What is a FSBO home.. I can only figure it out as” For Sale by Barrack Obama....”
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.
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. ;^)
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.
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.
Don't make out any deposit checks to the seller. Insist your deposit go into an escrow with a title company that will be handling settlement, and only with a signed contract. Note The attorney for the title company does not represent YOU, he represents the transaction. If the deal falls apart you won't get your deposit back unless the seller signs off on it.
Make sure your personal attorney is available at all times. Realtors work 24/7/ Make sure your attorney is similarly available.
Realtors have a name for attorneys “deal killers”. Keep this in mind depending on how bad you really wnat the house. Your attorney gets paid whether you buy the house or not.
Be prepared to do some research on your own. ie, tax records are public property. Get one for the property you are considering. But remember - tax assessments are really different than appraisals.
If the house is in a development or homeowners association get a copy of the rules. You may not be allowed to build a fence or pool, paint your house pink, own 3 dogs, park in the driveway, or operate a business from your home.
Have yourself mortgage-loan approved before you make an offer. Make your offer subject to lender's appraisal being at or greater than purchase price.
Interview home inspectors and decide who you will call. Make your purchase offer subject to a satisfactory (to you) home inspection to be completed with 72 hours of seller accepting your offer in writing.
Don't nickle and dime and renegotiate the price based on the home inspector suggesting cosmetic and “nice to have” upgrades. Factor the age of the roof and appliances and condition of the paint, carpet, fence, etc- into the price you offer from the get-go. On second thought- be a real pain in the axx. That's what FSBOs should be prepared to handle.
Many sales contracts used by Realtors number 20 pages or more-every one of those forms is based on someone elses’ past mistakes and misunderstandings.
This is all real simple, right? That's why it is so “easy” to be a Realtor who doesn't really “do anything” for that 2.5% of the sale price the FSBO seller is charging you anyway because he wants the same price for his house as all his neighbors who sold using Realtors.
You and your “buyer” are both looking to save the broker’s commission. How dumb is that?
Every FSBO that I have seen has been overpriced. I would just go with a realtor and listen very carefully to what he has to say. He is a second set of eyes (which you need).
Bottom line: The seller is not going to knock off the 6% or so that he normally would pay to the realtors in the deal. You will pay him that 6% so you might as well get the expertise that goes with it.
One other caveat. I have found that many FSBO sellers are a bit wierd which can add a note of mystery and suspense to the closing. I personally like a really boring closing for my clients.
Pay the best Real Estate Attorney in your area to handle the deal - from start to finish - for you. If anything goes awry, you will have recourse. It will be the best few hundred bucks you have ever spent.
Thanks for all of your input everyone. As I am not experienced in these matters every little bit of advice I can get is worth its weight in gold. You guys have provided some very solid advice!! Thanks again.
AC,
If this is your first home buying experience, by all means, get an agent and get a good one. You need to understand what everyone here is saying, that either this seller thinks he’s smart enough to do this deal on his own and wants to save the commission, or he’s upside down and can’t pay one if he wants to. Either way, he’s making you do all the work, determining real market value, determining your rights to inspection, required disclosures, etc. etc.
With a buyer agent working for you, that agent could even most likely find out what the seller paid and when he purchased this home, which could give you insight as to what the seller’s motives are for going FSBO in the first place.
The main thing you need to know before you sign a purchase contract is, is this property worth the asking price? And you absolutely have to have a way out of this contract should you find defects through your rights to inspect by professionals. Half of a purchase contract a real estate agent provides to you addresses the right to inspect the property, negotiate repairs, and will state that if you can’t negotiate repairs with the seller, you will get your earnest money back and truck on. As a real estate agent, I always advise my buyer clients to do this inspection immediately, before your UP FRONT appraisal money is spent by your lender, because once this is done, that money is GONE. ($400) Our contract verbiage has the buyer agreeing to get the appraisal ordered within 7 days, so you don’t have a long time to get your mechanical inspection.
As mentioned above, Realtors use a contract that covers every scenario possible, protecting the buyer and the seller in the transaction, and I sure as heck wouldn’t use one from Office Depot or wherever. You must protect yourself, hire a Realtor and put the commission costs to you in your offer with the seller if you can’t dig it out of your pocket.
Good luck!