Buying a Home That is For Sale by Owner

There is no way around it. Selling a home with a realtor can be expensive. If you choose to sell your home on your own you can save a great deal of money. This is because you will not have to pay a fee to your listing agent. While this is a great way to save money, there are a few disadvantages. Of course, these disadvantages are also accompanied with some serious advantages. If you are thinking about buying a home that is listed as “For Sale By Owner”, these tips can help you decide if it is the right choice for you.

Don’t worry that there is something wrong with a home. Just like with a listed home, FSBO homes must disclose any problems with the home. Federal and state laws will protect you from purchasing a problem home whether it was sold by an agent or by the owners themselves. You will be told if the home has lead based paint, if someone has died in the house recently, if it has been affected by a disaster like an earthquake or hurricane or if major repairs have been made to the home. You can purchase a FSBO home knowing that federal and state laws still apply to you and the home that you are going to purchase.

As you consider purchasing a FSBO home remember that you may get a great deal or you may pay too much. FSBO listing can save the seller as much as 5-10% off of the listing price. However, many FSBO sellers do not know how to properly price their home. Real estate agents can be a great help in providing an unemotional fair market price. Homeowners on the other hand are very attached to their homes and tend to price them too high due to their attachment to the property. A good way to find a great deal is to compare the list price of the home to other recent sells in the area. If the house seems overpriced, find a different option and avoid the FSBO home.

Commonly when purchasing a home, you will need to put down a few thousand dollars as a sort of “earnest money.” While this is a common practice, an escrow company is a great way to protect your investment and to make sure that nothing goes wrong. Consider using one of these title or escrow companies to make sure that your initial investment is safe.
As you write a FSBO offer be very clear. Be sure to include contingencies such as the home must pass a home inspection, you can adjust the offer if the inspection reveals any problems, you only have to purchase the home if your home sells, the home must qualify for insurance coverage and that you must qualify for your loan. Make sure you get these in writing so that you aren’t stuck purchasing a home that you don’t want.

Nothing says that you can’t have a realtor. The seller may be choosing to save money by not engaging a realtor but you can still have one of your own. Your realtor may be able to help you write a great offer, include needed contingencies, calculate property taxes, determine who pays what, and protect your expenses. A realtor will help you by protecting your interests during the selling process. Of course you will have to pay a fee of approximately 3% but you may be able to get the seller to pay this fee to sell their home.

A lawyer is a great idea if you choose to navigate the FSBO process without a realtor. The few hundred that you will spend will be well worth the investment. They will help keep you from making common mistakes and will protect your interests. It is always a good idea to have someone in your corner when you navigate the real estate market.

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