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Buying a FSBO

by Jeanette Joy Fisher
 
Regardless of the advantages that brokers and real estate agents can offer in marketing a home, many people still try to sell their homes themselves. In real estate parlance, those types of homes, and the people who sell them, are called FSBOs (For Sale by Owners). Although FSBOs are more common in seller's markets, when competition for homes is fierce, you'll find them in all types of markets, and you'll need to use the same caution if you decide you want to buy one. 

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Sales Price

Sometimes FSBOs can be bargains, although they're often overpriced because the owner doesn't have access to comparable properties from which to derive a competitive price. When you first talk to a FSBO, ask how they came about arriving at their asking price. You can then counter with a price that's more in line with true market value if you've been shopping for some time, because the chances are good that you know more about home values than they do.

Negotiations

Remember that diplomacy and tact are very important when dealing with FSBOs, because they are selling their most valuable asset, and a place that has been their home for however long they've lived there. It's not like using an agent as an intermediary. You'll be dealing face-to-face with someone who'll take everything you say personally.

When negotiating a price, ask specific questions, without getting too personal. Ask how long the home has been for sale. Ask about any problems or required maintenance, and if the owner seems open to the question, ask why they're moving.

When you make your offer, take into account comparable properties, the length of time the home has been on the market, the seller's situation, and the fact that there won't be any real estate commissions involved (which can save you thousands of dollars by making a lower offer).

Support Services

It's often worthwhile to protect yourself by hiring a home inspector to provide a neutral opinion of necessary repairs. Choose your own inspector, rather than one recommended by the seller, just to be safe.
 
You may find it to your advantage to hire a buyer's broker to help you work through the process of buying a FSBO home, but you'll have to pay that agent's commission out of your own pocket. Even so, you can often save enough money to pay the commission by getting a better price on the home or other savings as the transaction moves along.
 
In many states, you'll find a valuable ally in your title company. They've done many real estate transactions, and they'll ask you for certain forms and information as the process continues, even if you never knew that information or form was necessary. A title company will earn their fees many times over, and they'll generally be far less expensive than going through a lawyer. However, if you've structured a fairly complicated real estate contract, you'd still do well to seek the advice of an attorney.

FSBOs have always been with us, and they can be good buys, but you should exercise extra caution when buying a home directly from the owner.

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