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Home > Home Buying Tips > Is Buying a FSBO Home Right for you

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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