As the real estate market heats up with buyers searching and competing for the best deal, many potential buyers are turning to FSBO properties. A FSBO is a home that is for sale by owner, this is often one of the ways in which home buyers believe they can get a bargain, according to Dean Graziosi. Although, in most cases that isn’t always the outcome; according to the National Association of Realtors, many home buyers may pay less when they purchase a home that has been listed by an agent rather than the current homeowner.
If you are a homebuyer who is considering purchasing a FSBO home, there are some things that you should be aware of before you agree to the seller’s terms.
- Understand The Seller – The better you understand the seller the easier it may be for you to get the best price on their home. You shouldn’t go into the deal thinking that you’re going to get their rock-bottom price right from the beginning. The primary reason why sellers choose to list their homes on their own is to avoid the commission they would have to pay an agent. This is money that they want to hold onto, and they will not give you their lowest price at the onset of the deal. As the talk progress, you may be able to gauge the willingness of the seller to lower their price. Once you notice that they may be willing to entertain an offer lower than their asking price, go ahead and make your best offer.
- Protect Your Interests – When you go into a FSBO deal, it is highly recommended that you understand how to protect yourself throughout the entire process. The most important thing for buyers in these types of deals to remember is to never count on an oral promise. You should always get everything in writing. This will help you protect yourself should the seller state that they never promised or agreed to any stipulation.
- Escrow – In an FSBO deal, buyers should never allow the seller to hold onto or deposit their earnest money. Instead, you should ask for it to be deposited into an escrow account. If you’re not sure who to open an escrow account with, you should ask your lender for any recommendations they may have.
- Obtain A C.L.U.E. Report – A C.L.U.E. report, also known as a comprehensive loss underwriting exchange, will let you check any insurance claims data on file related to the home you are purchasing. This report will cover the last five years and can be obtained online. Once you receive the report, you should carefully go over it and take note of any claims related to water damage or mold. These can be red flags and may signify further expenses on your part once you purchase the home.
Mr. Graziosi states that buyers who purchase a FSBO home may often receive good deals, but it is important for anyone considering this buying technique to go into the process armed with as much knowledge as possible. This will help buyers avoid any costly mistakes and possibly walk away with nothing.