What Buyers need to know about FSBO (For Sale by Owner) properties
My favorite Lender, Juliana James-Thomas of 1st Capital Mortgage, contacted me about a client interested in purchasing a FSBO property - “for sale by owner.” She was concerned that he didn’t have his own representation and that he may be paying too much for the property. The Buyer feels rushed to make an offer on the property because the Sellers have offered to pay a portion of his closing costs and have come down from their original list price. 
Juliana asked me to investigate to determine if the Buyer was indeed getting a good price on the “for sale by owner” property. He is getting pre-qualified in preparation to make an offer. Many Lenders wouldn’t care whether their client are actually paying a fair price, but Juliana takes a very personal and ethical approach to lending, which is why she builds client relationships for life.
I did some quick research on the property, and the “for sale by owner” property is over-priced by at least $10,000. In fact, the Sellers are asking almost $30,000 more than they paid for the property four years ago and from what I can tell from our MLS data (Multiple Listing Service), they have made limited improvements since their purchase.
Even IF Seller and Buyer agree on price, this property may have a problem appraising for the agreed-upon sales price, and that won’t be discovered until the Buyer has already spent $400 on an appraisal and possibly $500 on inspections. What happens then?
What Buyers need to know about FSBO (For Sale by Owner) properties
Often Buyers think they will get a better deal on For Sale by Owner properties because the Seller is not paying Realtor commissions. In actuality, Sellers rarely pass that savings along to the Buyer. Without having Realtor representation, a Buyer will often pay too much for a property and not negotiate needed repairs or know to ask for a residential service agreement.
Buyers, please take advantage of the many services a Buyer’s agent can offer you. We can access records to determine what was originally paid for a property, what improvements have been made, what the Sellers owe on the property and much more.
We help people buy houses every day, so we can craft an offer asking for the appropriate amount for repairs, closing costs, home warranties and more. We will be aware of what will likely be an appraisal requirement and will know if the house will appraise for the amount paid.
We will guide you through the buying process -- the largest investment you will make in your life time.
With the deadline approaching for 1st-time home Buyers to be under contract by April 30th, please contact me if you are considering purchasing a home.
Time is of the essence and Buyer representation is PRICELESS.
Lori is a residential Realtor serving the greater Tulsa area, and specializing in midtown Tulsa real estate. Please visit Lori’s web site, LoriCain.com or call 918-852-5036.
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Lori is a residential Realtor with Chinowth & Cohen Realtors serving the greater Tulsa area and specializing in downtown Tulsa and midtown Tulsa real estate.
It is wonderful the Lender took the time out to make sure her customer's were getting a good deal. A lot of buyer's don't know you don't pay for representation the seller pays your commission.
Lori,
What a nice mortgage rep and it was so nice of you to help check the value as well.
Juliana is an awesome Lender - always looking out for her clients' best interest.
While investigating this property, I found another one down the street - same floor plan, same square footage, etc., but this property has new laminate flooring, new ceramic tile, new HEAT and AIR, new light fixtures and more - offered at $10,000 LESS than the FSBO property he is considering. Don't you think we should compare the two? :-)
Excellent example of the need to have the backing of a realtor behind you to negotiate and protect. And what a great lender you have in Juliana.
Lori,
Great Post. It tells how important a REALTOR role is when you are buying or selling a home.
Thanks for sharing,
Matt Naumann
Lori, I have had not one, but two, buyers reject getting into negotiations with sellers that list and want to represent themselves with a low-to-no service company...not quite as out there as a FSBO, but close. Both had already been through a couple of purchases and didn't want to get tied up dealing with a seller that didn't know the depth of a contract. Good valid post!
I want to scream every time I hear someone proclaim that a FSBO is a better deal because of the lack of commission being paid.
HOOEY!
That savings is going right in the seller's pocket. (I don't bedgrudge that. But I begrudge the notion that a better deal is being given!)
Jane - Juliania is a great partner and one smart cookie!
Matt - thanks for stopping by.
Jane C - Thank you my dear!!
Lisa (Schnitt Happens) - love your comment!!!
Let the buyer beware if for sale by owner homes! DO you have many FSBO's inTulsa these days?
If you are being sued for $100k you hire an attorney to represent you, when you have a $100k tax problem you hire a CPA to respresent you so it makes no sense when you want to buy a $100k home you get a Realtor to represent you. Thanks for the post and I am going to reblog!
Rich - not too many FSBOs - seems they eventually list with a Realtor. I think the biggest problem FSBOs have is getting qualified Buyers.
Kari - excellent points - thanks for the re-blog!
I like the FSBO who owns his home free and clear, so he prices his home $100,000 above the short sale next door and the foreclosure across the street to match the price that those people paid three years ago. Nope. Doesn't work that way.
Lori - love the post and i'm going to reblog. Most buyers don't have a realistic idea of the homebuying process and the role of the real estate agent in it. You've done a nice job of explaining why we bring an added advantage to FSBO's. By the way, what a great and caring mortgage rep.