How Do FSBO / For Sale By Owner Real Estate Transactions Work in Michigan?

for sale by owner

If you are thinking about buying or selling a home, you should learn about the For Sale By Owner process. FSBO (pronounced fizz-bow) is very popular in the City of Ann Arbor and throughout Washtenaw County. If you are a seller, you might want to consider using the FSBO process. If you are a buyer, the dream home you want might involve a FSBO transaction.

Basics of a For Sale By Owner / FSBO Real Estate Transaction

FSBO For a Seller

If you plan to sell your home other than through a private sale, you have two choices: You can use a real estate broker, or you can handle the sale yourself using the For Sale By Owner process. Since using a real estate broker typically costs a commission of 5% to 6% of the sale price, the FSBO process can put more money in your pocket after the sale.

A seller has a lot of responsibility and work in a FSBO home sale. The seller takes care of preparing the home for sale, which may include getting an appraisal to ascertain value. After fixing up the property, setting the price, and advertising the sale, the seller handles open houses and individual buyer showings.

To reach agreement on a purchase price, the seller conducts negotiations with potential buyers. Legal documents are necessary to form an enforceable sale contract. Those documents establish the terms that apply to transferring ownership of the property at closing.

If you are considering selling your home using a FSBO process, talking with a knowledgeable lawyer before you undertake a FSBO sale is the best way to prepare yourself for the responsibility of a FSBO sale. Your lawyer will explain the process, provide the documents you need, and work with you throughout the process to finalize the sale. Lawyers do not charge a commission to assist with a FSBO sale. Most charge a flat fee for the service.

FSBO For a Buyer

If you are a buyer, you also have the choice of using a real estate broker to help find a new home or going it alone. If you use a broker, the agent receives a 2% to 3% commission, based on the amount of the sale. That can be a disadvantage in negotiating purchase of a FSBO home, because the seller pays the agent’s commission.

As a buyer, you can avoid the hefty cost of a broker’s fee but still protect your interests by retaining an attorney experienced with FSBO sales and avoiding. Talking with a lawyer about the FSBO process before you negotiate with the seller is the best strategy to protect yourself.

Representation By a Lawyer

When a seller or buyer has an attorney assist with a FSBO transaction, the lawyer represents and advises the client throughout the process, including at the closing (settlement), when the final documents completing the sale are delivered to each party.

Legal Requirements For a Michigan FSBO Real Estate Transaction

The State of Michigan, like other states, has specific legal requirements that apply to the purchase and sale of real estate. One important requirement is that all contracts for purchase or sale of real estate must be in writing.

An offer made and accepted in a phone call or conversation is not enforceable. The buyer in a FSBO process should be prepared to make an offer in writing. The seller in a FSBO transaction should require offers to be in writing.

Legal Documents

Quite a few legal documents are necessary to create a real estate sale contract and accomplish transfer of the property. That applies to a FSBO sale, just as it applies to a real estate sale through an agent. The documents are all extremely important, because they define the legal rights and responsibilities of the seller and buyer.

If you are a buyer or seller in a FSBO home sale, you should never sign a document that has a mistake, omission, or a provision that you do not understand. Especially given the significant financial character of the transaction, the best approach (whether you are the seller or buyer) is to retain an attorney to review all the documents before signing them. Your attorney also works with you throughout the whole process.

Seller Disclosure Requirements in For Sale By Owner Transactions

In addition to the sale agreement or contract, state and federal laws require the seller to provide additional documents in a FSBO sale. One of the most important is the Seller’s Disclosure Statement. Under the Michigan Seller Disclosure Act of 1993, the seller must provide this comprehensive document to a prospective buyer prior to the buyer and seller signing a sales agreement. The buyer should also acknowledge receipt of the Seller’s Disclosure Statement in any offer that is submitted to a seller.

The Seller Disclosure Statement includes detailed information about the condition of the property and certain fixtures in it. A seller’s failure to complete the disclosure form fully and accurately as required by the Seller Disclosure Act can have serious consequences, including cancellation of the sale or even a court action against the seller for fraud, misrepresentation, or deceit after completion of the sale.

Legal Representation & Advice

To ensure compliance with all requirements of Michigan law, a seller utilizing a FSBO process should retain an experienced FSBO attorney to assist with preparation of the documents and required disclosures. The lawyer’s role includes assisting with all aspects of the transaction.

Buyers purchasing a FSBO property should have their own attorney to represent them in the transaction. The lawyer can assist with every aspect of the purchase, from making the offer to negotiating the price and eventually closing on the property. The lawyer reviews all legal documents before the buyer signs them, including the closing or settlement documents that accomplish transfer of the property.

Talk With an Experienced Ann Arbor Real Estate Attorney About the FSBO Process

In my real estate practice at Ager Law Office, I assist both buyers and sellers in For Sale By Owner / FSBO transactions. For a reasonable flat fee, I provide a full explanation about how FSBO works and assist clients through the whole process from start to finish, including preparation and review of the documents and forms required by law. I also assist clients with sales and purchases involving a real estate agent.

From my Ann Arbor office, I serve clients throughout Washtenaw County. To talk with me about a purchasing or selling your home in a FSBO transaction, call (734) 649-0784, send an email to, or use the online contact form.

Categories: Real Estate