When you’re shopping for a home, you may come across one you’re interested in that is listed as For Sale by Owner. In 2016, 89% of homes sold involved an agent, so while this DIY approach is not the most popular choice, it is something you may come across during your search.
A seller may choose to sell their home without the help of a realtor to save money on fees. Buying a home that is listed this way can present a few unique challenges. Don’t be scared off, though! Be prepared by remembering these four tips:
1. It’s not just business, it’s personal:
Since there is no real estate agent involved on the seller’s end,as the buyer you’ll be dealing with the home owner directly when you tour the property and negotiate the deal. People become emotionally invested in their homes, and this could make you feel uncomfortable and less free to ask questions, voice concerns, or openly negotiate given the level of involvement the seller has.
2. Who pays who?
During real estate transactions, the seller pays the realtor’s commission. Since a FSBO transaction doesn’t involve a seller’s agent, you should be clear of how your agent’s involvement may change if you pursue a the property. If you’d like to keep your agent, ask the seller if they are paying a commission to an agent that brings in a buyer. Realtors often bring traffic to a for sale by owner’s home, and as a result the seller is often willing to pay some sort of commission to a buyer’s agent. This can be an important negotiating tool. A seller may believe they can save all commission fees when a home is first listed, but the longer the house is for sale, the more open they may become to paying a portion of the realtor’s commission.
3. Hire the pros!
While you may end up purchasing a property without the help of a realtor, that doesn’t mean you should forego using other professionals. A real estate lawyer can and should help draw up a purchase offer and contract, and it’s a good idea to have an escrow company hold your earnest money, rather than giving it directly to the seller. Appraisal and inspection companies should also be involved as you work through all the details of the deal.
4. Sellers are serious.
It’s a common myth that FSBO listings are less serious sellers, and are instead interested in gauging interest. In fact, most sellers are very interested in selling their homes, so you should approach them with the same level of seriousness as a buyer.