Things You Need To Know Before Buying a ‘For Sale By Owner’ House
Some homeowners wish to sell their properties without the help of real estate agents to represent them. This is called For Sale By Owner (FSBO), which many people choose to do.
Dropping the need for an agent might mean being able to eliminate other expenses. As a result, the cost of the property will be a bit less because of the absence of a real estate agent’s commission. It is a standard procedure that when homeowners seek assistance from real estate professionals, they are required to pay the realtor’s agent as well as the agent representing the buyer. FSBO properties involve direct transactions between the buyer and the seller.
If you’re planning to purchase a FSBO home or property, here are some things that you need to consider first:
1. FSBO properties remove realtors from the equation.
If you initially asked for a realtor’s assistance in finding you a home but suddenly stumble upon a FSBO property, the real estate agent will no longer be assisting you because this would mean that you will be talking to the seller yourself. That means your agent would not be earning from such transaction. Remember that agents earn through commission.
2. A loan pre-approval letter dispels doubts.
There may be a need for a pre-approval letter coming from the bank where you plan to loan. It would serve as a better opportunity for you to buy the property without the seller getting worried about your capacity to pay.
3. You need to be sensitive and understanding of the original homeowner.
It may be a bit intimidating when the homeowners would be the ones giving you a tour of their houses. There may be some emotional attachment to the property, which may make it difficult for prospective buyers to envision the house as their own.
However, if you are really a serious buyer, you should check everything that needs to be checked without having any second thoughts. It will probably be easier if you ask permission from the homeowner prior to opening cabinets, drawers and doors, just to be sure.
4. Insurance and maintenance history needs to be checked.
You may also want to check on the history of the insurance of the house to determine any existing problems that may affect the cost of the insurance once you purchase the property. The seller should be able to abide by the laws imposed with regards to selling the property; that is, to let the buyer know everything about the house – any existing leaks or issues that may be of concern.
5. A home inspector might be helpful.
Paying a visit to your prospect home may not be enough as there may be small details that you may overlook. Allow a home inspector to check on electrical wirings, presence of carbon monoxide, asbestos and moisture level, all of which may affect your family’s health. This is to ensure your safety once you decide to buy and move in.
6. You should hire legal counsel to check all documents.
Keep in mind that this kind of transaction is more than merely buying and handing over the payment. There is a need to have a real estate lawyer that would help in arranging and preparing documents should the purchase of the house become final. A lawyer would be able to see if the documents presented by the seller are legal and if there are no impediments that could hinder the transfer of title.
7. The original owner may not know the property’s market value.
An FSBO property may not be as easy because the seller may not know the exact market value of the property. The seller should be able to determine several other factors which a real estate agent has the capacity to know better.
Some sellers would ask for a very high price based on their personal valuation of the home. They may have sought help from real estate agents prior to selling their property on their own. However, they may not have agreed with the price, leading them to sell their properties on their own.
There is no law that prohibits homeowners to sell the property without a real estate agent. However, as a buyer, you would probably want to be assured that the property that you are buying is legally owned by the seller and that any problem that the property may have should be disclosed prior to closing the sale.
Whether you’re buying a FSBO house or choosing to buy from realtors, asking for advice from real estate professionals could be your ticket to getting the most out of your investment. Feel free to contact me for consultation on buying your dream home.