For Sale By Owner (FSBO) homes make up about 20% of the real estate market. You can easily find FSBO homes in your newspaper's classified section, on Craiglist.org or other websites, or by driving around looking for signs. Sometimes buying an FSBO home can be cheaper because the owners don't have to pay a fee to a Realtor. However, since you're not using a real estate professional, you as the buyer have to do a lot more research and planning to make sure you're getting a good deal and making a sound investment. Does this Spark an idea?
Get Pre-Approved
Determine how much you can afford to spend on a house and how much you want to put down. The more money you put down on a house, the more likely you are to be pre-approved for a mortgage. To determine how much you can afford, do the following: Take your monthly take-home income and subtract all the bills you currently pay, then subtract any money you set aside in savings. The number you're left with is what you can afford for a mortgage payment. Be careful because banks will always tell you that you are pre-approved for more than you can really afford.
Being pre-approved makes you more attractive to home sellers. Pre-approval means you are a serious buyer and FSBO homeowners will feel more comfortable with that.
Finding FSBO Homes
Use the Internet to search for homes. There are several websites where FSBO sellers post their properties. One of the most popular is For Sale By Owner (www.forsalebyowner.com). Use these resources to search for a home in your area. Drive around the area in which you wish to purchase a house and look for FSBO signs. They are often smaller than Realtor for-sale signs and will announce that the house is For Sale By Owner.
Don't use a Realtor to find an FSBO home. Most people who sell their homes by themselves do not use a Realtor because they want to avoid the fees associated with it.
Once you find a home in which you are interested, contact the owner directly. They will work with you to set up a tour of the house.
Fair Market Value
Sometimes people who sell their homes themselves mark up the price to try and make more money or they are just not familiar with price a house. Research the fair market value of the house. You can do this by going to your county's website and searching comparable houses for what they are worth and what comparable houses have sold for. The house you are looking to buy should be in the range of the comparable homes. If the house you want to buy is $200,000 but the comparables are around $150,000, the house is probably worth closer to $150,000.
You can also find out how much the current owner paid for their property and how much it is assessed for by going to your county's real property tax database. Most counties now have these online, if they don't you can go to your local assessor's office to find out these prices. These numbers play a factor in obtaining a mortgage. A bank will never loan you more than what the home is assessed for.
Hire an Attorney
Having a real estate attorney on your team is a must when buying an FSBO home. The attorney will provide you with advice and insight and can keep you from making a wrong decision.
All contracts should be drawn up by the attorney to make everything official. Once you have an attorney, you can go ahead and make an offer on the house. The attorney can help you negotiate during the offering process. Once the offer is in and it's accepted, it's time to get a home inspection.
Home Inspection
Home inspections are extremely important and you should never skip them. A home inspection lets you, the buyer, know if there are any defects with the house you plan on purchasing. If there are defects that turn you off from purchasing the house, you can walk away from it without any penalties. An inspector may find small defects that you can negotiate for the seller to fix. These might include: broken window panes, missing railings on stairs or missing smoke detectors.
If everything turns out to be fine after the home inspection, a date will be set by your attorney to the seller for closing.
Closing
Closing on an FSBO home will be different from a closing using a Realtor. Your attorney, you and the seller will sit down and sign any contracts the attorney has drawn up. The title of the home will transfer to you and at this time any monies to be paid by either party will take place. Without a Realtor there are fewer contracts and fees. The attorney will be paid by you the buyer. Once the deed of the property is in your name, it's yours and you can get ready to move in.
Tags: FSBO home, Sale Owner, real estate, attorney seller, attorney will
