for sale by owner questions?
October 17, 2009 by
Filed under realestate for sale by owner
If Im a first time home buyer, if I buy a home that is FSBO…what things should I look out for, Who draws up all the paper work? How is it different than using a realestate agent? pros and cons? Thanks!!
please dont tell me not to buy that the market is terrible. aka stuff I already know. Im looking to buy in about a year or so not really sure. I just need info. THANKS
the purchase sales agreements are pretty easy to do just fill in the blanks but get the inspections done like structural and appraisal and termite etc for your protection and the title and mortgage company will do the rest
I am a mortgage banker in tN & KY
Unless you are exceptionally savvy and learned in the practice of real estate, buying a FSBO home without any kind of professional representation is the biggest “don’t” in my book.
Certainly, if you insist on bringing a buyer’s agent to the table in a FSBO deal, the seller can balk at paying any commission at all to your agent (which customarily would be half of the typical sales commission of 6 percent, for example). After all, the seller’s objective all along was to save on fees. So you might not get the house you really want unless you’re willing to pay the entire commission, a scenario that might tempt you to skip the agent route in buying that FSBO home you’re eyeing.
You can get a standard real estate contract from a stationery store or online or from a real estate office. Many FSBO organizations provide a blank form as part of service. You don’t have a neutral 3rd party negotiating and acting as buffer between seller and buyer.
Good to plan ahead like this.
BUILD your credit by paying all bills in full and on time. Pay down all credit cards, paying 3-5 times minimum every month. Reduce credit card usage, number of cards.
SAVE money for down payment. Need 3-5% for FHA, 10% is better. If you have 20% down you avoid PMI, which is good.
Your going to most likely need a lawyer and to have title work and inspection done on your own. Basically- you have to do all the research and work- if this is your first home, I personally won’t do it. You can still have an agent while the other person does not- I personally think it’s worth having the agent because if you buy a bad title with liens against it or the wrong title “like they show you a mansion and then your title is for a shack”- you are screwed.
I know someone who bought a house from the owner fast for 10,000 and then later found out that 300,000 was owed against it!!!!
Some deals are too good to be true.
Anyone who tells you not to buy in this market is a fool, as long as you are looking to stay in the home for at least a few years. Now is a great time to buy because prices are very low and there are a ton of options on the market.
Anyway, when you purchase a home FSBO, you can still have a real estate agent represent you, it just means that the seller doesn’t have an agent. In a normal sale with agents for both parties, the seller pays the buyer’s agent’s commission. You should try to negotiate a deal where the seller pays your agent’s commission like normal. However, in the seller may refuse to pay real estate commissions at all. If this is the case, you should pay your agent about 3% of the sale price of the house for commission. Factor this expense in before you commit to a sale price, you should pay about 3% less for the house so that the extra money can pay your Realtor. You may be able to find an agent who will work for reduced commission, but you get what you pay for.
Another option is to have a real estate lawyer review all the paperwork. This will cost you a few hundred dollars, but it will be cheaper than paying an agent but they won’t give you the same level of service.
Why wouldn’t you buy in a down market? BUT be sure you have representation to cover your interests. The only reason someone sells FSBO is to keep his profit as high as possible. He will not do anything to protect you.
You should get someone to help you get comps, do a full professional inspection top to bottom, make sure the contract has all the necessary contingencies, etc, etc. I would never do it on my own.