When you’re hunting for your dream house, you want to make sure you turn over every stone and look in every nook and cranny of the market. This can mean moving away from houses listed in traditional ways and checking out buying a house for sale by owner.
Only about seven percent of home sales happen without a seller’s agent. The FSBO market might help you find a house with less competition and maybe a better deal, but there are some potential challenges to be aware of.
There’s lots of information out there on how to sell a house by owner, but not so much about buying one. Let’s take a look at how it changes the buying process when the seller isn’t working with an agent and what to expect.
1. Agent Fees
Most people selling a house on their own do so to save on paying agent fees. In most transactions, the seller pays the commission for the seller and buyer agents, which typically comes in at a six percent split between them.
This could mean the seller can be a bit more flexible on the price since they have lower costs to sell, but you might want to start with a discussion to get them to agree to pay your realtor’s commission. Otherwise, you’ll be paying them out of your own pocket.
2. Poor Pricing
Homeowners who put their house on the market themselves don’t have the same resources a realtor would have to help them determine an appropriate market price for their house. They can see what others are listed for around them, but not actual sales prices.
As a result, sellers might not price their houses well. They don’t get a full picture of the market and overprice their house. Or they see what things are listing for and find it difficult to believe their house should sell for that.
This leads to a situation that can work well for you or be a disaster. A seller might underprice their home and you find a great deal, or they can get unreasonably stubborn about the pricing and make negotiation harder.
3. Inexperienced Seller
Selling a house isn’t an everyday occurrence for most of us, which makes it a guaranteed bet that the seller lacks experience with the process, laws, and paperwork. If they were renting the house out, they might have some guidance from a property manager like Rentbottomline.com, but the odds are good they’re going it completely alone.
The seller might try to pressure you to not have an inspection, survey, or appraisal, but a professional home inspector should be a part of your team with any sale to ensure you know just what you’re getting. Mistakes by the seller can be costly to both of you, so it might also be a time to consider bringing on a real estate attorney as well.
Considering Buying a House for Sale by Owner?
In a competitive market, you shouldn’t discount the option of buying a house for sale by owner. You do need to be aware of the differences when it comes to dealing with a selling homeowner directly rather than through their agent, but the overall process is similar to any house purchase. Make sure you or your agent pay close attention to the details to ensure the sale goes smoothly.
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