For sale by owner or FSBO, as they are often referred to, is when a homeowner decides to list and market their own home for sale instead of going through a real estate broker or agent. Most homes are listed by real estate agents under a brokerage of some type but occasionally buyers come across the for sale by owner home. This may be someone you know or just a random listing in the newspaper or drive by a sign in the front yard. You might think this is an easy way to get a home without involving real estate agents but actually, it’s the opposite of simplifying the process. Conducting a real estate transaction with people that may not know the process or the legalities, can turn into a nightmare and make you and the seller liable for certain issues.
Here are five things to know before jumping into a for sale by owner real estate transaction.
1) many homeowners will work with a buyers agent.
Even if you have your own buyer’s agent but find a for sale by owner home, the seller will typically work with the buyer’s agent so you don’t need to go behind your buyer’s agent’s back in order to complete the transaction. Talk to your agent about finding the home and let them do the negotiations for you. Often times, homeowners will pay the buyers agent a commission simply for helping facilitate the transaction.
2) Pricing may not be accurate.
Talk to your agent about the accuracy of the list price. Many homeowners price their home where they think they should be listed and it may be completely off the market value. Homeowners typically don’t do a lot of research when it comes to pricing their homes. They may be overpriced or underpriced but rarely at market value. Talk to your buyer’s agent about the accuracy of the price and if you should negotiate a lower asking price.
3) Check the integrity of the house.
There could be a variety of reasons the owner is choosing to sell themselves. Perhaps they don’t want to pay a seller’s agent commission, there could be something wrong with the house, or they just don’t like working with real estate professionals. However, the house might be perfectly fine. You shouldn’t discount a for sale by owner home by thinking there something wrong with it. Many homeowners take very good care of their properties but you’ll also want to verify building permits, local codes, and have a home inspection.
4) All laws still apply.
Just because the owner is selling the home themselves doesn’t mean that they are exempt from typical state and county laws. Laws typically stipulate that the seller must disclose any problems with the home and perform any repairs upon negotiations. If there’s a hazardous issue, it should be taking care of before the buyer takes ownership. Homeowners should also allow the buyer to have their own home inspection.
5) Understand your legal rights.
If you’re not working with a real estate agent on a for sale by owner home you could be liable for issues in the future if you don’t understand all the legalities. This is why it is so crucial to have a buyers agent on your side that is familiar with local codes, tax laws, and regulations. If information is conveyed in writing it must be signed and documented by both the buyer and the seller. Do not do any negotiations verbally without everything being in writing and signed off. The last thing you want is for the previous homeowner to negate any repairs that they said they would do simply because it was not in writing.
Buying a for sale by owner home is not impossible but it does take a little bit more research for both the buyer and the seller. If you have found a home in the Tri-Valley area that is for sale by owner and you need help facilitating the deal contact my office today.
Image adapted by Mark Moz