Real estate agents can be valuable in attracting more qualified potential buyers and negotiating favorable terms. Sellers who choose FSBO transactions typically want to avoid paying commissions, but they may decide to work with a real estate agent in a limited capacity. One way a real estate agent may help in FSBO is to list the property on the Multiple Listing Services (MLS), which is where brokers share property information with other brokers to facilitate connections between sellers and buyers, according to the National Association of Realtors.

Another way real estate agents can help in FSBO transactions is with marketing or contract negotiation, recommending vendors, and coordinating the inspection process and closing. Contracting a real estate agent for specific services at a flat rate can allow the seller to benefit from the agent's expertise while maintaining control over the selling process. Notably, some of these duties will be performed by a buyer's agent, who will still earn a commission from the transfer of the property.

What Is the Role of a Lawyer in FSBO Transactions?

Louisiana real estate attorneys handle the legal issues that arise during the purchase and sale of real property. These lawyers play a crucial role in all real estate transactions, including for sale by owner. Real estate attorneys may perform any of the following duties:

• Review the purchase agreement for accuracy and legal compliance 

• Arrange for title insurance and ensure that closing occurs on time and according to the purchase contract

• Perform the due diligence of a title search to determine if the property has a clear title and is free of encumbrances and legally available for sale or development

• Negotiate the real estate deal by working with clients to ensure a smooth transaction

• Address zoning and land use issues that may arise during negotiations

• Offer guidance and legal representation during boundary and title disputes

• Draft documents and review contracts for closing

One reason for involving a lawyer in a FSBO transaction is to take advantage of his or her expertise in real estate law. A lawyer can help navigate complex legal requirements, such as disclosure obligations, and perform title searches and research into transfer tax requirements. This due diligence, according to the Legal Information Institute (LII), is the care taken to avoid liability. Having a lawyer at the closing table can help to ensure that the FSBO sale complies with all state and local laws and regulations.

Lawyer Fees vs. Real Estate Agent Commissions

Cost is one important factor that sellers consider when deciding to conduct a FSBO sale. Real estate agents typically earn a commission of about 6 percent of the property's sale price. According to §2781.1 of the Louisiana Revised Statutes, a broker who negotiates the conveyance of property according to the written agreement of the parties has a legal interest in the amount of commission owed. Sellers who choose to sell their own property without contracting a real estate agent typically do so to avoid paying the commission, either to benefit from a higher profit margin or to lower their asking price to encourage a quicker sale. The seller may, however, still need to pay a portion of the broker's commission to the buyer's agent.

Some real estate agencies do offer services for a flat fee based on the seller's needs. These services can be beneficial for sellers who choose the FSBO option. Real estate lawyers also generally charge flat fees for the services they offer for real estate transactions, or they may charge hourly rates. Lawyers provide the services necessary to complete the legal transfer of property from the seller to the buyer. A skilled real estate attorney with Business Law Group may be able to describe the services available for these transactions.

How To Choose a Professional for a FSBO Sale

When selecting a lawyer vs. real estate agent, choosing a professional to assist with a FSBO sale can help to ensure a smooth and successful transaction. Some factors to consider include:

• Experience and expertise: Find a real estate agent or lawyer with experience working on FSBO transactions and knowledge of local real estate laws and regulations

• Reputation and references: Read online reviews, ask for references, and reach out to trusted sources for recommendations to learn more about the selected professional

• Services offered: Evaluate the services that lawyers and real estate agents offer to determine what aligns with the needs and preferences of the purchase or sale of the property

• Cost: Compare fees that different professionals charge for similar services and consider the value of the service in relation to its cost

Contact a Louisiana Real Estate Attorney Today

When selling your business's property yourself or purchasing FSBO property to expand your business, a qualified real estate attorney may be able to help throughout the process. An attorney can provide personalized legal advice and guidance tailored to the unique circumstances of the sale. Whether you need help with drafting contracts, reviewing purchase agreements, performing a title search, or navigating complex legal requirements, a real estate attorney can help to facilitate a smooth and successful FSBO transaction. If you are questioning whether to hire a lawyer vs. real estate agent, consider contacting an experienced Louisiana real estate attorney with Business Law Group today by calling (504) 446-6506 to schedule a consultation.