- #1 - Do you need an agent?
- #2 - Writing the offer to purchase contract
- #3 - Let’s talk home inspection
- #4 - Some myths about FSBO sales
It isn’t always everyone’s ideal to buy a house that is being sold by the owner but these houses often pop up and they should not be dismissed by interested home buyers.
These homes were easily spotted in the olden days with signs popping up on their lawns but today it is easier to find online.
Your real estate agent might even suggest it to you as an option!
There are, however, many questions buyers have regarding ‘For Sale By Owner’ (also known as FSBO’s). It’s almost like buying any other property but someone is going to have to step into the role of that missing listing agent.
#1 – Do you need an agent?
If a seller is selling his own home, he obviously doesn’t want the help of a listing agent. That doesn’t mean that you should go in on the deal on your own.
Having an agent on your side will play a key role in handling the necessary documentation and they can be extremely helpful in the situation.
Plus the seller will pay their commission, so there is no reason not to have one.
#2 – Writing the offer to purchase contract
Any house sale begins with an ‘offer to purchase‘ contract.
If you decide not to use an agent, you can enlist the help of a conveyancing attorney.
It would be a good idea to hire an attorney anyway, even if you have an agent to help you. They will ensure that the documentation is legal and that you are totally covered in case there is a glitch in the negotiation.
You can also choose to take care of the documentation on your own. If you do this, there are a few things that you need to keep in mind:
- Offer less than the price list.
If you start out too high, it is difficult to come back down. A lower price means that negotiations can only go up. - Write in contingencies.
Ensure that you have a way out of the transaction. This can include things like loan approval, satisfactory home inspection, etc. If any of these are incomplete, the contract can become null and void. - Do not give the deposit to the seller.
Give it to a third party (i.e. trust account) for if the sale falls through.
- Find out who is responsible for what.
Make sure that you know exactly what fees you have to pay and what the owner has to pay.
#3 – Let’s talk home inspection
You can’t skimp out on this one.
You need to get a reputable home inspector to do a home inspection.
Too many things can go wrong when you hire a fly-by-night, so it is important to ask for credentials.
Assuming you have placed a ‘subject to’ clause in the agreement, you can ask your seller to fix major problems before you buy or you can ask them to reduce the selling price so that you can fix it later.
#4 – Some myths about FSBO sales
- FSBO sellers are not serious.
Not true. A small percentage might test the waters but a larger percentage really wants to sell. - FSBOs are not flexible on price.
Statistics have actually shown that FSBO sellers get less for their home because they don’t have the help of an agent and they aren’t great at negotiation if it’s not their job. - FSBOs hide material facts.
FSBOs are bound by the same laws that govern sales made with the help of real estate agents.
