For-Sale-By-Owner (FSBO) Purchase: What You Need to Know

Posted by Steve smith on December 5th, 2019

If you want to sell your home, most people's immediate choice would be to choose a real estate agent and sell their home with a prearranged commission rate. But did you know there was another way? 

What is For-Sale-By-Owner    

Choosing to sell your home without the help of a real estate company is called a sale-by-owner agreement. This allows you to sell your home without having to pay a commission, meaning that you can get all of the money generated from your house sale. Sounds easy right? If you are prepared to put in the leg work, you could be saving you, and your buyer, thousands of expenses.

In the traditional real estate market, the commission is split between the seller and the buyer in theory, The problem with this method usually arises when it comes to finding a serious buyer.  Some custom services may be available for a greater or lower percent in your region, depending on the scope of work and market conditions.

Ideally, you should hire a real estate agent. It’s always in the best interest to have a representative, someone who can guide you through the process. He will confirm, for instance, whether a home's price is reasonable, assist in putting together a convincing offer, negotiate the inspection and issues that may arise on the way.

Here’s where money may play truant. If you're a buyer with your own real estate agent, he will expect to be paid for his time and efforts on your behalf.

Sale and Purchase Agreement 

There are many sites dedicated for-sale-by-owner purchases, using one of these can help you to find a buyer/seller. This allows you to circumvent the agency commission rates but also allows you to begin proceeding towards making a purchase/sale.

You should negotiate and research before agreeing to a sale and purchase agreement. This should involve the buyer and the seller (preferably together) investigating the prices of property in the same/surrounding area to communicate a realistic price point. This will ensure no misunderstandings or false truths during the negotiation. You should still use an Agent, which is a good practice.  Even if you are able to negotiate a deal between the two parties, you should still look for an agent for soliciting the contract and the exchange. This helps you to protect you and the buyer from overlooking anything.

Generally, a real estate agent will offer a fixed cost, much lower than a commission, to arrange for the correct documentation to be provided and to oversee the signing and exchange. If you are a seller, using an agent will allow you to avoid paying more than you should. By allowing an agent to value the property of interest will ensure that you are paying the correct value of the home. It is unlikely that an inexperienced seller will be able to tell the true value of his home, the agent will also provide you all the protection you need to be able to legally buy and own the home you have agreed to buy. Both parties should make price agreements and how to handle the handover beforehand to save some time if you want to sell/buy quickly! 

Mortgage Agreements 

The process for gaining a mortgage is similar to the traditional house buying process. You must provide details of the purchase, and they will make an arrangement if they feel that your situation allows for the mortgage your applying for. You will need to do footwork including allowing an inspector to review the property; this will allow you to find any deficiencies in the property which the seller is obliged to fix before selling the house to you. This will save you money and avoid unexpected surprises! 

You should seek legal protection to oversee the mortgage agreement signing between you and your bank to ensure that there can be no loose ends and make sure that your contract is fair and watertight. 

Remember to take precautions when looking to buy or sell without an agent. Don't skimp or skip any procedures which you are used to. The rules and regulations are there for a reason. Just because your avoiding charges doesn't mean you will save money, consider all your options when buying a house. The commitment is long (even within a business environment) and the investment is huge.  We wish you luck on your venture to buying your future home and hope that your future business dealings are successful and satisfactory.

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Steve smith

About the Author

Steve smith
Joined: December 5th, 2019
Articles Posted: 1