Oct 17, 2011

Buying a For-Sale-By-Owner

Buying a for-sale-by-owner (FSBO) property carries with it additional buyer concerns than purchasing a property listed with an agent. A FSBO property is one where the seller is not represented by a Realtor. Before becoming a Realtor, I both sold and purchased homes ‘by owner’. I know a few things to help protect you on the buying end if you don't have good information and competent guidance. Things can go wrong with disclosures, property defects, easements, zoning, financing, insurability, neighborhood restrictions, surveys, covenants, closing delays, etc.

Let’s say, you’ve found your dream home and you’re serious about buying it. Next, consider price. Who wouldn’t want to get their dream house for less than the going rate? Some buyers believe that unrepresented sellers will pass along their savings from an agent's commission. The Truth: The seller is not likely to give you the commission savings or they'd be no better off than if they had let a real estate agent take care of everything.

Some sellers choose to be unrepresented after an agent tells them they won't be able to get as much as they wanted for their house. Many price their home based on what another homeowner is asking down the street. Get "comps" or sale prices of comparable homes that have sold in the past six months in the neighborhood from a Realtor. Your offer should be based on those comparable prices, not the asking prices. Texas is a non-disclosure state and sales prices are not publicly available. Work on facts, not fiction.

Buying from an inexperienced seller who is handling everything by himself can be frustrating but can also be profitable if you are prepared for the negotiations. People usually try to sell a house on their own to net more money. Often they underestimate the time, cost and complexity of going it alone. They end up tired and frustrated of the process, ready to be done with it. Help them solve their problems, and you may be rewarded.

Identify what is most important for the seller and try and give it to them in trade for something else. The selling price is not the only area of negotiation. You should know which costs are customary for a seller or buyer to pay in our area. Date of possession and financing options can have a huge affect on your bottom line. Never rely on oral agreements, such as "all appliances will remain with the house." Get it in writing.

Keep all conversations as neutral as possible. Because the seller doesn't have an agent, there's no liaison to buffer the bargaining process and present offers with an informed, realistic perspective. Offensive questions or negative comments about the house or its condition can be hurtful enough to keep the seller from negotiating with you. It's difficult to get a good deal if the seller doesn't like you. On the other hand, don't become too friendly with the seller. Sentiment and personality conflicts often cloud judgments. It is not in your best interest to let emotions guide the financial process.

If you do decide to buy a home without a realtor, hire a real estate attorney to help you draft the purchase contract. Factor the legal fees into your costs. Buyers, at a minimum, should be aware of our disclosure laws. Some unrepresented sellers have been known to take advantage of the less formal process by concealing problems or flaws. You want to know about material facts and potential problems upfront before money changes hands. After closing, it is pretty difficult to get compensation from a seller who has just moved cross-country. 

Make any deals contingent in getting satisfactory report from a home inspector that YOU select and pay. Never sign away your rights to inspection, even if you know the seller won't agree to make repairs. Then comes the paperwork. 

Real estate today requires an ample awareness of current law, contracts, and the intricacies of closing the transaction. To succeed, buyers need to stay on top of the details and look out for their own interests. Unrepresented sellers usually don't have a plan for where to close, where to buy a title policy, where to keep a good faith deposit, etc. Be ready with simple solutions to all these problems.

Most buyers are best served by selecting a buyer's agent to represent them. A buyer's agent represents your interests. If you don't sign a buyer's agent contract with an agent, then you should presume that they represent the seller in the transaction. As a buyer's agent, I provide the services that may otherwise fall to the buyer or seller, eliminating the need for the parties to draft a purchase agreement, order appraisals, property inspections, title insurance, closing, etc. 

Some sellers recognize that agents are their best source for a qualified buyer and a smooth sales transaction and they fully expect to have a buyer represented by an agent. I've worked as a buyer's agent with unrepresented sellers who agree to pay my buyer agent fee. Other unrepresented sellers can balk at paying a commission to a buyer’s agent. After all, the seller's objective all along was to save money. Often it is my job to help everyone not only save money, but get the deal done.
Who really benefits from omitting an agent, the seller or the buyer? Without an agent, the buyer must navigate the process on their own. Logically, the motivating factor would be to save money. If only the seller is benefiting, then it’s hard for a buyer to justify omitting an agent.

When you purchase a FSBO property with me, you can rest assured that you are being represented by an experienced professional who is looking out for and protecting your interests every step of the way. [where: 75230]


fort worth cpa said...

Usually I do not post on blogs, but I wish to say that this post really forced me to do so! Thanks, incredibly nice article.Thank you lots, I am obliged to announce that your blog is excellent!

Flat Fee MLS said...

Hello Dude,

FSBO home owners can employ the services of marketing or online listing companies or market their own property and need not pay a commission and represent themselves with the help of FSBO websites throughout the sale. Thanks for sharing it.....

Avril Copperfield said...

Well, if it is your first time to put up your own property up in the market, it is better to deal with a buyer represented by an agent. This can help make sure that you are dealing with a qualified buyer and allow for a smoother transaction.