FSBO Do You Really Save Money In The Long Run?

I have been hearing about and seeing a lot of homes "For Sale By Owner (FSBO)."  In fact, I am working with a few clients that are trying to buy a FSBO.  I am not sure if more FSBOs is a product of the type of market we are experiencing.  I suspect many people are trying to get out of their homes and feel they need to save some as much money as possible.

There are a few things you need to be aware of if you are trying to purchase a FSBO...

This area is usually addressed from the real estate agent perspective by Jeff and his team, but in light of recent experiences, I wanted to share some thoughts on the topic.

When purchasing a home, you do not necessarily have protection unless you are being represented by a Realtor.  There are many areas in which you SHOULD be afforded protection.

• Make sure the home is going to appraise for what you have agreed to pay for it.  Do your homework and research the property first or even have an appraiser take a look at it.
• Make sure you are protected for any damage that the seller may leave when they move out.
• If they are renting back the home from you, make sure that you have put in place the proper paperwork that ensures they pay you rent.
• Don't forget about a home inspection.
• Make sure you know what type of property you are buying. Is it a stick built home, a double-wide on a permanent foundation or is it a modular home?  That makes a huge difference in your financing.

Kim Thagholm
Loan Officer
Peoples Choice Mortgage

You can reach Kim Thagholm via email or by calling (540) 395-6674

Comments

[Jeff Edmisten]

Kim,

Good words of caution. I personally have friends who purchased a "For Sale By Owner" a couple of years ago. They now understand that they paid more than the home was really worth and didn't have the protection they should have.

Since they made the purchase they have poured many thousands of dollars into making repairs for hidden and undiscovered defects in the home, with little or no recourse.

If I can add another note to your post. I agree that someone purchasing a FSBO without representation should do extensive research on the home including the price. But an interesting note that most purchasers of FSBOs may not understand is that even if it appraises for the sales price, doesn't mean that you still are not paying too much for the home. The market may actually be dictating a lower price for that home.

I understand some of the mindset behind a seller who tries to sell their home themselves. I do not understand the mindset of a purchaser who buys a FSBO without representation. The FSBO has no long term problems or issues if they sell the home, but a purchaser can have some very expensive and long term issues if they buy the home without protection. I am not saying they shouldn't buy a FSBO, but I certainly wouldn't make that kind of investment without representation and protection. If the seller refused to participate with a Realtor involved, then I would find another home.

All great points Kim, and thanks for bringing it to us.

[MtMav]

"A man who represents himself in a court of law has a fool for a client." Likewise in Real Estate, an individual who buys or sells a property in today's litigious society without an agent is asking for trouble.

[Kim thagholm]

Thank you for your comments. Great point!

[Jeff Edmisten]

MTMav,

Great point about the litigation conscious society in which we live. Well said.