Homeowners list their properties as ‘for sale by owner’ (FSBO) primarily to avoid paying a commission to real estate agents. A commission cuts into their profits big time as it is usually up to six percent of the sales price. FSBO sellers can potentially save thousands of dollars by listing their homes on their own.
If you have zeroed in on a property that is listed as FSBO in Fargo ND, you must be wondering how the absence of a listing agent to represent the seller can affect the process. Here are a few tips for buying FSBO homes:
Be more careful about the asking price
Since the seller has not hired a real estate agent to come up with a listing price for the home, he or she is prone to overpricing the property. Be sure to conduct a study of comps or comparable homes. You should look at the listing detail of homes that were sold recently and are currently on the market in your target areas. You can also analyze the information about median home values in specific neighborhoods provided by free property listing websites. The idea is to make sure that the seller has priced the home fairly and you don’t end up paying more than what the property is worth.
Know who will pay for the commission for the buyer’s agent
In most cases, the seller pays the commission to his agent as well as that of the buyer’s. But FSBO sellers are not hiring a real estate agent to avoid paying a commission in the first place so they may refuse to pay any commission to your agent. If you have hired a real estate agent to represent you, you should find out if the seller is willing to pay the commission. If so you should get him or her to write this agreement into the purchase contract to avoid last minute conflicts.
There is one more thing that you need to consider. What if you found the FSBO home on your own? Will your agent still get the commission? Well it depends on the clauses in the representation contract that you signed with your agent.
Go through the regular home buying process
The process of buying a FSBO home is not different from buying a regular home. You will need to take all the steps as usual. You should get pre-approved from a lender to ensure that the seller takes your offer seriously. If you are financing your home deal with a mortgage, you should write relevant contingency clauses into the contract to make sure that your interests are protected. You should also hire a home inspector to perform a home inspection and know the property’s condition.
Make sure that the seller provides you with a North Dakota Residential Real Estate Sales Disclosure Statement and discloses all the known defects with the property. You should also go through the purchase agreement carefully.
Don’t hesitate to buy a FSBO home if you are getting a good deal. Make sure that the home has been listed for the right price. Since you are dealing with the seller directly, you should try to avoid saying something that could potentially offend him.