Editor’s note: This article was updated April 12th, 2020 to have the freshest, most relevant Florida FSBO information.
If you’re going to sell your house on your own in the Sunshine State, you’ll need to be prepared before you get the buyer on board.
Florida, like every state, has unique laws when it comes to selling a house, and you’ll need to be familiar with them if you are selling by owner.
In fact, being prepared will make it much more likely you’ll secure the buyer, because the more knowledgeable you are, the more comfortable a buyer will in dealing with a for sale by owner property.
I went out and interviewed real estate lawyers / title company experts throughout the state of Florida, and asked them what FSBO sellers in the state should be looking out for when it comes to selling their home without agent representation.
Below I have videos embedded of these interviews along with written transcripts of some of the highlights of each discussion.
Warning: This is going to be a dense guide. If you’re short on time, be sure to bookmark the page or save the link so you can reference it as you go.
Also, I am not a lawyer and none of this can be construed as legal advice.
Please reach out to one of the lawyers or title experts I interviewed if you have a legal question.
To make this a comprehensive guide, I’ve compiled answers to the most common questions I hear about selling FSBO in Florida.
- What are the Pros and Cons of selling a house FSBO in Florida?
- What paperwork and contracts are needed?
- What’s the cost of selling a home FSBO in Florida?
- What’s the cost of selling your home without a Florida agent?
- Florida real estate taxes
- Interviews with the Florida home selling experts
Should you sell your house For Sale By Owner (FSBO) in Florida?
Selling your house is a big decision, and selling it For Sale By Owner is an even bigger commitment. It’s important to understand what FSBO is, what the pros and cons are, and what the paperwork required is before you think about embarking on the For Sale By Owner journey!
What is FSBO?
The first step to selling your house “For Sale By Owner,” often shortened to FSBO, is understanding what it means. FSBO is selling your house without the help of a real estate agent. Instead of having a real estate agent to help you with listing, arranging showings, and smoothing bumps; homeowners that choose to list FSBO can expect to do the pricing, showing, and negotiating by themselves.
What are the Pros and Cons of selling a house FSBO in Florida?
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Although FSBO might seem like a great (or terrible) idea right off the bat, it’s important to understand what selling your house without a real estate agent is really like. Here are some pros and cons to selling a house FSBO.
The Bottom Line: Selling a house for Sale By Owner is the right fit if you’re comfortable negotiating, skilled with paperwork, and would rather trade selling speed and market prices for having control of the process
What are the paperwork and contracts needed to sell a house FSBO in Florida?
If you’ve decided FSBO is right for you, it’s important to understand the paperwork and contracts needed to sell your house in Florida.
Unfortunately, this is where most people run into trouble. According to Florida Real Estate Lawyer Anthony Suarez (who has a full interview below), only 50% of FSBO deals end up closing, compared to 95% of deals involving real estate agents.
Even worse, you may wind up in situations where you prepare your documents incorrectly, and end up facing legal or financial issues. According to Florida Tile Expert Michael Bluem (interviewed below), this is sadly common in Florida. He sees many homeowners enter into improper contracts and end up with clouded titles.
This is not something you want!
Instead, make sure that you protect yourself. Using an FR (Florida real estate agents) form or FR/BAR (Florida real estate agents/Florida Bar) “AS IS” residential contract to sell your house FSBO is the best way to make sure that you don’t end up in trouble. These forms are both developed and used by industry experts to ensure the least chance of litigation, and therefore the best choice in real estate contract forms in Florida.
Whatever contract you use, remember that Florida is a “Duty to Disclose” state, which means that you must disclose known defects of the property. You might also want to consider consulting with a real estate lawyer before using these forms, in case rules have changed and to ensure they’re filled out correctly.
Whatever contract your use, make sure it includes information on:
- Price
- Personal Property
- Financing Contingency
- Closing Date
- Inspection
- Title and Survey
- Riders
The Bottom Line: Unless you are absolutely confident that you can correctly use and negotiate a contract, consider listing your home with the help of a real estate agent. It’s better to be safe than sorry when it comes to dealing with what is likely your biggest asset. We’ve partnered with the folks at Clever Real Estate to offer full-service, discount agents that will sell your house for a flat fee of $3000 or 1% of your home’s value.
Don’t Want to Sell Your Home By Yourself?
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What is the cost of selling a home FSBO in Florida?
For many people, FSBO is appealing because it allows them to not pay the real estate agent commission, which in Florida averages $13,394! However commission fees are not the only price you’ll pay in selling a house.
If you sell your home for Florida’s average price of $243,520, expect to pay about $32,877 in selling costs. From sale prep to real estate agent commission to closing costs, selling a house is not cheap!
The biggest expenses you’ll run into selling a house in Florida are:
- Lien Search: This process checks to see if there is any debt against the home. This debt could be as normal as a mortgage or something unexpected like unpaid child support. Either way, liens need to be investigated and paid in full when a home sells.
- Property Taxes: In Florida, sellers must pay property taxes for the amount of time they lived in the home that year so that buyers aren’t left with taxes on a home they don’t occupy.
- Buyers Closing Costs: Many times, sellers will pay their buyers closing costs in exchange for a larger offer or expedited sale. This is more common than it once was, but not a given.
- Warranty Fees: In order to offer buyers a piece of mind, many sellers choose to warranty their home for the first year after sale to ensure buyers are confident about their home’s condition.
- Pest Inspections: Buyers want to know a home is pest free, but may choose to pass on a home rather than pay to get every house they are interested in inspected. To combat this, many sellers pay to show buyers that their homes are pest free.
- Title and Escrow Charges: Escrow providers charge a portion of the sale price to manage the home transfer process. Closing costs are not just for buyers!
In addition, Florida has special costs associated with selling a home, like the Documentary Stamp Tax. This tax varies by county, but expect to pay around $2,000 on a $300,000 house sale.
While costs won’t be the same for everyone, keep in mind that things like staging your house properly, which costs money up front, often pay for themselves in increased sales price. This is where a real estate agent can come in handy. Partnering with someone who understands the housing market allows you to get insider advice on what is worth it, and what isn’t.
Don’t forget, all these costs assume that you have already paid off your mortgage! All outstanding loan balance is due at closing.
What is the cost of selling your home without a real estate agent in Florida?
Since selling a home is so expensive, selling a house For Sale By Owner might seem like the best way to save money. To many people, giving someone 6% for what seems like an easy job doesn’t make sense. But many forget that there are additional costs that occur when you sell your home without a real estate agent.
You will still need to pay all the same taxes, fees and inspections that you would if you had a real estate agent, but you’ll also be responsible for the costs of:
- Advertising your property
- Holding open houses
- Listing on the MLS
- Closing attorney fees
You usually won’t need to worry about these additional expenses when you sell your house through a real estate agent (assuming they offer full service).
Adding to these physical costs, there are less tangible costs associated with selling a house FSBO. When you are comparing the cost of using a real estate agent versus the cost of selling FSBO don’t forget to include the cost of your time spent advertising, showing, and negotiating the sale. Remember, FSBO homes are on the market for longer and sell for less than those managed by a real estate agent.
In addition, since we know that FSBO homes sell for less than homes represented by a real estate agent, sellers looking to sell their own homes must take this loss into consideration. According to NAR, homes that sell FSBO go for 16% less than agent-sold homes – that means you could end up losing $48,000 on a $300,000 sale!
The Bottom Line: There are many costs associated with selling a home, whether you use a real estate agent or not. However, not all real estate agents cost the same, and finding a service to match you with a full-service real estate agent for less might save you money in the long run.
A brief note about the taxes involved with selling a home in Florida…
When you are selling your home, it’s easy to overlook the taxes involved. Make sure you plan ahead and know to expect these taxes when you sell your home.
Property Tax: When you sell your home in Florida, expect to pay a portion of your yearly property tax. The exact amount you will pay will be prorated depending on when you move out, but it’s important not to forget about this tax.
Capital Gains Tax: In addition, expect to pay capital gains tax on the amount your home has appreciated since you’ve purchased it. But, you can avoid paying capital gains tax if the house you are selling is your primary residence and meets a few other criteria.
Federal Tax on Rental Income: If you are selling a house that has been a rental property, getting out of capital gains tax can be difficult. However, there are two things that can work in your favor: a 1031 Exchange and rental property depreciation tax deductions. At its most basic level, a 1031 Exchange allows you to use the proceeds from one rental property to buy a similar investment property and avoid capital gains tax. Rental Depreciation Property Tax allows you to deduct home depreciation from your taxes. If you are selling your rental property in Florida, you should absolutely learn more about how to avoid paying taxes on your rental property. Overall, if you’re looking to save money on selling your home, but don’t want to deal with the hassle of going FSBO, choose to use a flat-fee real estate agent like Clever. A service like this matches you with a licensed and experienced real estate agent who markets your home for only a fraction of the price. With a flat-fee agent you can get all the benefits of listing with a real estate agent, without paying the high commission typically charged.
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Interview With Real Estate Experts
FSBO Tips and Stories from Title Expert Yvette Betancourt
Yvette is a title company pro at The Closing Company in Miami Florida. It was awesome to get Yvette on a video chat. She has so much to share with all of her experiences with FSBO sellers and the challenges they typically face.
Enjoy a bit of the video transcription below:
Q: What was your introduction into the real estate business? How did you get started?
Yvette:
I sold my first business around 31 years old and I took off a year and then I decided I would try my hand in realtor. So I got my real estate license and I started practicing. I Wasn’t, wasn’t really into it, I can’t say I really enjoyed it.
I found that I liked real estate in general, but I did like the whole going out and listing properties and taking buyers out and that whole thing.
I thought it was kind of mundane and, but over the course of my two years, I learned about closings and the title process and that was way more interesting and exciting.
One day I glanced at a time, what they call a title commitment, which is the foundation of our work, which is the roadmap to a closing. I kind of looked at it, I was like, well, I think I know what that means. I think I know what that means. And I was like, wow, this looks really fun. Like this looks like kind of a challenge. And um, I decided, actually I woke up one day, decided to go get my title license without any experience. And then I was very fortunate to end up end up partnering with My. What was that? Well, what still is my ex husband who was an attorney and with starting a title company, we saw an opportunity, we both thought that we would love to work with. We love transaction work and that was now, Gosh, be 14, 15 years, 14 years now.
Yvette: [03:24] One day I glanced at a what they call a title commitment, which is the foundation of our work, which is the roadmap to a closing. I kind of looked at it, I was like, well, I think I know what that means. And I was like, wow, this looks really fun. Like this looks like kind of a challenge. And I decided, actually I woke up one day, decided to go get my title license without any experience. And then I was very fortunate to end up end up partnering with my ex husband who was an attorney and with starting a title company, we saw an opportunity, we both thought that we would love to work with.
We love transaction work and that was now, Gosh, be 14, 15 years, 14 years now.
Ryan: [05:27] Okay. So that’s an interesting path to that. So I guess jumping right into the, the issues that for sale by owner people face. From your experience, are you seeing people who are coming to you with a lot of knowledge or are you seeing people come to you pretty much with no knowledge and need a lot of guidance?
Yvette: [05:49] Well, for certain, there’s been a very large increase in for sale by owner transactions when we began in this, there was very few, I would say like just before we spoke, I had my probably second call of the day from a for sale by owner.
I think the reason for this is pretty clear. It’s that now they have avenues to promote their properties on zillow and hundreds of other websites and, you know, saving six percent is a pretty honorable goal. Like that makes a lot of sense. So between the ability to market the properties worldwide themselves on Zillow or I can’t even name half the sites, you know, but they’re able now to reach the world and buyers in a way that they could never do it before.
It’s a natural evolution of technology that they’re now interested in saving six percent. I think this is going to greatly impact the future of the relationship with realtors by the way.
Yvette: [06:42] Generally I find we’ve had, we’ve worked with hundreds, if not, I can’t even imagine how many, definitely hundreds of for sale by owners.
We charge more for them because they’re far more problematic, far more problematic. We’re actually thinking about raising the pros again because what ends up happening on, for sale by owners, they have great intentions and by all means they should try to market their properties, but they’re generally unprepared for what they’re about to do.
Every now and then we’ll stumble. I’ll actually, I’ll tell you out of the gate, the ones that are successful that are generally smooth transactions is when they have a tenant occupying the property for many years and the landlord is interested in selling and they strike a quick deal.
Yvette: [07:39] There are challenges that are worth getting over because they’re going to save tens of thousands of dollars, but they need to really think about this in advance.
Number one from a philosophical standpoint, they’re really unprepared to aggressively market the property the way a realtor would and the time and the lack of bonafide offers is very frustrating for them [which would normally be filtered out].
Yvette: [09:40] Only half the deals for FSBO’s are going to work out because of improper vetting of the buyer and of the deal in general.
This is versus a normal realtor deal which is like almost 95 percent of them close and it’s because it’s something that realtors do every single day.
Yvette: [10:37] They’ve usually over-thought their price and they’ve usually overstated it.
They may not have actually researched the market and then when they get an offer that may be realistic, they’re like kind of insulted.
Comment from Ryan: At this part in the interview, Yvette mentions that some FSBOs will heavily lean on them (or try to) for deal support, like asking them to call back a buyer and tell them they won’t accept their terms or offer. This is obviously not really the title company’s job.
So some FSBOs find themselves not actually comfortable dealing with buyers directly (they don’t like confrontation etc.).
Know yourself, if that’s you, you should hire a buffer (and the title person isn’t one).
Yvette: [13:07] Every contract has like eight things that a seller needs to look at, you know, Oh, who’s my buyer, what’s his credit worthiness? When does he want to close? How long does he need for financing?
Key Takeaways: Qualify your buyer and be prepared to handle roadblocks and things that come up during inspection, appraisal, etc.
A FSBO Nightmare Story from Yvette:
Yvette: [18:43] This is a good nightmare story. The buyer moved in rent free back in December into a for sale by owner because during our process we discovered open permits for a roof. So they weren’t just open permits. The roof was never tied down to the house, which in Florida is a violation building code.
The owner did his own roof but it wasn’t tied down properly.
So, uh, the seller against our advice, let the buyer move in and we told the buyer not to move in also, but she moved in any way.
This is a million dollar purchase,a large transaction. And there were. So now our buyer is living there. Six months rent free, but she doesn’t own the house. The seller is slowly working his way toward resolution and the open permit, we think we’re not really sure.
She [the buyer] has gone through three rate increases in interest rates [while waiting for the permits to close living in a house she doesn’t even own].
Yvette: [20:09] We have a lot of those. We have quite a few people have gotten themselves into that [similar situation].
The FSBO Micromanager–an unexpected challenge brought up by Yvette (20% of all FSBOs):
Yvette: [22:56] Another problem is some of them are over prepared and then they start to micromanage the whole transaction and micromanage everybody in it and then they will come to me with their own title search,
So you don’t need to do it. I already do. I already did it.
Just like, well I’m sorry I can’t accept yours. You’re not certified to do this. And you know, it’s all there. They have good intentions, but they’re trying to micromanage the entire transaction and don’t really know how to do that.
If you want to contact Yvette with title work help
The Closing Company
Email: yvette@theclosingcompany.net
Phone number: 305-271-0100
Title Expert Michael Bluem Shares His Insights On Why FSBOs Should Be Wary of Investors
Michael arrived in the real estate business after he saw the crash coming before 2008. He saw the title business as a way of diversifying his income sources to prepare for the downturn (super smart).
Michael spent most of his growing up around the real estate business and after the crash he made it a point to start utilizing his skills and become a real estate investor.
Michael looks at the FSBO situations that he sees through the lens of an investor, and some of the what he sees is not pretty.
Below are the relevant parts of the transcript for easy reading. Enjoy!
Q: How did you get started in the business?
Michael: [02:02] My mother was in real estate, so my entire time growing up I’d been around real estate from her managing different properties to, uh, helping friends and family, a transfer houses, you know, move to different states and so on and so forth.
I picked up on title about seven years ago when the market crashed. I had a, a friend’s family that went to a local title company and I got on board with them. I was a mortgage broker at the time and I had seen kind of the crash coming.
So I went in, I wanted to kind of separate myself and diversify with an additional stream of income. So I went into the title side. I really wanted to be an investor, but it was kind of, I could kill two birds with one stone and sell the title insurance alongside of learning how to invest in real estate myself.
Michael on what’s possible (both good and bad) with going FSBO
Michael: [05:11] So it’s possible in today’s Day and age to use the Internet to get the eyeballs that even realtors in most cases would get. Everything has passed that point as far as what to lift the pro to make sure that you’re competitive in the market.
It is how to stage and show the property. There is the types of contracts to use.
I see a lot of investors out there using a one page contract that leans heavily towards the investor. It puts a homeowner at a significant disadvantage once they sign these contracts and homeowners don’t really know.
They don’t know what a FARBAR as his contract is. They see real estate contract. It’s the price that I want, oh, we’re putting a deposit down and that’s really all that they care about.
Michael: [06:03] But when the transaction doesn’t go smooth, it’s all the additional terms in the contract that really helps separate what’s going on with that transaction. And that’s really where homeowners get caught up and you can find yourself in legal limbo with an unscrupulous investor kind of holding leverage on you of not being able to get out of the contract. I’ve seen it over and over again.
Michael: [07:42] Investors chase them because they’re just uneducated as a general statement in the market. You know when you leave your nine to five job and you come home, you show your house to somebody and sign a contract without actually having any market experience. There’s always increasing the chance that something can go wrong with your transaction. But I think investors more so are trolling these uneducated people and are putting documents in front of them that these people don’t necessarily understand the ramifications of it as far as listings and realtors.
This is the part where Michael breaks down the real danger of these shoddy contracts
Michael: [13:57] I get a lot of investor closings. I focus on investor closings here in south Florida market. It is rampit out here that investors will have homeowners sign real estate contracts, one page contracts that heavily favor of the investor.
If the investor doesn’t like the numbers, they can’t flip the property and they recorded copy of the contract and the public records.
What that does is that clouds the homeowners title and you know, the investor, the investor disappears and the homeowner continues on trying to find a buyer. They find a buyer, they go to closing and they realize they have cloud on their title.
At that point the title company has to call the investor. They need a release of that. So it’s a, it’s basically a lien on the property. So you have to basically call that an investor that walked away from your deal and you go, I need you to release this.
[14:49] An investor could walk away with 15, $20,000 solely for releasing their previous contract that they didn’t close on because there is no other option. The other side of that is the only way to get that clouded title off is by going out and suing the investor. So it’s a problem that a lot of homeowners, especially here in south Florida since flipping is so hot, it doesn’t really take any educational background to get into real estate investing. A lot of people teach this as an actual business strategy of: cloud the title, when they find another buyer, they’re going to need you to release and you tell them you want five, 10, $20,000 for releasing.
I see it day in and day out. That investors that walk away from a deal a year ago are now saying they want money in order to release their cloud and you know, it’s really holding homeowners feet to the fire.
Below Michael explains how the standard Florida contract realtors use wouldn’t allow this clouded title issue:
Michael: [16:50] This is one of the basic differences when you work with a realtor, they know to use the approved contract in the approved Florida far bar contract specifically states that they cannot file a notice in the public records regarding that document. But when you switched to a one page and it doesn’t have anything disallowing the investor to do that, then they are free to do that.
Michael concludes by pointing out that education is key for FSBOs to avoid trouble
[22:13] Education is really the biggest thing. Over here at Title Now we do our best. I mean we put on educational events for realtors all the time about the ins and outs of the contract. Uh, you know, if you are buying a home and you know, you want to get more education, feel free to come. You’re able to sit in one of our contract to closing classes with all the other realtors that we teach on a monthly basis, free of charge. We provide lunch. So it’s definitely something that the resources are out there in order to help you protect yourself in order to educate yourself. There’s really no excuse for that. If you are taking on somebody else’s job, you need to be educated on what that job actually is.
So I understand the allure of saving 10 grand, 20 grand, whatever the case may be by selling yourself, but you need to have the knowledge behind there to really do you do yourself justice because it’s one thing to save the money, but if you are just going to give it back by being uneducated and taking the wrong steps through the process, you’re just shooting yourself in the foot, you’re not really saving anything.
If you want to contact Michael to attend his classes or get title help:
Title Now Florida
Email: Michael@titlenowfl.com
Phone: (954) 947-2040
Lawyer Richard Weinstein on the Broad Range of FSBO Experiences in Florida
Q: Why did you get into the real estate business? What was the motivation?
Richard: [01:26] I’ve been doing real estate work for about 20 years and what appealed to me and still does appeal to me about real estate is that it’s generally not adversarial and everybody is happy and the butters that happy, the seller’s happy. The real estate agents, the happy, the mortgage brokers are happy. I’m happy, everybody’s happy
Richard on the complexity of the standard Florida contract
Richard: [10:08] For a layman to read and understand the standard Florida contract is very daunting and even lawyers will argue over the meaning of certain provisions so you right away you’re entering a legal transaction when you, when you do have a contract and that contract, the standard Florida contract is is designed to be very even handed to be fair to both the buyer and the seller and to protect both the buyer and the seller as you indicated within disclosures and setting forth the responsibilities of each party.
Richard Brings up the potential for the relationship to sour between the buyer and the seller during the transaction
Richard: [30:27] There’s another factor too, which is one of the personalities when the buyer and seller are working together without representation, very often the relationship sours during the process.
[30:47] for whatever reason, it could be over an article, a property that’s in the house or, or something in the yard or some, some point of disagreement which contributor a sour ranking of the relationship.
[31:13] It’s such an important transaction, to not work in harmony can be detrimental to the whole process. And if, if each side is represented either by a real estate agent or an attorney, the disputes can be resolved through intermediaries.
Richard’s Contact Information:
Law Office of Richard S. Weinstein, P.A.
Email: richsw@richardweinstein.net
Phone: (561) 745-3040
Real Estate Lawyer and Title Expert Anthony Suarez Breaks Down why FSBO’s should seek legal guidance early on in the process
Anthony’s background is in litigation and he’s been an attorney for 41 years! He’s licensed in the states of Florida and New York and he likes real estate because the emphasis is on making the deal rather than going to court and litigating.
Anthony: [03:18] People often try to sell and then whenever they can, and they obviously can save themselves quite a bit of money, but the problem is every single sale could have the potential for problems.
When you have a situation where you know the owner or the buyer very well, not a problem, you go resolve something that comes up, but we don’t know the person very well, and the contract has difficulties and it didn’t cover every potentiality.
That’s where it gets difficult. Well, what happens if they don’t get financing? You’ve got the house three months without a sale and they’re not qualified. What happens?
Problems with inspections and surveys–what does the contract say?
Anthony: [04:11] What does your contract say in that situation? When a person doesn’t qualify and you just lost three months of waiting time, right? That’s just one example. What happens if it turns out when they do the inspection that the roof needs to be repaired and it’s $15,000–who’s going to fix it?
Who’s gonna do it? Do you have the right to walk away from that contract or are you required to fix it? Um, and so what happens if there’s a title defect? You put a shed and violated the lines, or you put a fence that was installed incorrectly.
Anthony: [04:58] So when they do the survey now the fence has to be moved. What does the contract say is that situation? So lot of the problems that FSBOs have is the contract did not cover all the situations that could happen.
Ryan: What would you say the success rate of FSBOs are that you’ve seen?
Anthony: [11:02] Well I would say, you know, a 50 percent. It’s probably worse than that because people come to me when they already had the problem. They are sitting in front of me because something happened in the process. So it’s, it’s, it’s, you know, I’m gonna have to guesstimate that it’s maybe 50 percent, but almost 100 percent of the people sitting in front of me are coming to me already having a problem.
Ryan: They are coming too late!
Anthony’s Contact Information
Anthony Suarez
Suarez Law Group
Phone: (407) 841-7373
Email: suarez@cfl.rr.com
Conclusion
The main takeaway from all of these experts can be summed up pretty simply: get educated, and get help early in the process.
Saving yourself some money is definitely a noble goal, just make sure you get smart and surround yourself with the right people before you start marketing your home.
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