Posted on 06/19/2008 9:02:37 AM PDT by AngryCapitalist
Im thinking about buying a FSBO Home. Have any of you had any experience with this before? Is it a good idea? Pros and Cons? What should I look for?
Any and all advice would be appreciated
What is a FSBO home.. I can only figure it out as” For Sale by Barrack Obama....”
For sale by owner. Be sure to get the disclosure.... and READ it
You basically have two choices, you can go to that legal zoom site and down load the documents that you need and hire the title search, yourself, or you can pay a real estate agent to review all the documents and draw up the contract for you. If you don’t know what you are doing, I suggest the second, especially in this market, where there could be unknown financing on the property, unpaid taxes, etc.
You basically have two choices, you can go to that legal zoom site and down load the documents that you need and hire the title search, yourself, or you can pay a real estate agent or lawyer to review all the documents and draw up the contract for you. If you don’t know what you are doing, I suggest the second, especially in this market, where there could be unknown financing on the property, unpaid taxes, etc.
Thanks, you enlightend me.. it will be a good read
Personally, I would advise you to hire a Realtor as a Buyer Agent representing you in the offer. If it’s just to protect your interests for that specific property, you can probably pay them 1% of the Contract Price...and get the seller to pay it by including it in any monetary concessions you ask for.
If you’re not willing to do that and insist on acting on your own behalf....
1) Ask a top-known real estate agent in the area who he or she would recommend you hire as a professional home inspector.
2) Find out what the comparable sold prices have been in the subdivision or neighborhood or immediate area for like size homes with the same GLA (Gross Living Area) above grade.
3)Make any written offer subject to a satisfactory home inspection to be conducted within 10 business days from the date of ratification by the parties...with satisfactory meaning at your sole discretion.
4) Make the offer subject to you being able to procure a firm written commitment for financing withing 30 days, so that if something negative happens, you don’t lose your earnest money deposit. Make sure a 3rd party holds that deposit and not the Seller.
If you need any other advice, you can Freepmail me.
30 years experience here.
My experience has been that FSBO home sellers always have a grandiose idea about the value of their home and are almost always arrogant and won’t bargain intelligently. I’d retain the services of a “buyers” broker/realtor.
Be really careful that you do not overpay, I have seen this happen more than once with people buying FSBO properties. People may not always like realtors, but a good buyers agent will keep this from happening, as they are working for you.
Make sure you have a very good home inspection done, again you have no one else watching your back. Once you close the home with any flaws is yours.
I am not saying you should not buy a FSBO; just be aware that you will on your own with a very expensive purchase.
Also, ask management to change the spelling of your moniker.
Capitalist is correct. Capitol is the building.
You’re welcome. ;^)
The main problem is that most people try to sell their own home without a Realtor in order to ‘save’ the commission.
And people who buy from a For Sale By Owner [FSBO] right off the bat want to offer less because they know the Seller is not going to pay a commission
Both can’t save the commission.
IMO, anybody that tries to sell their own home in the current inventory flooded market is not serious about selling and usually has his property overpriced.
Maybe he works at the Capitol or something...
maybe he is angry at the people in the Capitol? I know that I sure am...
You are getting the home at a discount since you are not paying (indirectly) the realtor’s commission.
Prior to making your offer to purchase, go to town hall and pull the property file to review the tax card, Certificate of Occupancy, survey, etc. There may be violations or other issues which can be used as a negotiating factor in your purchase price.
When you’re ready to make an offer, put it in writing. You can pick up a form in Staples.
Hire a real estate attorney who can negotiate the contract for you. Do your due diligence—title search, home inspection, septic inspection (if applicable), etc. Never put down more than 10% of the purchase price as a down payment. Down payment should be held by seller’s attorney in an escrow account.
Make sure contract contains financing contingency. This is your back door out of contract should you decide that house is not for you.
As most have already stated, get a realtor on your side and make sure you pull comps. Nearly every FSBO house I’ve looked at over the past few years has been grossly overpriced.
As long as your financing is in order and you like the house the transaction should be a breeze.
I sold my home FSBO and it went pretty well. I find the only real benefit of a Realtor is they do the legwork to find the house for you and they do the bargaining, which some people don't like to do.
Now if the owner is financing the house for you, that is a different story altogether.
I had someone last year who bought a FSBO. They didn’t want to spend the money on a home inspection.
A week after closing they found termites in the home. The property appraised for enough, but it appeared they overpaid also.
In conventional markets, FSBOs are regarded as “sellers to cheap to pay a commish” (I’m a realtor)
In present day markets, FSBOs can mean “seller whose sale proceeds would not permit him to pay a commish because he/she is underwater”. (eg; the seller would have to bring funds to the closing table.)
In ANY kind of market, another variation could be “seller owns the house outright and might well be willing to provide seller financing” which is potentially one of the biggest and most favorable opportunities for buying the home. I am NOT saying that you would be getting a deal on the home, I am saying you might well get a deal on the financing.
First, you have to decide whether you are buying as your residence or as an investment. Different rules apply. In your position, with your inexperience, I would have to recommend something like the following, and I can’t pretend to be giving you the complete to do list: See if you can obtain the public records regarding the house. These are available on line from several sources, including trulia.com. Or, they are available by visiting your county recorder. No intelligent strategy can be derived without knowing the sales history of the house. For example, if the home was bot circa 2005-2006, you may be looking at an underwater seller. If the home was bot long ago, you could be looking at a seller with a ton of equity or one who has substantialy paid down their mortgage...or one who owns the home free and clear. Try to obtain this info on your own, without affiliating with a realtor.
Second, get your financing lined up. Get pre approved (not just pre qualified) by a lender in the form of a pre-approval letter, which will state an amount you qualify to borrow. This puts you in a strong negotiating position with ANY seller on ANY home, and it will demonstrate to any realtor you associate with that you are serious.
If you do not have any personal friends who are realtors who can give you a quick review of the circumstances, I think you would be wise to make the acquaintance of a realtor and unconditionally offer to pay them several hundred dollars to review the situation, whether the deal proceeds or not. Presumably, you would at least a few steps further down the road than where you are right now and you continue tohave interest in the home. You should stongly consider forming and signing a “buyer’s broker” relationship with him/her FOR THIS POTENTIAL DEAL ONLY and offer to pay them their normal (or a negotiated, reduced) commish if this deal executes. Normally, the seller pays the commish, but you would do well to have AND PAY FOR the guidance of a realtor out of YOUR money. Above all, you MUST obtain and have at least one other set of eyes on the deal. Otherwise the pitfalls are legion.
If you wish to PM me for further suggestions, feel free.
Advice - don’t.
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