Tips on Purchasing a FSBO Home
Although the houses themselves are physically unchanged, the process for
purchasing them can differ dramatically when homeowners act as their own real
estate agents. A vast majority of do-it-yourself-sellers only take on the
headache and responsibility to market their homes by themselves because they
want to save money on Realtor commissions. They would rather delegate the task
to someone else, but rise to the occasion to assume the role – which is similar
to taking on a 2nd fulltime job – because hiring a professional can cost tens
of thousands of dollars. Many would rather pocket that money, or deduct it from
their selling price in order to attract more buyers, instead of listing their
property with a broker.
When selling a typical single family home worth $250,000, an owner can expect to
incur at least $25,000 in closing costs. And the majority of that expense –
$15,000 or more – goes go to pay real estate brokers. But almost anyone who has
experienced being a For Sale By Owner – or FSBO in real estate parlance – will
tell you that Realtors often earn every penny, and much more. They have to
honor showing appointments that get broken, guided tours of houses full of
unruly pets, fill out reams of legal paperwork, negotiate with unreasonable and
stubborn parties, and work countless hours on weekends and holidays. And that
is just a short list of what the work entails.
But Realtors also endure extensive training to prepare them for the job. To
graduate from real estate school and pass a state licensing exam, candidates
must take 100’s of hours of courses and then demonstrate proficiency in a
variety of subjects including real estate law, mathematics, interpersonal
psychology, sales, knowledge of building construction, mortgage finance, and
marketing.
Those who sell their own homes don’t necessarily have to know any of that, and
many lack the various qualifications and personality traits that make a good
Realtor. Although some FSBO sellers are knowledgeable and experienced, others
are flying by the seat of their pants. And that’s where the problems begin.
To assist those in the market for a FSBO property, ForeclosedHomes.com offers half a
dozen insider tips, to help buyers and sellers experience a more productive and
smooth-sailing relationship that ends with a pleasant and rewarding transaction
for all.
Personality Conflict, Ego, and Emotions:
People who sell their own homes can be especially sensitive sellers, because
they have time, money, and emotional memories invested in their home. Critique
of the house can be interpreted as personal criticism.
The best approach is to be courteous, professional, and businesslike, in order
to distance yourself from emotional issues and stay focused on the goal.
Realtor Fees and Mortgage Applications:
Most FSBO sellers will agree to a one-time-one-buyer type of listing that your
Realtor can arrange, which ensures that the real estate agent gets paid a
finder’s fee. Of course if you are going it alone without an agent, it’s not an
issue.
Before shopping for a home, get pre-qualified or pre-approved for the loan, to
show your seller that you mean business. Involve your mortgage company in the
process as soon as possible.
Disclosures, Paperwork, and Inspections:
Every state has disclosure statements, sales contracts, and companies authorized
to offer title insurance related to real estate transactions. Use these and
have a real estate attorney review them before you sign.
Hire the best home inspection professionals you can find. Study their findings
and ask as many questions as you need to in order to evaluate the condition of
the property before you buy.
Negotiations:
If you don’t use an attorney or Realtor to handle the negotiations, at least get
everything in writing in advance. Then have a lawyer review the details before
you agree.
Don’t get so focused on price haggling that you lose a dream home over money you
can afford. But if you think the price is too high, just walk away and shop
elsewhere. ForeclosedHomes.com has hundreds of other reasonably priced properties to
browse.
Escrow and Closing:
Enlist a neutral 3rd party such as a lawyer or bank to hold the escrow funds
until the terms of both buyer and seller and have been reached. Never let the
seller hold the escrow.
Follow these tips and others you’ll find on ForeclosedHomes.com.
Then shop with confidence, and don’t shy away from the attractive FSBO houses
on your list.