What to look for when buying a FSBO?
There are many issues for home buyer to look out for when buying a home directly from a home owner. The common issues are:
1. Paying too much.
Without a good knowledge of the neighborhooe, a home buyer not using a Realtor may end up paying too much for a home. This is the biggest mistake a home buyer makes when buying a house directly from the owner. There may be zoning and by-law changes that can adversely affect the value of the home being purchase. The seller may be motivated to sell his home for that reason, but he or she is not legally obligated to share that information with the home buyer. This could hurt you when the changes have a negative effect on your property value.
2. You may not be getting the bargain on a FSBO property.
This is a common mistake home buyers make when they are buying FSBO properties. The seller may save the real estate sale commission, but he or she is not reducing the sales price by the amount of the commission saved. It is difficult for a home buyer to know whether the price being negotiated is not too high for whta the home is worth.
3. Not knowing the market can hurt you.
Home buyers especially first-time buyers are not likely to know all available properties for sale in the market. Hence, they are not fully prepared to negotiate a favourable price. They are in the dark, and may get carried away with their own thoghts, or allow the sellers talking them into paying more than they wanted to pay.
4. Some properties have problems.
There are two main reasons why a homeowner sells without a real estate agent. Saving money by not wanting to pay a commission is one reason, and the second reason is the seller thinks his property will sell at price more than what he is told by a real estate agent. The FSBO seller is hoping a home buyer will come along and pays the price expected by the seller.
5. No proper disclosures.
If you’re buying directly from the seller, without an agent, make sure you get the property disclosure forms that you are expected to receive. If you work with a Realtor, he or she can help guide you in ensuring the problems are detected, and the costs to fix the problems are determined. Many home buyers fail to properly examine the problems especially older resale homes, and ended up paying dearly for repairs that have to be done later.
6. Your deposit should be held by your lawyer or notary.
When you sign a contract to purchase a FSBO house, your deposit should be held by your lawyer or notary and not the seller. Never pay the deposit directly to the seller, as any disagreement you have with the deal put you in a disadcantage position to get your money back.
7. Problem with the contract.
The sale and purchase contract should have subject conditions that protect you as a buyer. When a contract is not properly written, disagreements and disputes can be financially costly to resolve. It is not uncommon to see real estate transactions ended up in court as buyers and sellers have disputes over poorly written contracts.
8. Make sure a professional home inspection is done.
A common mistake home buyers make is trying to save money by not engaging a professional home inspection done on the property they are buying. Major problems that need repairs can be dealt with before the purchase is firmed up for completion. If a resolution cannot be made with the seller, and the problems are too costly to fix you should walk away from the deal.