Should you be looking for a FSBO?
Some people find unbelievable bargains by shopping the For Sale by Owner market, but it does take time and persistence. The ones who do the best usually find FSBO's that are not yet advertised and whose owners have not consulted with a Realtor. The people who buy them have usually heard about the home for sale from a friend… or through local gossip.
Most people who offer their homes for sale without benefit of a Realtor fall into 4 general categories:
- People who intensely dislike Realtors and don't want to pay one.
- People who have a lot of experience in buying and selling real estate - it may be a business for them, not a one-time thing.
- People who have the time to be available to show their property, negotiate, and take care of the details involved with a sale.
- People who have consulted with a Realtor, know what their house should sell for, and hope to "save the commission" by doing it themselves.
Except in rare instances, FSBO sellers will want the same price that they would ask if selling through a Realtor. The selling process, when done correctly, takes time and work… and they want to be paid for that time and work.
Therefore, don't expect to pay less money if you choose a FSBO.
This is a choice based more on your personality and your own time commitments than anything else. Some of the advantages of buying a FSBO are:
- You may be able to get a price reduction when you point out that they are not paying a Realtor.
- You can become closely acquainted and learn more about the house and the neighborhood than a Realtor would know.
- You may be able to learn about other things you can "give" that will help the sellers and reduce your final purchase price.
- You may be able to negotiate "extras" such as the riding lawn mower, a porch swing, or the above ground pool.
- You might make a new friend.
On the other hand, there are disadvantages:
- You'll have to arrange a separate appointment for each home for sale, rather than making one appointment with a Realtor who will show you multiple homes on the same day.
- You'll need your best "poker face" when shown the home by the seller rather than a Realtor… enthusiasm can weaken your position.
- You have no "third parties" to soften your offering price and reduce potential conflict with the seller.
- Personality conflicts could cause you to lose the house.
- You're under more pressure to answer immediately in negotiations. (A Realtor offers a buffer zone during which you have time to consider your options and formulate your answer.)
- You will have to do more work in the form of arranging inspections and appraisals, ordering title reports, locating a closer, etc.
- When you get the inspection report you'll have to go over it with the seller and negotiate needed repairs.
- You might make a new enemy.
Only you can decide if you have the personality, time, and patience to deal directly with sellers. Weigh the benefits and drawbacks and see what's best for you.
One note of caution: If you are working with a Realtor and have signed a "Buyer's Agency Agreement" you will be legally liable for the commission to that Realtor even if you purchase a "For Sale by Owner" home. If that is the case, take your Realtor along even when viewing homes "for sale by owner"… and then let him or her do the work.
Click here to contact me if you have any questions.
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