Buying a house generally comes with a lot of complexities and lengthy procedures. If the property you intend to purchase is being sold by the owner (FSBO), you might presume that these complications are eliminated. However, this isn’t always true.
The main benefit of FSBO properties is that the seller saves up to 6% of the cost if both parties don’t use real estate agents. While selling a house as an owner might seem simple, buyers should be versed with the following caveats when buying these properties.
While the commission isn’t the only way of saving when purchasing FSBO properties, it is one of the main ways. The typical commission charged by real estate agents is 6%. Depending on the cost of the house, the seller pays the commission, which is split equally between buyers’ and sellers’ agents.
As the buyer, you might be tempted to ignore everything about the commission. However, you shouldn’t because the seller may factor in this value when quoting the property price. Not hiring a real estate agent only makes sense for property sellers. As a seller, not working with agents eliminates the 6% commission, and you get to sell the house at your desired value. Note that agents don’t always guarantee a high average selling price.
If you have excellent negotiation skills and can easily create a connection with the seller, buying a FSBO property will be highly beneficial. Buyers with good negotiating skills and experience can convince sellers to lower the purchase price even better than agents would. This is better compared to using an agent, as buyers will be betting on the negotiation capabilities of the agent. FSBO buyers and sellers who develop a good relationship and trust eliminate the inevitable hurdles of purchasing the property.
While transacting without a real estate agent is possible, both parties should involve a real estate attorney in their transactions. The attorney should also oversee the signing of contract details. After negotiating the price and completing all the mandatory checks required before making a purchase, you should work with an attorney to close the sale.
While some transactions are very straightforward, others might become complicated and stressful. This may make it difficult and quite impossible for some buyers to pull through alone. Working with a real estate attorney can help in such situations.
Unfortunately, there are several misconceptions that can stop you from buying a FSBO property. Some common myths you shouldn’t pay attention to include:
- FSBO sellers aren’t serious – While a small number of FSBO property sellers want to test the waters, most FSBO sellers absolutely want to close the deal
- FSBO prices aren’t flexible – You are free to negotiate with the seller
- FSBO sellers hide material facts – FSBOs follow the same rules followed by real estate agents. They should disclose to buyers everything about the house according to federal and state guides
There are many misconceptions surrounding FSBO properties. However, you can find the best property on the market being sold by the owner. Like the conventional property purchase process, always seek legal and tax advice.
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