A FSBO, or "for sale by owner" home can be a great deal, but as with any other real estate transaction, there are specific issues that you have to watch for. While many FSBO properties can be bought at a very fair price, make sure that you're aware of the issues involved. Dealing with an owner who does not have a professional representing them can be difficult.
Many people feel that FSBO can save them money by taking the 6-7% agent fee out of the equation. This may well save them money, if the home sells reasonably quickly. However, it may also mean that they don't have the resources and the knowledge at hand to efficiently market and sell their home. This can mean anything from overpricing to underpricing. It may also mean that the seller isn't aware of building defects or property issues. Or, worse, they're attempting to sell FSBO to avoid disclosing problems that could inhibit a sale or lower the price.
Sellers may also be unaware of some of the details that need to be arranged prior to the property transaction. You or your agent may have to do some of these things in order to facilitate the purchase, such as arrange for a neutral party for escrow management. Your agent may need to do some extra hunting for accurate house information, such as property lines, if the sellers have not thought to do this.
Another thing is that your agent may have to do some of the sellers' work for them by getting together any paperwork that the seller misses. This can work in your favor. Solving the seller's problems may smoothe the way for a faster transaction. If a seller doesn't have to struggle with legal paperwork as much, they are less likely to consider another offer. If your seller has spent more money than they intended to and you offer an easy way out, they may be inclined to take it.
One thing to be aware of is that many sellers are emotionally attached to the house they are trying to sell, which can make them difficult to negotiate with. Negotiations can be strained if the seller chooses to read negotiating as an insult to the worth of their home. Tread carefully and get your agent to do a lot of your negotiating if at all possible, so you can maintain your distance. However, if you can use friendly relations with a seller to advance your cause, do so. Many sellers will make decisions based on emotions and if they are positively inclined towards you, so much the better.
Get permission from the seller for a C.L.U.E. ("Comprehensive Loss Underwriting Exchange") report. The report will show you the consumer claim information concerning the home. If a seller hasn't had their home checked out before, this can reveal some startling information for all concerned, so it's valuable information. The C.L.U.E. keeps up to 5 years of property claims history.
Many states have laws about disclosure statements. The seller is legally obliged to let you know certain things about the house in many areas. Be aware of these laws, as the knowledge can give you a distinct advantage over a seller who doesn't.
Get a home inspection done. It's wise for all properties, but especially with a FSBO where the person representing the property hasn't the skills or the knowledge to check whether their home has a galloping case of termites or black mold.
Buying a FSBO property can be rewarding, but it requires that you follow a narrower path than you would if you were seriously considering an agent-represented home. If you play your cards right, you could luck into a great home for less.
Many people feel that FSBO can save them money by taking the 6-7% agent fee out of the equation. This may well save them money, if the home sells reasonably quickly. However, it may also mean that they don't have the resources and the knowledge at hand to efficiently market and sell their home. This can mean anything from overpricing to underpricing. It may also mean that the seller isn't aware of building defects or property issues. Or, worse, they're attempting to sell FSBO to avoid disclosing problems that could inhibit a sale or lower the price.
Sellers may also be unaware of some of the details that need to be arranged prior to the property transaction. You or your agent may have to do some of these things in order to facilitate the purchase, such as arrange for a neutral party for escrow management. Your agent may need to do some extra hunting for accurate house information, such as property lines, if the sellers have not thought to do this.
Another thing is that your agent may have to do some of the sellers' work for them by getting together any paperwork that the seller misses. This can work in your favor. Solving the seller's problems may smoothe the way for a faster transaction. If a seller doesn't have to struggle with legal paperwork as much, they are less likely to consider another offer. If your seller has spent more money than they intended to and you offer an easy way out, they may be inclined to take it.
One thing to be aware of is that many sellers are emotionally attached to the house they are trying to sell, which can make them difficult to negotiate with. Negotiations can be strained if the seller chooses to read negotiating as an insult to the worth of their home. Tread carefully and get your agent to do a lot of your negotiating if at all possible, so you can maintain your distance. However, if you can use friendly relations with a seller to advance your cause, do so. Many sellers will make decisions based on emotions and if they are positively inclined towards you, so much the better.
Get permission from the seller for a C.L.U.E. ("Comprehensive Loss Underwriting Exchange") report. The report will show you the consumer claim information concerning the home. If a seller hasn't had their home checked out before, this can reveal some startling information for all concerned, so it's valuable information. The C.L.U.E. keeps up to 5 years of property claims history.
Many states have laws about disclosure statements. The seller is legally obliged to let you know certain things about the house in many areas. Be aware of these laws, as the knowledge can give you a distinct advantage over a seller who doesn't.
Get a home inspection done. It's wise for all properties, but especially with a FSBO where the person representing the property hasn't the skills or the knowledge to check whether their home has a galloping case of termites or black mold.
Buying a FSBO property can be rewarding, but it requires that you follow a narrower path than you would if you were seriously considering an agent-represented home. If you play your cards right, you could luck into a great home for less.
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