Tips for Buying a For Sale By Owner (FSBO) Property
Although the houses themselves are physically unchanged, the process for purchasing them can differ dramatically when homeowners act as their own real estate agents. A vast majority of do-it-yourself-sellers only take on the headache and responsibility to market their homes by themselves because they want to save money on Realtor commissions. They would rather delegate the task to someone else, but rise to the occasion to assume the role - which is similar to taking on a 2nd fulltime job - because hiring a professional can cost tens of thousands of dollars. Many would rather pocket that money, or deduct it from their selling price in order to attract more buyers, instead of listing their property with a broker.
When selling a typical single family home worth $250,000, an owner can expect to incur at least $25,000 in closing costs. And the majority of that expense - $15,000 or more - goes go to pay real estate brokers. But almost anyone who has experienced being a For Sale By Owner - or FSBO in real estate parlance - will tell you that Realtors often earn every penny, and much more. They have to honor showing appointments that get broken, guided tours of houses full of unruly pets, fill out reams of legal paperwork, negotiate with unreasonable and stubborn parties, and work countless hours on weekends and holidays. And that is just a short list of what the work entails.
But Realtors also endure extensive training to prepare them for the job. To graduate from real estate school and pass a state licensing exam, candidates must take 100's of hours of courses and then demonstrate proficiency in a variety of subjects including real estate law, mathematics, interpersonal psychology, sales, knowledge of building construction, mortgage finance, and marketing.
* The savings represented are estimates based on current market trends and cannot be guaranteed for all users.
Those who sell their own homes don't necessarily have to know any of that, and many lack the various qualifications and personality traits that make a good Realtor. Although some FSBO sellers are knowledgeable and experienced, others are flying by the seat of their pants. And that's where the problems begin.
To assist those in the market for a FSBO property, Bargain Homes offers half a dozen insider tips, to help buyers and sellers experience a more productive and smooth-sailing relationship that ends with a pleasant and rewarding transaction for all.
1. Personality Conflict, Ego, and Emotions:
People who sell their own homes can be especially sensitive sellers, because they have time, money, and emotional memories invested in their home. Critique of the house can be interpreted as personal criticism.
The best approach is to be courteous, professional, and businesslike, in order to distance yourself from emotional issues and stay focused on the goal.
2. Realtor Fees and Mortgage Applications:
Most FSBO sellers will agree to a one-time-one-buyer type of listing that your Realtor can arrange, which ensures that the real estate agent gets paid a finder's fee. Of course if you are going it alone without an agent, it's not an issue.
Before shopping for a home, get pre-qualified or pre-approved for the loan, to show your seller that you mean business. Involve your mortgage company in the process as soon as possible.
3. Disclosures, Paperwork, and Inspections:
Every state has disclosure statements, sales contracts, and companies authorized to offer title insurance related to real estate transactions. Use these and have a real estate attorney review them before you sign.
Hire the best home inspection professionals you can find. Study their findings and ask as many questions as you need to in order to evaluate the condition of the property before you buy.
If you don't use an attorney or Realtor to handle the negotiations, at least get everything in writing in advance. Then have a lawyer review the details before you agree.
Don't get so focused on price haggling that you lose a dream home over money you can afford. But if you think the price is too high, just walk away and shop elsewhere. Bargain Homes has hundreds of other reasonably priced properties to browse.
5. Escrow and Closing:
Enlist a neutral 3rd party such as a lawyer or bank to hold the escrow funds until the terms of both buyer and seller and have been reached. Never let the seller hold the escrow.
Follow these tips and others you'll find on Bargain Homes and Bargain Network. Then shop with confidence, and don't shy away from the attractive FSBO houses on your list.