Buying a Home For Sale By Owner: 5 Things You ... - Austin Real Estate

Think you are going to get a better deal if you buy a FSBO?

Are your FBSO sellers taking their junk, er, ART with them?

Think again.

5 Reasons Why a FBSO Won?t Save You Money

When you think For Sale By Owner, you might be thinking you?ll save yourself a real estate commission, and get a better priced house in the process.

Unfortunately, that isn?t usually the case and here are 5 reasons why:

1. Sellers selling FSBO want to save the real estate commission. That doesn?t mean they took it off the price of the house, it just means they won?t be paying a commission to a Listing Agent, or to your Buyers Agent (if you have one).
2. FBSO homes are usually overpriced. Why? Because sellers price it according to what they want out of the house, not what the actual market value of the house is. Sellers selling a home by themselves rarely have a good idea of what the price on the home should be.
3. When you don?t have an agent, it is even more critical that you have a real estate lawyer review your contract for you. When you buy a listed home (i.e. a home on the MLS), the seller pays the commission on both sides of the transaction.

   When you buy a For Sale By Owner Home, you don?t have an agent (paid for by the seller, but working for you) to review your contract, or to answer any of your questions. What do lawyer?s fees run ? about $350/hour? (This is not the time to have your Aunt Holly the paralegal take a look ? too much money is st stake).

4. You?ll be negotiating directly with the sellers. If you?re a push-over, you?ll pay too much. If you?re a hard-nosed negotiator, you may alienate the sellers ? make them angry ? with your tactics. Either way, you lose.
5. Even if you and the sellers reach an agreement, the appraisal might not ?come in?. When neither side of a transaction has access to actual market data on a home, the agreed-upon sales price may be higher than the actual market value of the home.

   When that is the case, the appraisal will ?come in low? (lower than the contract) and you?ll either have to re-negotiate to lower the price, come up with more cash to close the gap, or cancel the contract ? after you?ve already invested a lot of time and money into it (for the inspection and the appraisal and your loan application.)

   (This is also a risk when agents are involved, but GOOD agent will spot an over-priced house before you get that deep into the contract.)

Not Convinced? Do Some FBSO Homework

If you still really want to buy a FBSO home, go for it!

Just make sure you?ve done all of your research so that you know all of the rules and laws that govern real estate transactions in Texas to make sure you are protected.

Also, make sure to hire a good lawyer to review your contracts and title policy for any potential problems.

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Source: http://findrealaustin.com/real-tips/buying-home-sale-owner-5.htm

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