Consumer publications talk about why its a smart idea for owners to sell their own homes. These sellers are referred to as For Sale by Owners (FSBO). Whats hardly mentioned is what the other side (the buyer, customer, prospective homeowner) experiences so the seller can save a few bucks (usually at the buyer's expense.) Theres a whole laundry list of tasks that need to be addressed by one or the other party in a real estate transaction. Do you know what they are? Are you prepared to play the guessing game with a home purchase, which is likely the biggest purchase most people make in their lives? It sounds pretty risky, doesnt it? What about personality conflicts? You never know what youre getting yourself into when you start the process of buying a home from a complete stranger. When you work with a Realtor at least you can choose someone to act as your filter. The Realtor will work on your behalf, regardless of personality traits on the other side. Buying a FSBO means you might just have to deal with individuals who arent on your same wavelength. That can derail your purchase, even for a home you just love. Who is doing the negotiations? Unless you are a pro, negotiating for price and contingencies is a frustrating and unfulfilling task for any buyer. Plus, many buyers are unaware of certain things to ask for, what to expect and how to gauge the sellers mood, capability or motivators. You should also know what form to use when making the initial offer and counter offer. Almost every sale involves a counter offer, so gather the information youre going to need to know now, because counter offers generally have time limits. Whose contract are you going to use? Do you have your own attorney who can draw up your offer, or are you going to rely on using the sellers contract? The sellers contract is going to favor the seller. Your attorney is going to charge you to prepare the contract and any consultation time it requires. Are you getting a deal? FSBOs typically dont know how to set price. If youre not aware of market trends, the number of competing properties, current listing features and pricing, changes in mortgage rates and a multitude of other pricing influences, you might not be in the best position to judge the value of your intended purchase. One of my first buyer prospects, prior to working with me, had found a FSBO that would not pay a fee for having a Realtor involved in the sale. At that point I had to back away from the transaction (to the horror of my prospect.) I continued to check in with the buyer during her negotiations. Each time we spoke, she expressed more and more frustration with the process. The negotiations took three times as long as she expected and caused considerable heartaches, at one point the she called me in tears. She got the property and overpaid by $25,000. To this day, I dont think she even knows it. It will become apparent when she goes to sell that investment property and discovers her profit isnt what was expected. Do you have an established professional network? To purchase an FSBO, your network should include a good attorney, title company, mortgage lender, pest inspector, home inspection service and a few others that may be called upon depending on the situation. Most buyers have to let their fingers do the walking and rely on instinct to quickly determine who to work with and which out of a pool of individuals represents the best choice. Your Realtor already knows the best of the best in each category. Working with a Realtor means youll never need to consult an attorney who will bill you, not the seller. Avoid using the sellers inspection network. The service providers will be working on the sellers behalf, not yours. How do you manage problems? There are a multitude of challenges that will crop up during the transaction. It could be theres a problem with termites, a water leak, the appraisal came in under the sales price, or the seller goes on vacation in the middle of your purchase. What is your course of action? If you arent prepared for any and all contingencies, you might be inclined to let it go. This is not a good idea, and in the long term, youll end up paying the cost of these contingencies, not the seller. Are you still interested in buying an FSBO? Then contact Linda for her 9 point checklist of how to prepare yourself to buy a FSBO. |
