5 Things You Do Not Know About FSBOs But Probably Should
Posted on: 24 July 2020
FSBOs, or homes sold 'for sale by owner', may seem like bargain shopping for the uninitiated. They, however, are not a deal and should be avoided. At the very least you should understand why.
1. Disclosure
Sellers are required to sign disclosure documents. While the wording varies from state to state, sellers are required to truthfully represent their home to buyers. A listing agent can explain this fact and the implications of lying to a client. A FSBO, however, has no code of ethics to respect. They may or may not mention the mold threat was quickly painted over in the back bedroom or the flood that happened in the basement twice the previous year.
2. Overpriced
FSBO sellers often try to put a 'pie-in-the-sky' price on their home to see what happens. An uneducated buyer may assume that the price is fair. Without an agent representing them in the transaction, a buyer would have no idea what a fair price for the home is. While national real estate websites may scrape data on sold homes in your area and offer a ballpark figure, it is not always accurate. Only an experienced professional can give a solid assessment of a home's value based on hyper-local knowledge and house-specific details that need to be seen in person.
3. Scheduling
You will have to work around the seller's day when scheduling showings, paperwork signing, inspections, appraisals, and final walk-throughs. If they had an agent, it would be that agent's job to meet you and your team at a time convenient to you.
4. Paperwork
Buying and selling a home results in a lot of paperwork. Sometimes the documents signed at the closing are several inches thick. You can't just hope the paperwork is done right. There is a reason that real estate agents hire other professionals to assist in the closing process. It's complicated. The average home seller will not know what to do correctly.
5. Commission
The main reason many homeowners decide to sell without an agent is to save on the cost of commission. They may present a good case to you as to why neither of you should pay an agent's commission when you can work out the details of the sale by yourself. Remember, however, that the buyer never has to pay commission. The seller pays the commission to their listing agent who, in turn, splits the commission with the buyer's agent. The seller is the only one saving money.
Buying an FSBO may be tempting, especially if the house has what you are looking for. It is not always the best financial decision, though.
For further tips, reach out to a local real estate agent that can help you find real estate for sale.
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