A Quick Guide to Buying a Home For Sale By Owner
Approximately 28 million Americans say they plan to buy a home this year. If you’re part of that group, it can feel like a grudge match between finding the perfect place, putting in a competitive offer, and hoping that you come out on top.
If you’re looking for ways to cut down on the competition, you might consider buying a for sale by owner home, also known as FSBO. Since fewer people buy FSBOs, you might be able to find and close on a house faster. But how can you make sure that buying a house that’s for sale by the owner is a smooth process?
We’re here to help.
Keep reading to learn the most important things to do if you’re buying a for sale by owner house.
Understand What It Means
Before you do anything else, take some time to make sure you understand what it means to buy a for sale by owner home so you can determine if it’s the right choice for you. The biggest benefit of buying a home that’s for sale by its owner is that there are no agent commission fees.
While these are typically paid by the seller, this can still benefit you. In many cases, since the seller doesn’t have to pay a commission fee, they’ll list their home at a more competitive price.
However, this means that you will have to work directly with the seller, instead of communicating with them through an experienced seller’s agent. Fortunately, you’re doing research by reading this article to make sure you’re prepared for the process. You’re already one step ahead of the game!
Consider Working With a Buyer’s Agent
While FSBO houses don’t include a seller’s agent, that doesn’t mean that you can’t enlist the help of a professional. When you hire a buyer’s agent, you’ll have someone on your side to help advocate for you. They’ll answer any questions you have and work with the seller during the negotiation phase.
Best of all, they’ll handle all of the complicated paperwork and contracts for you. This is especially helpful since they can review the seller’s paperwork to make sure nothing is out of the ordinary. As we mentioned above, sellers typically are responsible for agent fees, including the commission for a buyer’s agent. So, there’s no downside to having that expertise on your side.
Get Pre-Approved for a Loan
Before you even start looking for FSBO houses to buy, you’ll want to get pre-approved for a mortgage. This helps you understand exactly how much you can afford, so you don’t waste time falling in love with a house that’s outside of your budget.
Having this pre-approval in hand also makes the buying process more streamlined, so you can put in an offer quickly as soon as you’re ready to buy. You can get pre-approved online fairly quickly, or ask your buyer’s agent for lender recommendations.
Look at Everything
Once you’re pre-approved, you can start the fun part of finding listings and scheduling tours. When you’re walking through a home, really take the time to give it a thorough inspection. During a tour, make sure to do the following:
- Open every door
- Turn light switches on and off
- Look inside the closets
- Look at ductwork and mechanical wiring
Now is also the time to ask the seller any questions you have about the state of the house. Ask about the age of the HVAC system and any work that’s been completed in the last few years. If the seller has done renovations to the house, make sure to ask about whether the work was permitted. The goal is to get as much information as you can about the home.
Do More Research
Once you’ve seen a house that you love, it’s time to do more research to make sure there’s nothing the seller is hiding. Start by ordering a Comprehensive Loss Underwriting Exchange report, which will pull any insurance claims filed in the previous 5 years.
This helps you to know more about the history of the house and any potential damage it may have.
You’ll also want to get the home professionally inspected and appraised. This gives you peace of mind that if you decide to move forward with the purchase, you’re not overpaying for it and there are no red flags that may pop up after you sign the paperwork.
Make an Offer
If everything looks good, it’s time to put in an offer on your future home! If you decided to work with a buyer’s agent, they’ll pull information about neighborhood comps to help give you guidance on a fair offer.
If you aren’t working with an agent, you’ll need to do this research yourself, to help you decide on what to offer the seller. Then, the negotiation process begins, until you and the seller come to an agreement.
Read Also: How To Sell Your House For Cash in Chicago
Consider Hiring a Lawyer
If you’re working with a buyer’s agent, they can walk you through the paperwork process. However, if you’re doing it yourself, you should consider hiring a lawyer to review the contract to make sure absolutely nothing is overlooked.
Buying a house is one of the biggest decisions you’ll make in your life and you don’t want to leave it up to chance just to save a few dollars. A lawyer will help you understand the terms of the sale and make sure that the seller doesn’t take advantage of you.
Now You’re Ready to Buy a for Sale By Owner Home
After reading through this guide on what to do when you buy a for sale by owner house, you have the knowledge you need to move forward with the house-hunting process. By doing this research ahead of time, you’re setting yourself up for success so you can find the home of your dreams.
Interested in more content like this? Be sure to browse through our other articles before you go!