For Sale by Owner Homes: 4 Things Buyers Should Know
You are wandering down a country lane when you see a sign: real estate for sale by owner. You start to get ideas and make plans for your future living on this rural property. However, before you slip too far down the road of imagination, consider whether you want to embark on the journey of negotiating directly with home owners to purchase a home.
1. Owners Are Often Financially-Motivated But Will Negotiate
When sellers list their home through a real estate agent, they will be responsible for paying realtor’s fees to both their agent and the agent representing the buyer. Many homeowners who list their homes themselves would like to reduce the fees that they pay and keep these funds for themselves. However, that does not mean that they are unmotivated or unwilling to negotiate. Owners are just as motivated as other owners to sell their property.
2. Negotiating Looks Different
When you work with a realtor, you are working with a professional who understands the business of real estate. A lot of this business is about negotiation skills. Real estate agents work to make sure that you get the best price for your home when you are selling, and they try to get you the best deal on what you are buying as well.
When you negotiate with an owner about a home, that person may not be incredibly familiar with real estate negotiation. Statistics indicate that most For Sales By Owners get less for their homes than those who list with a real estate agent. Similarly, a buyer who does not use a realtor in the negotiating process needs to be ready to sharpen his or her own negotiating skills to get the best deal possible.
3. You Still Need to Be Critical
If you are getting a home tour from the owner, it is hard to open up drawers and check doors to make sure they work. You may feel uncomfortable discussing the results of a home inspection. However, it is very important that you do the same amount of due diligence that you would do if you were buying this home with the help of a realtor. Consider getting a CLUE report, a Comprehensive Loss Underwriting Exchange that shows you the five-year history of insurance claims on the property, which can give you ideas about past damage that has occurred to the home.
4. You Will Still Need Help
Even if the owners do not want to work with a realtor, you can work with a mortgage company to get a letter of pre-approval, so that you can show this to curious owners who want to confirm that you can buy the property. You should also connect with a real estate attorney to make sure that you have someone who can properly organize the transfer and closing of the property. Purchasing title insurance is also a wise choice.
Are you looking at purchasing a property? Are you considering buying real estate for sale by owner? If so, Open for Homes can help you in your search for more information about the process of buying and selling a home. Visit the blog at Open For Homes for information about the home buyer's journey.