Is it wise to buy a FSBO?
FSBO is shorthand for "For Sale By Owner." A FSBO property is one that's offered for sale by sellers who aren't represented by a real estate broker.
There are several reasons why sellers might choose to sell their home without a real estate broker. They may have had a horrible experience with the last broker they worked with. More common are FSBO sellers who are selling in order to save themselves the cost of a real estate commission.
The number of FSBOs on the market tends to increase during a seller's market. There's often a shortage of houses for sale in a seller's market, which gives a FSBO seller a better chance of selling without the help of a real estate professional.
A FSBO listing may be the perfect house for you, but you need to exercise caution when you purchase a house directly from a seller.
First, make sure that the seller's price is right. You can do some legwork on your own by visiting Sunday open houses. If you're working with a real estate broker, he or she can provide comparable sales information for you.
To ensure that you don't overpay for a FSBO listing, include a contingency in your purchase agreement stating that the property must appraise for the purchase price.
Hire an attorney, or real estate broker, to draft and review the purchase contract for you. Because negotiating directly with the seller can be difficult, consider hiring a professional (a real estate attorney or broker) to handle the negotiations.
Include an inspection contingency in the purchase agreement and have the property thoroughly inspected before completing the sale. FIRST-TIME TIP: Finding the right house is rarely easy. If you restrict your search exclusively to houses being offered for sale by owner, you'll limit your choices considerably. In order to maximize the selection of homes available to you, consider hiring a buyer's agent who will show you both FSBO listings and houses listed through the real estate community. If you're working with a conventional real estate agent (that is, one that's not working only representing buyers in real estate transactions), make an agreement with your agent to pay a fee if he or she finds you a FSBO house that you ultimately buy.
Most FSBO sellers are willing to cooperate with a broker who's representing a buyer even though the sellers don't have their own broker. Such a seller will usually pay the buyer's agent a commission from the sale proceeds. The commission in this case is usually one-half of the amount the sellers would pay if they listed the house with a broker (3 to 3.5 percent of the purchase price, although this is negotiable). If the sellers absolutely refuse to pay a brokerage fee, you'll have to pay the fee.
THE CLOSING: A successful real estate transaction depends on teamwork. If you purchase a house without the aid of a real estate broker, make sure you line up a good loan agent, title officer and real estate attorney who can help you.
Dian Hymer's column is syndicated through Inman News Features. Send questions and comments care of Inman News Features, 5335 College Avenue, No. 25, Oakland, Calif. 94618.