About 7% of homes were sold by owners in 2020. These are called FSBO homes, and they tend to get overlooked in the real estate market.
FSBO homes are usually seen as something to avoid in the real estate market. Sellers try to sell the home themselves to save money on commissions.
Home buying is stressful, and in this tight real estate market, a FSBO home just might be the deal you’re looking for. Should you buy a FSBO home?
Conventional wisdom says no, but the reality is that they offer plenty of benefits to home buyers. Want to learn more?
Keep reading to discover the benefits of buying a FSBO home and how to buy one.
1. Greater Control
A FSBO home means that you’re highly involved in the real estate transaction. You don’t leave the transaction between two real estate agents.
You know exactly where the deal stands and what needs to happen next. That degree of control might give you a little more security knowing everything is getting handled.
On the downside, that control means you’re much more involved in the home buying process. Things that you would normally handoff to a real estate agent are your responsibility.
2. FSBO Homes Usually Cost Less
This is often the biggest advantage of a FSBO home. Real estate agents earn commission on the sale of the home, often adding thousands of dollars to the total cost of the home.
Sellers save money, and they pass that savings on to home buyers.
Be aware that some sellers are overly optimistic about the value of the home. Be sure to do your own assessment of the property and determine a fair price for the home.
If you’re looking at a real estate investment, a FSBO home could be the way to get started. They’re often undervalued and you can find properties that have two flats for sale.
You can fix up the building, live in one flat, and rent out the second for a nice stream of income. You can get started in real estate investing even if you have low income.
3. You Learn More About the Home and Neighborhood
Sellers are responsible for arranging showings and open houses. This is a great chance to ask questions about the neighborhood and the home.
A real estate agent wouldn’t know the characters of the neighborhood. They wouldn’t know who the noisy neighbors are or who the gossips are.
A FSBO seller knows. They also know a lot about the home. There are small quirks and great stories about the home. A FSBO seller will tell you all of these things.
You’ll get a sense of the spirit of the home that you just won’t get from a real estate agent.
4. Better Communication With the Seller
What’s nice about buying a FSBO home is that you work directly with the seller. If you’ve ever played a game of telephone, you know that information gets lost when more people get involved.
Since there isn’t a real estate agent involved on the seller’s side, you have fewer people involved in the transaction. The communication is much better and more direct.
5. Creative Negotiations
If a seller is willing to forgo the conventional route to sell a home, they’re usually willing to get creative in contract negotiations.
They may want to stay in the home a little longer so they have more time to find a home for themselves. Since you’re working directly with the seller, it’s much easier to come up with a contract that works for everyone.
Some FSBO sellers are real estate agents themselves. This means that they know how to make a transaction happen, no matter what your circumstances are.
They might offer financing for people with bad credit. They’re also bound by state regulations as licensed real estate professionals.
How to Buy a FSBO Home
In a real estate market as challenging as this one, it’s worth it to consider buying a FSBO home. How do you go about finding them?
Since they’re outside of the multiple listing service, they have to use other venues to list their homes. You could start by driving around the neighborhood where you want to live. It’s possible to see a for sale by owner sign in the window of a home.
Check online for FSBO homes. Sites like Craigslist, Facebook Marketplace, Zillow, and Trulia have FSBO listings. An online search for FSBO homes in your area could uncover additional properties for sale.
You’ll need to do some investigating before you make an offer on a property. Do a comparable sales price check with other similar properties that sold in the last three months.
Ask the seller a few questions about the home. Find out how long the property has been on the market and if it was listed with another real estate agent.
If the home has been on the market for a long time, ask the seller why they think it’s been on the market for so long. If they’re blaming agents or people come in with lowball offers, be wary about proceeding.
This is a very optimistic seller. They’re likely to be difficult to deal with.
If you do make an offer on the home, be sure to get the home inspected. You’ll still negotiate the contract offer, and finalize financing on the home just like you would with a conventional sale.
Getting Creative With the Home Buying Process
Home buying is tough in this market. It’s hyper-competitive and people are driving up sales prices of homes in bidding wars.
You can find diamonds in the rough and great opportunities when you look at FSBO homes. There are a lot of benefits to buying a FSBO home. The home buying process is similar to a standard sale with real estate agents.
If you enjoyed learning about FSBO homes, you’ll like the other real estate articles on this site. Check out the Real Estate Talk section of this site for the latest.