Disadvantages of Buying a For Sale by Owner Home
May 29th, 2015
May 29th, 2015
If you’re looking for a new home, you’ve likely come across homes that are for sale by owner, also known as FSBO. What that means is the home owner is attempting to sell their home on their own without the help of a real estate agent. Some people will tell you that buying a FSBO home is easy and can save you money if you do it without a Realtor®. However, you need to understand why it’s best to have a real estate agent in your corner to avoid common pitfalls when dealing directly with a home owner on a FSBO property.
One reason a person may sell their property on their own is that they believe they’re going to save on the Realtor fees. However, according to Steve Farmer, a licensed independent Realtor with F.C. Tucker, “Most sellers probably don’t understand that they are going to have to pay the buyer’s agent anyway. So really at the end of the day, using a real estate agent on a FSBO property isn’t going to cost the buyer anything.”
Also, some people are under the impression that buying a FSBO property will save the buyer money. But per Farmer, that is definitely not the case. “From my experience of working with people who are selling their home on their own, they definitely tend to over-value the price of their home when compared to similar homes that are selling on the market,” he says. “Typically, it is very rare that I find a well-priced home when I’m looking at FSBO properties for my buyers. An experienced real estate agent can sit down with a buyer and explain to them what a good offer should be without overpaying for the home.”
There are three key reasons why it’s in your best interest to work through a Realtor.
1. Your real estate agent has experience in real estate transactions, can offer advice regarding the contract, and can make sure all the paperwork is completed properly. Without the use of a Realtor, you’re on your own in figuring everything out unless you hire an attorney.
“When you give the seller a purchase agreement, you are signing a legally binding contract, stating that you are going to purchase the home,” says Farmer. “The standard purchase agreement that we use is seven pages long, so there is a lot of information in that set of pages that we have to explain to our clients that your average person isn’t going to understand.”
Also, Farmer adds there are exit ramps in the contract for both buyers and sellers if you need to get out of the contract that the average person doesn’t know. So you’re not forced to buy a home you may not want if issues arise.
2. Your real estate agent is a skilled negotiator, and you may not be.
“I’ve seen some FSBO contracts that don’t cover a lot areas in which you could really get burned, if you don’t know what to ask for,” says Farmer. “A real estate agent is going to be able to help you with negotiations so you know what to ask for.”
According to Farmer, the buyer can request a lot of things when negotiating the contract that they may not be aware of. You can ask the seller to pay for some of the closing costs, like the title fee. Also, the average buyer isn’t going to understand that the seller needs to pay the property tax up to the date of the closing.
Repairs are another item you can negotiate to have the seller take care of. Farmer says, “There are certain repairs that are pretty obvious that need to be done that the seller should pay for that the buyer may not typically know. But you don’t necessarily ask for everything to be done. Typically, the real estate agent will know what the more costly repairs are.”
Additionally, the negotiation process, in general, can be very emotional for both the buyer and the seller. Therefore, a real estate agent can act as a shock absorber to absorb some of that emotion. Farmer says, “I’ve seen very reasonable offers offend sellers. So typically, it takes that professional to say, ‘Hey, this is typical of what a home sells for in this market. This is a reasonable offer.’”
3. Your real estate agent will have professional connections with people who can help you with the inspection, repairs, getting a mortgage and/or the closing process.
Farmer has recommended Grandview Lending, a family-owned and operated residential home lender, to several of his clients. “Every one of my clients who have used Grandview have come away very pleased,” he says. “They never missed a closing deadline. They are nothing but professional, and they do a great job of communicating, not only with their clients, but also with me and the title company. I don’t hesitate at all to recommend Mike Farrell and Grandview Lending.”
Regardless of whether you’re looking for a home that’s FSBO or not, Steve Farmer can help you find the home of your dreams in Hamilton County, IN or any of the surrounding counties. Contact Farmer at 317-989-1434 or via email at Steve.firstname.lastname@example.org.
If you’re need a mortgage for your new home, call the mortgage specialists at Grandview Lending at 866-690-4920. They will listen to your needs to help you make the best decision when it comes to financing your home.
Photo credit: iStockphoto/foxden1
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