Things to Consider Before Purchasing a ‘For Sale by Owner’ Home

Sunwest Escrow of Albuquerque, New Mexico has been servicing real estate contracts and owner financing for over 30 years. In that time we have learned quite a bit about ‘For Sale by Owner’ home purchasing and FSBO contractual agreements. As industry experts, our extensive experience in ‘For Sale by Owner’ buying exchanges can save you time, money and the frustration of navigating this somewhat complex home-purchasing experience.

Here is some important information the team at Sunwest Escrow would like to share with you before you pursue a home that is ‘For Sale by Owner.’

Have you fallen in love with a home that is ‘For Sale by Owner’ and you’re not really sure what to do next? You might have a lot of unanswered questions about the difference between FSBOs and a home listed through a real estate brokerage firm, starting with, is this FSBO home something that I should follow up with or should I stay clear of the home all together? Buying a FSBO is just like buying any other property…somewhat. Someone will need to assume the responsibilities of the missing listing agent on the other side.

1.    Is an agent necessary in a home buying situation that involves an FSBO?

The whole reason the seller has listed their home FSBO is most likely to avoid having their own agent mixed up in the home selling process. But, as a buyer, having your own agent can be extremely helpful throughout the FSOB process. If you have an agent already, they can contact the buyer on your behalf. If you currently are without an agent, consider finding one that is willing to work with FSBO contracts. Real Estate agents that represent the buyer aren’t always thrilled with the prospect of working on FSBO contracts because of the increased liability, increased work load and not necessarily increased earnings for the extra work.  Finally, the seller typically pays the agent commission so why should you go at it alone?

2.    What do I need to know about writing the purchase contract?

All home sales begin with a purchase contract. Writing one can be very difficult and often requires expert help. If you aren’t working with an agent and aren’t comfortable taking on the contract writing yourself, you can choose to bring in a real estate lawyer to handle that particular aspect of the transaction for you. In reality, you should go ahead and find a real estate attorney that you are willing to work with and have them assist you in making sure the entire transaction is accomplished legally and all of your rights are covered and protected. Many lawyers can draw up purchase offers and other documents for a reasonable fee, and it’s usually money well spent.

3.    How do I handle FSBO home inspections?

FSBO home inspections should be handled in the same manner that any other home inspection prior to purchasing is handled. Always get a home inspection by a reputable home inspector. Deals can go bad very quickly when you are working with a bad home inspector. Make sure you ask for credentials, industry associations, and customer references. Then make sure you follow up on the information they provided you to confirm that what they are telling you is true. If a problem with the house is found during inspection you can request that the owner fix the problem, credit you the money, or reduce the sale price.

4.    Should I get a ‘Title Policy’?

Some buyers think it’s not worth the extra money to buy title insurance but a smart buyer always does so. The cost to fix clouds on a title or to dispute easements can be enormous when compared to the amount it costs to buy insurance.

Things to consider when buying an FSBO Home:

• Offer less than list price.

• Write in contingencies.

• Do not give your earnest money deposit to the seller.

• Use a third party to hold deposits for you, such as a title or escrow company.

• Determine who pays for what.

• Agree upon and document when you will take possession.

• Get preapproved for a mortgage, just like you would for any other home purchase.

Are you considering buying a ‘For Sale by Owner’ home in the Albuquerque Area? Let Sunwest Escrow of Albuquerque, New Mexico facilitate your ‘For Sale by Owner’ home purchase.

Call Today for a Consultation Appointment at (505) 237-2225