Have a Realtor, But Found a House Yourself?
House hunters often feel torn when they have found a house for sale by owner, commonly called a “FSBO.” Most home buyers want to be loyal to their realtor but wonder if they can or should work directly with a seller. And they might think working without a realtor could save them money. In fact, working with a realtor is essential when buying an FSBO because this type of sale needs extra attention from a real estate professional.
Pros and Cons of Buying a House For Sale By Owner
Ten percent of sellers sold their house on their own in 2021. But most sellers are inexperienced at handling a real estate transaction. Buyers also lack experience in buying an FSBO property. Before making an offer, they need to consider the pros and cons of buying directly from the homeowner.
Pros of Buying an FSBO
For most buyers, the most positive aspect of an FSBO is its price. The home may have a lower list price than others nearby for two reasons:
- Sellers will save money on commissions by not having to compensate their own real estate agent, so they may ask for less.
- Sellers may underprice their property to sell it quickly. (Real estate agents help homeowners price their properties to sell quickly and make the most money possible.)
Many buyers also value the chance to talk directly to the seller of an FSBO. They can ask them questions about the schools and the neighborhood along with what they want to know about the house. Some buyers have more confidence about the house's condition when they speak directly with the seller. They might think they will know if the seller is telling the truth.
Cons of Buying an FSBO
In most cases, buying an FSBO is more of a headache than buying a home listed with a real estate agent. Buying a home is a major legal and financial transaction. When the seller is going it alone, everything is more complicated on their end, and the buyer feels it. Other drawbacks of buying an FSBO include:
- The FSBO is just as likely to be overpriced as underpriced. The seller may lack knowledge of the real estate market or have an inflated sense of their home’s value.
- Negotiations about sale price, move-in date, and who pays how much of the closing costs may be difficult because the seller lacks real estate experience.
- Legal and financial processes will not be as smooth as they would be if the seller were represented by a real estate agent. Both sides need to be confident that everything is being handled correctly.
- Real estate agents are bound by ethics rules, whereas a homeowner selling an FSBO may hide problems, post inaccurate photos, or worse.
- The sellers may be reluctant to fix problems found in the inspection. If they were represented by a real estate agent, they would have help negotiating on what can be one of the most challenging parts of selling a home.
In the big picture, buying a home for sale by owner adds stress to what should be an exciting, rewarding experience. Buyers face a lot of uncertainty because of the seller’s lack of real estate experience.
Working with a Good Realtor When Buying a FSBO Property
If you have your heart set on a house for sale by owner and you want your real estate agent to help you purchase the home, relax. Real estate agents work with FSBO sellers all the time. An agent will guide you in making the home your own. A good realtor will help determine a fair offer, negotiate with the seller, and handle legal and financial documents properly including:
- Disclosures: FSBO sellers may not disclose everything they need to because they don’t know they should. Or they may be covering up the defects. Regardless, a good realtor guides buyers about uncovering major issues like mold, leaky basements, and outdated electrical systems.
- Purchasing agreements: A seller’s listing agent usually drafts the contract between the buyer and seller. When the seller does not have a real estate agent, the buyer's agent prepares the contract.
- Earnest money: Inexperienced sellers may ask a buyer to deliver the earnest money directly to them. This is never a good idea. Real estate agencies have established escrow accounts and can handle holding the funds.
At Berkshire Hathaway HomeServices Select Properties, we have a team of experienced real estate agents who can help you navigate the complexities of buying an FSBO property. Our agents know St. Louis real estate and can provide personalized guidance throughout your home-buying process.
Whether buying an FSBO property or working with a seller's agent, a good realtor can make all the difference. Contact us today online or by calling 314-835-6000.
Cover photo by lutherhill by Canva.com
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