When shopping for a home you will come across some listings that are For Sale By Owner (FSBO). One of these properties could be your dream home and the property could offer great value, but there are some potential drawbacks of a FSBO that you should be aware of.
It’s not necessarily less expensive.
The main reason people choose to sell their own home is to save money on realtor commissions. If the seller is saving money, you’d think that would be reflected in the sale price, but that’s rarely the case. People will typically price their property in accordance with market prices of similar homes in the same neighbourhood, regardless of commission savings. Since they’re already trying to save a buck, they might be firm on their asking price and tough to negotiate with since they don’t have the experience of negotiating price and terms.
They may not disclose everything about the property.
Even a well-intentioned seller may not be aware of all the things that need to be disclosed. Condition of the home, repairs completed or required, whether the property has had flood damage or mould problems and even details like square footage of the home. You won’t discover a problem until after the sale – even an inspection generally can’t be comprehensive enough to capture what the seller may be obligated to disclose.
Your realtor may not want to assist with the transaction.
Depending on the broker or the individual, some realtors will not get involved with a FSBO transaction. Since the seller doesn’t have a realtor and might not know how to take care of all the paperwork, your agent could end up doing the work of two realtors for only half the commission. Some won’t want the extra workload.
If you do go ahead with purchasing a property that is FSBO, you may want to find an agent who will help you and all paperwork should be looked at by your lawyer. You will need at least one professional who can get all the paperwork in order to make for a smooth process. A professional will know if the property is priced fairly, help with negotiations and close the deal.