For-Sale-By-Owner Homes: Should the Buyer Beware?
The price of for-sale-by-owner homes — also knowns as FSBOs — may seem like a great bargain, especially if you are working with a limited budget.
But, as is usually the case, if it sounds too good to be true, it probably is!
The risks of purchasing an FSBO property almost always outweigh the potential benefits. In fact, unsuspecting home buyers may find themselves in a devastating financial or legal situation.
Why Sellers Believe For-Sale-By-Owner Homes Are a Good Idea
Some home sellers believe that real estate commissions are a waste of money. They believe they can sell their homes themselves and keep the commission.
If the seller has experience in the process and a realistic expectation of value, this may indeed be possible. For most for-sale-by-owner home sellers, however, this is not the case.
Many FSBO sellers lack basic knowledge of legal contracts. Worse, these types of sellers may be driven by ego and greed, making them bombastic and unwilling to negotiate with qualified potential buyers.
Why a For-Sale-By-Owner Home Is a Bad Idea for Buyers
Buyer or selling real property is a highly complex legal transaction. As much as we may wish to return to the days when a handshake sealed a deal, today’s litigious society renders that impossible.
FSBO sellers often believe they can use a contract they found online, or copy the contract their brother-in-law used when he sold his home in Missouri six years ago. In reality, each state has unique laws and documentation requirements for the transfer of real property.
Failing to follow those legal guidelines can leave you exposed to liability and potential financial loss. For example, if the for-sale-by-owner home has a structural problem, zoning or code violation, unpaid liens or another type of title problem, you may not discover it during the FSBO process.
Finally, don’t overlook the possibility that the listing is a scam. It may be difficult to determine if the seller is the legal owner of record. Unfortunately, is becoming more and more common across the United States.
What if You Fall in Love with an FSBO Listing?
If you’ve come across a private listing that you simply can’t live without, you can still protect yourself and your financial interests.
You can ask your Realtor® to contact the seller and explain that he or she has a willing and able buyer who is ready to make an offer, and ask if the seller is willing to pay a commission to a buyer’s agent in exchange for handling the paperwork.
If the seller refuses, your next option is to increase your offer to cover your agent’s commission. This means you get the house you love while protecting your legal and financial interests.
In Yorba Linda, the Edie Israel Team knows all about the pitfalls of purchasing property without professional representation. For a home buyer, real estate commissions are covered by the seller. Don’t let an unrealistic or greedy seller cheat you out of the legal and fiduciary representation you’re entitled to.
Contact us today for assistance with purchasing property in Southern California, especially for-sale-by-owner homes.