Selling a home by owner, often referred to as FSBO (For Sale By Owner), is a route some homeowners choose when they decide to put their property on the market. Instead of involving a real estate broker or agent, they take on the responsibilities of listing and marketing the home themselves. While most homes are traditionally listed through real estate professionals affiliated with a brokerage, every so often, you come across a FSBO property. This might be a friend or neighbor deciding to go it alone or simply a chance discovery through a newspaper ad or a sign in a front yard.
On the surface, it might seem like an appealing way to purchase a home without dealing with real estate agents, but in reality, it can complicate the process. Engaging in a real estate transaction with individuals who may not be well-versed in the intricacies and legalities of the process can lead to unexpected challenges, potentially making both the buyer and seller liable for various issues.
Here are five essential aspects to consider before embarking on a FSBO real estate transaction:
Cooperation with Buyer's Agents:
Even if you have your own buyer's agent, when you come across a FSBO property, the seller will usually cooperate with your agent. This means you don't have to bypass your buyer's agent to complete the transaction. Instead, involve your agent in the process and let them handle the negotiations. Often, homeowners are willing to pay a commission to the buyer's agent for facilitating the transaction.
One of the critical aspects to discuss with your agent is the accuracy of the listed price. Many homeowners tend to price their homes based on their perceptions rather than market value. They often lack the research or market knowledge to set a competitive price. Consequently, FSBO homes can be overpriced or underpriced, rarely aligning with the market value. Consult your buyer's agent about the price accuracy and whether negotiating a lower asking price is advisable.
Property Inspection and Integrity:
It's essential to explore the reasons behind the owner's decision to sell the property themselves. While it could be due to avoiding seller's agent commissions, there might be legitimate concerns about the property's condition. However, don't jump to conclusions regarding the property's integrity. Many homeowners diligently maintain their homes. Nevertheless, it's crucial to verify building permits, local codes compliance, and conduct a comprehensive home inspection to ensure there are no hidden issues.
Legal Obligations Apply:
Just because the owner is handling the sale independently doesn't exempt them from adhering to state and county laws. These laws typically require the seller to disclose any problems with the property and make necessary repairs during negotiations. If there are hazardous issues, they should be addressed before the buyer takes ownership. Moreover, homeowners should permit the buyer to conduct a thorough home inspection.
Understanding Legal Rights:
When you're not working with a real estate agent on a FSBO transaction, you bear the responsibility for potential future issues if you're not well-versed in the legalities. Therefore, having a buyer's agent who is knowledgeable about local codes, tax laws, and regulations is crucial. Any agreements or information exchanged should be documented in writing and signed by both parties. Avoid verbal negotiations, as undocumented agreements can lead to disputes down the line, potentially impacting the completion of promised repairs or other essential aspects of the transaction.
In summary, while FSBO properties may seem like a way to bypass real estate agents, it's essential to proceed with caution and thorough understanding of the process, legalities, and potential pitfalls. Engaging a knowledgeable buyer's agent remains a valuable asset in navigating the complexities of buying a home directly from the owner.