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Should you Buy a FSBO

For Sale by Owner (FSBO) offers some great opportunities to get a home at bargain price, but also some risks. National Association of REALTORS® research shows that the difference between asking price and selling price for FSBO sales is about twice that of homes sold through a real estate agent. In 2006, the difference in median purchase price was more than 15 percent. It is the buyer, not the seller, who saves the commission - and then some. But unless you really know what you are doing, you will need a real estate professional in your corner.

There are two ways to buy a FSBO through a REALTOR®.

Enter into an Exclusive Buyer's Agreement with a REALTOR®. That means you, the buyer, agree to pay the commission. When your agent finds the FSBO that you want to purchase, ask him/her to negotiate for the seller to pay the commission, or reduce the selling price accordingly. The agreement provides that any commission paid by any other party is deducted from your commission obligation.

Usually a FSBO seller will "work with an agent." That means that if the agent brings a buyer, the seller will enter into Single Party agreement. Because there is no Listing Agency involved, the seller pays only one half the customary commission, usually about 3 percent

Savvy investors watch the FSBO ads carefully, submit low offers, and often buy at a bargain price. Ironically, when they are ready to sell they are likely list with an agent, for a quicker sale at a better price, even after paying a commission. A FSBO can be a good way to buy a home, if you are careful.

For more information go to: www.OakhurstRealEstate.info/news.html or www.EdBaileyRealtor.com/news.html

Posted by Ed Bailey GRI, Broker Associate, Instructor on 05/16/2008 06:58 AM

Comments (4)

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4 Comments on Should you Buy a FSBO

It used to be a great way! When the market was hot you didn't need a realtor. All you had to do was a stick a sign in the yard and wait for the bidding war to begin. It also caused the market to be flooded with new agents that weren't really qualified. Now the market has changed and the importance of a good, experienced realtor is very important. An in-experienced agent is just as bad as buying from a FSBO like you described above.

I recommend all my buyers use an experienced Realtor in this market so that they can get the best deal possible.

John Thomas - Certified Mortgage Planner

05/16/2008 08:05 AM

by John Thomas (Primary Residential Mortgage Inc.)

As a for sale by owner service, we recommend to our sellers that they obtain and use a professional appraisal to set their asking price to avoid over or under pricing their properties. The appraisal gives them solid facts to rely upon when negotiating with buyers (and their agents). The appraisal also offers sellers confident that their buyer's mortages will be written as they already know their homes will appraise out appropriately.

We educate our sellers about how to work with a buyer's agent and help them understand how the commission may be worked out between both parties. Of course, a buyer doesn not NEED an agent in order to purchase privately from the seller. The buyer should hire an experienced real estate attorney to represent their legal interests, as should the seller.

Investors look at all types of property, with agents and on their own. We have worked with many savvy investors who, when it comes time to sell an improved property choose our services over listing with an agent and losing 6% on their potential profit. Again, a current appraisal will help them to price their property appropriately for the market and assure them that they are getting full value.

05/19/2008 08:09 AM

by Liz Provo, Massachusetts 4 Sale By Owner

Hmmm......

Research by the National Association of Realtors found that in 2006 the median purchase price for homes sold through an agent was 15% higher than for homes sold by owner. Let me see, gain 15% and lose 6%. Sounds good to me. If anyone saves on FSBOs, it is buyers.

05/22/2008 07:59 AM

by Ed Bailey GRI, Broker Associate, Instructor (Oakhurst Real Estate)

I think we could all do our part. if each Realtor purchase a bank owned home (1 million +) we would change the business all by our selves. Lets vote on that.. Steve

05/22/2008 08:03 AM

by Steve Loynd, Alpine Lakes Real Estate Inc., Loon Mt, NH.

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