J. Patrick Sutton Cases & Issues Blog


For Sale By Owner Real Estate Sales: Not for the faint of heart, but a big money saver. Allocate a bit of the savings for attorney review of the documents.
Home sellers may be forgiven wondering why they must pay 6% in real estate sales commissions, and some homeowners now choose to leverage the power of the internet to sell their own homes. If you’re thinking about a for-sale-by-owner transaction, for god’s sake get a lawyer to handle the paperwork for you. You’ll still save a bundle on commissions, but also have some peace of mind that the transaction was well executed.

FSBO is not a good idea for everyone, but for some motivated, well-informed sellers, it’s an option. Our firm assists these kinds of sellers in getting their homes sold with good contracts and smooth closings – and with minimal expense compared to traditional 6% commission transactions.

An anecdote:

I purchased a home in Virginia in 1994 that nearly tripled in value by 2006, with most of the increase occurring in the 2003-2006 time frame. Had I sold the house in early 2003, I would have paid about $15,000 in sales commissions upon sale. Since I sold in 2006, however, I paid over $41,000 in sales commissions. Furthermore, the real estate agent that I hired in arguably did less to sell the home in 2006 – the house sold in two weeks just as the white-hot market had started to cool just a bit. Had I sold even two months earlier, the house would probably have been in a bidding war.

My point here is not to begrudge real estate agents their due, merely to point out that the agents in my case saw a huge increase in their commissions owing not to intrinsic effort but to inflated market prices. Fair enough – I benefited too! I was too busy running a construction firm in 2006 to handle my own sale, so I valued the efforts of the realtors who handled the transaction. However, it’s understandable that someone might look for alternatives to paying $41,000 in commissions.

In FSBO transactions, the fees to have this law firm handle the contract, documents, and closing range from $500-$2,000, depending on what level of service we provide (including on-site inspection of the property). That’s a small fraction of what sales agent commissions would be for most in-town properties in Austin.

Since at this firm we see the fallout from real estate transactions gone awry, I can assure you that getting the transaction right upfront is a tremendous money-saver.
J. Patrick Sutton Cases & Issues Blog