If you’re new to real estate, you probably haven’t heard of FSBO, but it’s an acronym you’re likely to come across. It stands for For Sale by Owner, and it means that you’ll be dealing directly with the owner of the home rather than their real estate agent if you choose to buy their property. Here’s what you need to know.
Be careful. Many buyers choose to avoid FSBO homes because there can be a reputation that these homes will be overpriced, and that the seller will hide defects that need repairing. You’ll need to do your research and rely on your agent to help you ensure the property will be worth it for you at the end of the day. Find out how long the home has been on the market and make sure you know the market value before you approach the seller.
Ensure the paperwork is all there. Paperwork is always important when it comes to real estate, but it’s vital to make sure all the paperwork is correct and in order when you’re buying directly from a seller. Without an agent representing them, there’s a much higher chance of error in the paperwork on their end, and that could affect you and your assets. An overvalued home or liens on the home could make your lender refuse your mortgage.
Use an agent. An agent is an invaluable resource when it comes to buying a home, but consider their value doubled if you’re looking at a FSBO. Your agent will be there to protect you and ensure you not only get the best deal possible, but don’t inadvertently end up with an overvalued home in need of repair. Since there’s no agent on the sellers’ end to ensure everything is being done by the books, you’ll at least know that your agent will be there to protect you. If neither party is using an agent, the home hasn’t been vetted by a professional—and, at the end of the day, you’re the one who will suffer.
Consider if it’s worth it. While many buyers might be scared away from a FSBO sale, there are reasons to pursue these listings if you have an agent on your side to protect you. Since they’re less desirable to many buyers, it means that there’s less competition, so you’re likely able to get a better deal than you would on a similar home. This means you can negotiate harder and get the best price for the property. It also means you might find that perfect hidden gem home that’s been passed over simply because it’s FSBO. As long as you have someone in your corner to protect you, don’t immediately discount a FSBO property.