For Sale By Owners (“FSBO”s)…. the market in some segments is getting hotter again. Inventory is tight and buyers are anxious. With conditions like this, buyers aren’t really sure what to think of “FSBOs”. I may be about to shock you with what I am going to say: Buyers should look at these!
Because of the very nature of FSBOs, a well educated buyer has signficant advantages. These are basically “traditional” sales, but because the seller is not using an agent, you may find a few hiccups along the way. Other than that, you may find that:
- FSBOs often have limited access to sales comparison information they have been able to locate on line. This may result in them over or under pricing their property. Either can work to the buyer’s advantage if they are well represented.
- FSBOs generally are not able to harness the same marketing power a REALTOR would if they were to list their property, so this could result in a lower interest level… and ultimately a lower selling price.
- FSBOs will generally agree to pay for buyer’s agent’s, but you’ll have to be sure to have your agent negotiate this on your behalf, you can’t assume it.
- FSBOs are often unfamiliar with disclosure laws, and even if your contract is otherwise non-contingent, should you change your mind during the contract period, this could allow for you to terminate your contract with no penalty.
BE CAREFUL: Be careful to ensure that you, the buyer, have someone working on your behalf to guide you through drafting the contract, obtaining financing, who should hold your deposit (and how much it should be), coordinating inspections and appraisals and obtaining good title insurance, etc. Otherwise, you could find that you have written a $10-20K check to someone for a deposit and end up losing that money and not getting the house either!
Although there may be some hiccups along the way as the sellers fumble through the sale, FSBOs can offer significant opportunities for the right buyer. The last FSBO I sold resulted in my buyer getting a property that was $83,000 below the appraised value…. and that seller never knew he left that much money on the table. Many people are penny-wise and pound-foolish. You may as well use these opportunities to your benefit. A good buyers agent can help you do just that.
Follow this link to learn about other Types of Sales we’re seeing in the 2014 Real Estate Market in Northern Virginia and “Typical Contract Terms“.
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