Is Buying a FSBO Home Right for you?
Are you considering selling your home? If so, you might think about
selling your home without using a real estate agent. There are certainly
advantages involved for home sellers, including the ability to save the
commission, but if you are in the market to buy a home it is a good idea
to make sure you understand the FSBO process before you start shopping
around.
FSBO, a common acronym that is used to refer to For Sale by Owner, is
growing increasingly common as many home sellers struggle to save every penny
possible on the sale of real estate in the existing real estate market.
When considering buying a FSBO home that is for sale by owner, it is
critical to make sure you understand the process and prepare to have
plenty of patience available.
In most instances, if you are considering buying a FSBO home, you may actually stand to benefit. For example, consider
a home that is selling for $150,000. If the FSBO owner is able to avoid
paying that 6% sale commission to the real estate agent then they stand
to save $9,000. That means that they just might be willing to pass on
some of those savings to you if it means encouraging a faster sale. Most
FSBO onwers are well aware of the fact that home buyers have plenty of choices
and are willing to provide a little extra incentive in order to
encourage buyers to consider their properties.
Before you start adding up how much money you can save on this type of
purchase, it is important to keep a few basics in mind.
First, make sure you understand what is involved if you are working with
a buyer's agent. When you work with a buyer's agent, the agent will
typically expect a commission that is equal to 3% of the home's sale
price. If you do not wish to pay for this cost then you will need to
negotiate with the FSBO owner to pay for it. In that instance, the FSBO
owner may not be as willing to consider a lower sales price.
Keep in mind that just because you are buying a FSBO that does not
negate your need for professional help. Always make sure that you have a
professional appraiser inspect the property. It is also crucial to
ensure that you have a real estate attorney review all of the paperwork
involved in the transaction.
Take your time when shopping. Remember that not all properties that are
for sale by owner will be listed in the Multiple Listing Service in you
area. Take the time to review the classifieds in the newspaper as well
as online sites. Also, consider driving around the neighborhood to look
for FSBO lawn signs.
Always remember when you are working with a FSBO owner who is selling their
property on their own that they may not be as forthcoming as an agent
would be regarding issues that might impact the value and appeal of the
property. You will need to do some legwork on your own by talking to
officials in the neighborhood as well as neighbors.
Be certain that all down payments and earnest monies are held by a third
party. Never provide money to the FSBO owner directly. If you do and the
transaction falls through you could have difficulty getting your money
returned. Talk to the local bank or title company about setting up an
escrow account instead.
Take the time to be certain that the price the FSBO owner is asking is fair.
If you use a buyer's agent you can ask them for sales information in
order to compare the prices of similar properties to the property you
are considering buying.
Finally, do not become so overly excited at the thought of saving money
on a FSBO or become so enamored with a property that you forget to make
sure you can afford it. Always be certain you know how much of a
mortgage you can realistically afford. When you do find a property that
interests you, make sure the offer is contingent upon your being
approved for a loan with a specified period of time. 60 days is a good
time frame.
Buying a FSBO home can certainly be a good option for many people,
especially considering the potential savings that are available. The key
to making this option work is making sure that you are fully informed
and that you take the time to do the necessary research.
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