What are some things to consider when buying a house for sale by owner? I really like a house, but I am not sure the next step for making an offer without an agent.
What are some things to consider when buying a house for sale by owner? I really like a house, but I am not sure the next step for making an offer without an agent.
Have an inspection.
Have an attorney look at the contract (you can use him for a closing agent if you want).
Not really that different, I bought my first house FSBO
You can always use an agent and negotiate a fee or you can hire a real estate attorney to look over all the paperwork and make sure everything is okay. My lawyer just happens to own a title agency. I buy and sell houses and normally have a real estate agent sell them but on one house a buyer approached me while I was remodelling it and ended up buying it from me. I used my lawyer to draw up all the paperwork the realtor normally would have done.
I just sold a house on land contract a while back and I had my lawyer draw up the paperwork. The buyer took it to his lawyer to check it out and we got to a contract we were both happy with. It really didn't cost that much money, maybe a couple hundred bucks.
I would consider if the house is overpriced. That's very typical with "for sale by owner" homes.
I am not a fan of Realtors, as a group, but I am highly suspicious of the motives and/or pricing of most FSBO sellers.
I wrote a booklet on the FSBO process, helping people to avoid dealing with Realtors. In doing the research on it, I found something quite unexpected. Many FSBO sellers are just the sort of people you wouldn't want to buy anything from, let alone a house. Oftentimes, they didn't do expected maintenance on the property and played dumb when they were hiding something. FSBO sellers are oftentimes the greediest and most stubborn people in a neighborhood.
Ideally, you want to buy from someone who doesn't know what their home is worth and has a Realtor who prices the house low for a quick sale and commission. The FSBO seller is fighting you for every dollar, and the FSBO homes are rarely priced low.
Just get a title lawyer and you will be fine. If you want to know how much the house is worth simply go to the local courthouse and see how much the guy paid for it and when . Next look up any recent sales. Offer what you want in this market. Realtors are for fools.
If you want to make an offer, you should do some research to see what other homes have recently sold for that compare to the one you like. You may want to order an inspection of the property, and maybe even an appraisal. Sometimes the Seller will already have an appraisal done. If you're going through the Bank to get financing, the bank will sometimes require that the home appraises for or above what your offer is. You may want to consider ordering an appraisal to see how about how much the market value is.
If you want to make an offer, you should do some research to see what other homes have recently sold for that compare to the one you like. You may want to order an inspection of the property, and maybe even an appraisal. Sometimes the Seller will already have an appraisal done. If you're going through the Bank to get financing, the bank will sometimes require that the home appraises for or above what your offer is. You may want to consider ordering an appraisal to see how about how much the market value is.
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Your state's bar association probably has a model sale contract for the sale of a residential home that you could use. Finding an attorney who does title work is also a good idea (as long as they work hourly).
The biggest problem with FSBO people is that they do not understand contract law. They are more likely to get into problems with multiple offers (if they price appropriately or are trying to sell fast because of a job offer). In most jurisdictions, acceptance of an offer on real property must be in writing to be binding. Best practice is to make your offer on a sale contract (earnest money contract) and require the seller to accept by signing the contract. That way the seller is bound and cannot dump you for a better offer.
The other problem is property condition. Do not rely on a single inspector. Get an electrician to inspect the wiring, a plumber to inspect the plumbing and a structural guy to look at the foundation (if that is an issue where you live), a termite guy and a regular home inspector to make the mortgage company happy. It will cost you an extra few hundred, but it is worth it as most home inspectors cannot catch everything. Also, trades will also be able to give you estimates.
Most sale by owner's provide this, but insist upon a one year insurance policy. They only cost $300-$400 and many cover most everything. This gives a little peace of mind on major things like furnace, plumbing, & electrical.
I've bought and sold without a realator more than once. Most just want to avoid paying the fee and are honest people. Just take the precautions others have mentioned.
This is all true. One thing can and does happen with FSBOs though...because they may not be as educated on their home's value as they should be, they SOMETIMES offer it all too LOW a price...though this is the minority of the time. However, it is more likely to happen with a FSBO than with a Realtor. BUT, I agree with you that MOST of the time a FSBO home is over priced.
The Most Obvious wrote:
I would consider if the house is overpriced. That's very typical with "for sale by owner" homes.
I am not a fan of Realtors, as a group, but I am highly suspicious of the motives and/or pricing of most FSBO sellers.
I wrote a booklet on the FSBO process, helping people to avoid dealing with Realtors. In doing the research on it, I found something quite unexpected. Many FSBO sellers are just the sort of people you wouldn't want to buy anything from, let alone a house. Oftentimes, they didn't do expected maintenance on the property and played dumb when they were hiding something. FSBO sellers are oftentimes the greediest and most stubborn people in a neighborhood.
Ideally, you want to buy from someone who doesn't know what their home is worth and has a Realtor who prices the house low for a quick sale and commission. The FSBO seller is fighting you for every dollar, and the FSBO homes are rarely priced low.
The Most Obvious is obviously putting in a plug for real estate agents. I don't believe a word he says about those who want to sell their own homes.
The OP should determine what a fair market price is and make an offer accordingly. Work through a real estate lawyer. I have had nothing but good luck and a honest relationship when buying from FSBOs.
Many of us have a negative opinion of REAs.
night runner wrote:
The Most Obvious is obviously putting in a plug for real estate agents. I don't believe a word he says about those who want to sell their own homes.
The OP should determine what a fair market price is and make an offer accordingly. Work through a real estate lawyer. I have had nothing but good luck and a honest relationship when buying from FSBOs.
Many of us have a negative opinion of REAs.
Okay, then I'll make it clear. I was a realtor for a year. A few were nice, good people, most were well dressed, low ethics, lowlifes. I spent several years after that in mortgage lending (a better group than realtors, but still many of them with low ethics). I was hired to ghostwrite a manual on buying FSBOs and went into the field and met with many homeowners who were selling their homes FSBO. The original purpose of the manual, which was, how to buy a home without a realtor, became a two part effort, including how to navigate the minefield of FSBO sellers.
When you've had over a hundred interviews with FSBO buyers and sellers, instead of your handful of personal experiences, then you are welcome to generalize about the market as brazenly as you do. Say what you want about anonymous me, but making me into a promoter for realtors shows just how off base you are on one of your key premises. You are not well attuned to the FSBO market either. It includes seller vultures and any advice to FSBO buyers should begin and end with beware.
It can go well, and often does, but it goes wrong often enough that FSBO buyers who pat themselves on the back for their success, are misleading to those who expect an honest FSBO seller, a lower price, and a happy experience.
Also, one of my favorite interview categories were of FSBO buyers who clearly overpaid. I never told them, just collected their impressions of the transaction. Most were clueless. I separately learned what their preparations were for the transactions, as the gaps in their awareness were vital for the manual, as I thought that not doing what those FSBO buyers did was important.
A remarkable number of people took the price of superior homes as "comps" for their overpriced FSBO acquisition. For example, the same model, on two different lots in a development could have been sold for $25K or $50K different prices when new and such a differential should typically remain on resale, to account for a lot with a better view, away from high traveled roads, etc.
Now, maybe you are fully aware of that, but I met many otherwise smart FSBO buyers who think they saved $5K to $10K going FSBO, when they actually overpaid by a much larger amount, for the one reason I mentioned above, and a whole host of others.
FSBO buyers, as a group, are often the same kind of people who think they are the ones that "got a great deal" from a car dealership. They are often very susceptible to a sob story, or flattery, and investigate very superficially.
Sure, most FSBO transactions are good and smart for both sides, but the array of experiences is much broader than you have implied.
The Most Obvious wrote:
I would consider if the house is overpriced. That's very typical with "for sale by owner" homes.
I am not a fan of Realtors, as a group, but I am highly suspicious of the motives and/or pricing of most FSBO sellers.
I wrote a booklet on the FSBO process, helping people to avoid dealing with Realtors. In doing the research on it, I found something quite unexpected. Many FSBO sellers are just the sort of people you wouldn't want to buy anything from, let alone a house. Oftentimes, they didn't do expected maintenance on the property and played dumb when they were hiding something. FSBO sellers are oftentimes the greediest and most stubborn people in a neighborhood.
Ideally, you want to buy from someone who doesn't know what their home is worth and has a Realtor who prices the house low for a quick sale and commission. The FSBO seller is fighting you for every dollar, and the FSBO homes are rarely priced low.
I dunno, dude. I was a grad student and decided to leave and take a job abroad, so I had owned my place and ended up selling it FSBO much lower than I'd bought it the year before. I'm pretty much as upfront as I can be about my intentions, not sure why you think all FSBOs are hiding something. It's just a good way to save on real estate commissions for informed market participants. The one agent I'd talked to seemed like a really shady guy.
that was very well written. I wish I could write like that. I've looked at FSBO listings on line and got the general impression people thought their houses were worth more than the market, much like people always think THEIR kids are the smartest, fastest and best looking; none of which are true.
TMO - You sound almost desperate in your effort to demonize FSBOs. So an agent loses a commission every time a house is sold FSBO. Too bad.
You are way too superficial on all of this, especially in your phony characterization of FSBO sellers and buyers .
Most people who bought houses from, oh, 2002-2007 "overpaid." Most of those went the fully traditional route with agents on all sides. Even if your intentions are pure, your logic doesn't hold up.
Granny does your dog bark ? wrote:
Realtors are for fools.
That is a very ignorant statement. I have bought and sold over 60 houses and always use a realtor. If you have the time and resources to sell your own house, then good for you. I can make far better use of my time doing what I am best at which is remodeling houses. I would become LESS efficient if I also tried to sell them too. I also like the "arms length" element of the transaction by having a realtor sell the property for me.
The added bonus is that when a great foreclosure gets listed, I am one of the first to get a call about it. Do you find it odd that most foreclosures from the largest mortgage companies in the U.S. are listed with realtors? If it was so easy, these companies would sell the houses themselves.
Kartelite: i've read your posts before, and you seemed to have half a brain. In responding to "most obvious" though, you made the assumption that because you were reasonably honest and upfront then everyone is. Hmmm, does that logically check out? I dunno, dude.
Night runner. I would bet anything that you are a realtor. You are probably the scummy, unethical windbag that gives ethical realtors a bad name. Or, you are just a scummy knee-jerk dumbass. Same thing
In reading both of "most obvious'" posts, s/he comes across as someone who has real insight into the process, and doesn't seem to have any hidden agenda. Why everyone seems so quick to accuse this person of some kind of agenda is weird. Full disclosure: i am a lifelong renter and have never bought or sold real property (so you can save your attributions of bias)
missing the benefits wrote:
Granny does your dog bark ? wrote:Realtors are for fools.
That is a very ignorant statement. I have bought and sold over 60 houses and always use a realtor. If you have the time and resources to sell your own house, then good for you. I can make far better use of my time doing what I am best at which is remodeling houses. I would become LESS efficient if I also tried to sell them too. I also like the "arms length" element of the transaction by having a realtor sell the property for me.
Amen. If you have the time, the information, and a simple transaction, FSBO could work for you. But keep your brash quote in mind, "Granny," if you're ever in the situation where you're responsible for selling a deceased person's property, particularly one that's geographically distant.
It is too bad, as it is with most posts on Lets Run that the idiots rule the roost. Fortunately, there are a few good individuals, who despite the crap, are willing to share their knowledge for the good of the readers.
I see the same sort of garbage generated on running related posts. These young, immature knuckleheads need to get on with their lives and just listen and learn. They have nothing positive to offer the original poster.