Buying a For sale by Owner Home...Do you know the risks?
Many times, people will choose to sell their home on their own, cutting out the real estate agent. The greatest benefit is the elimination of high commission costs paid to the agent.
This type of sale is known as a "For Sale by Owner" or "FSBO". While buying a FSBO is a great way to purchase a home since it offers a reduction of fees for the seller and for you, there are some risks that you want to consider first.
While buying a "For Sale by Owner" is usually a good option, you need to remember that a professional real estate agent or broker is not acting on the seller or buyer’s behalf. For this reason, you want to approach this option a little bit differently from that of a standard purchase. For starters, you want to make sure the home you want to buy is in great condition and worth the asking price.
The good news is that you have several options for determining this kind of information. For instance, you want to do your homework, checking out other similar properties within a five-mile radius of your home. In other words, if you have a three bedroom, two bath home, 30 years old, with approximately 1,400 square feet, then you need to look at home on the market with the same or similar values. This way, you can look at other asking prices to see if the home you like is overpriced. In addition, if the home is under priced, you might be asking why.
You can also work with the home seller, asking if you can hire a professional inspector to come into the home, looking for minor and major defects, which should be done before signing any contract any way. With this, you would know exactly what problems you might face should you choose to purchase that particular FSBO. Many times, defects are insignificant and cheap to fix but without an inspection prior to a contract, you would not have the same peace of mind.
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You also want to consider the location of the home, whether a FSBO or standard sell. Obviously, location pays a huge role in the value and selling benefits of a home. If the home was situated on a busy street and you have smaller children, then it might not be the right home. Keep in mind that most FSBO sellers do not like to haggle over price. They will set the price and stick with it. Therefore, you want to find out how the seller came to that particular price.
Finally, make sure you would be offered an ironclad contract. In fact, with the purchase of a FSBO, we highly recommend you spend $150 to have an attorney look at it to make sure there are no loopholes or faults. Because you and the FSBO seller would be working one-on-one without the assistance of a professional seller, it is imperative that you research the facts before buying. The result will be the purchase of a beautiful home, void any problems.
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