Should You Buy a House That Is For Sale by Owner?
Some homeowners decide to sell a house themselves, rather than getting help from a real estate agent. Buying a house that is listed as “for sale by owner” (FSBO) may have pros and cons.
What Is a “For Sale by Owner” Listing?
If a house is listed as “for sale by owner,” that means the homeowner is selling it without assistance from a real estate agent. Owners of FSBO properties generally want to avoid paying a real estate agent’s commission.
Pricing for FSBO Listings
When a seller works with an agent, the agent looks at the recent sales of comparable homes to set an asking price. A person who is not working with an agent will not have access to the same detailed data that agents do.
An agent can take an unbiased look at the characteristics of a house and neighborhood and the local real estate market to set a list price, but a seller’s emotional connection to a home can affect their assessment of its value. A seller who’s not working with an agent may set an unreasonably high asking price.
On the other hand, you may find an FSBO property at a bargain. When a seller has an agent, the agent’s fee is built into the list price. A seller who doesn’t have to pay an agent may adjust the asking price accordingly.
Communication With the Seller
In transactions in which agents represent the buyer and seller, the agents communicate with each other and relay information to their clients. If the seller doesn’t have an agent, the parties can communicate more directly.
If the seller is honest and forthcoming, you and your agent may be able to gather more information about the house, its condition and the neighborhood than you could if an agent represented the seller. That may help you make a more informed decision.
The current owner may reveal his or her motivation for selling. If the owner has to move soon to start a new job, he or she may be willing to negotiate a lower price.
Problems That May Arise
A seller who doesn’t understand how real estate transactions typically proceed may object to requests that are common and reasonable. For example, the seller generally pays commissions for both the seller’s and buyer’s agents. An owner who wants to make as much money as possible may refuse to pay your agent’s fee.
If an inspection uncovers problems, the buyer may ask the seller to make repairs or to lower the asking price. A seller who doesn’t understand that may be offended if you request repairs or a price reduction.
Talk to Your Agent
A home that’s listed as “for sale by owner” can pose unique challenges and opportunities. Your experience may depend on an individual seller’s motivation, understanding of the real estate market and willingness to negotiate. If you’re interested in an FSBO property, discuss it with your agent.
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