If you interested in opportunities in real estate and are considering buying a home that is being sold by the owner, these four considerations will assist you in determining if, and how you may want to proceed.
With the advent of on-line real estate information, searches and self-help selling companies, there are now many more homes listed for sale by owner (FSBO). You may even have a neighbor, friend, or relative who wants to sell you their home directly.
On first blush, it seems logical that buying a FSBO home without involving real estate agents would simplify the process, however this is not always what it seems. Real estate ownership is easier to navigate these days, however it takes diligence and an insightful eye to do it alone.
As you consider buying directly from an owner, there are four situations you should consider when evaluating whether to pursue a FSBO transaction.
Most individuals who decide to list a FSBO only conduct Internet research when determining a selling price.
These property owners have a significant emotional attachment to their home and are unable to emotionally detach from it. Research has indicated that properties listed FSBO on average are priced higher than comparative properties.
When buying and selling of real estate, there are requirements and duties for transferring real estate. This includes disclosures of all known problems. Many individuals who sell their own property are not familiar with basic real estate conveyance procedures. Pay close attention to all details, most importantly all scheduling deadlines and trust your instincts, even if you are using an agent. If you have reason to think the seller is neglecting a duty, or is preventing you from doing reasonable due diligence examinations--walk away.
If you plan to use an agent to buy a home, the smart FSBO seller will understand your decision and be willing to work with your agent. The FSBO seller should understand that your agent has been working closely with you to help secure a property. A FSBO seller should never suggest you “go it alone” to save paying the commission to your agent. It is inappropriate and may be another indication that you should--walk away.
If you are not using an agent and are pursuing the purchase of a property by yourself and come across a FSBO listing, you can always choose to “purchase” time from a licensed real estate attorney to consult with or help you review particular documents. They can also provide you with a list of all the required disclosures, transfer documents, contracts, or things that you will need to complete a transaction in your state (here's a checklist of necessary forms for buying real estate in Colorado). Remember, pay close attention to the conveyance documents since these documents are how title to the property is transferred. Remember---the closing is not the time to find out that there is a problem!
Don’t think of it as any different if it’s listed FSBO rather than a property that is listed by an agent.
The main thing to keep in mind is that you will likely meet and see the owner face to face. Whether it is a home or commercial property that is being sold by an owner, you have every right to request time to view the property and evaluate its condition---without the owner looking over your shoulder.
Buying a property through a FSBO listing isn’t something you should be afraid of if you go in with your “eyes open.” Whether you go it alone or use a licensed real estate agent or consult with a real estate attorney, if you see something that meets your criteria, take a look and hold to your evaluation criteria during your purchase deliberations.
Go in with your eyes wide open and know that, just like any negotiation, it may or may not work out. Although no one really wants to spend money on an attorney, if you are unsure of anthing, you can always consult a licensed Colorado real estate attorney. You might find this useful in your buying journey, my "Checklist for Closing Day on Your Real Estate Purchase."
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