Even though the market has cooled a little bit since 2022, there’s no question that real estate deals are still moving pretty fast, especially in highly desirable areas. That’s prompting some homeowners to forgo hiring a listing agent and simply list their properties “For Sale By Owner” (FSBO).
Buying an FSBO home isn’t necessarily risky, and it could even have some advantages. Here are some additional tips that can make the whole process easier:
1. Make absolutely certain that you do your research
Often, owners who go this route haven’t been living long enough in their home to have a lot of equity, and they don’t want to lose what little equity they do have to realtor’s fees. Unfortunately, that means that they may push their price point a little above market average, too.
That means it’s important to look at the recent sales prices on comparable properties in the area. This can help you determine if the home is priced realistically or not and make negotiations more productive.
2. Don’t skip the home inspection
There are mandatory disclosure requirements in real estate that have to be made even in FSBO deals – but those are not substitutes for a thorough home inspection. Even though some buyers, anxious to make a deal, are skipping this step, you really shouldn’t. The inspection will help you identify any problems with the property (and, potentially, give you more leverage when it comes to negotiating the price).
3. Don’t give your earnest money to the seller
Your earnest money is what shows you’re serious about an offer, and you normally would give it to the seller’s listing agent. Since there is no seller’s agent, you may be tempted to give the money to the seller directly, but that’s a bad idea. Put the money in an escrow account or with the title company you hire. That keeps your money secure in case something happens and the seller backs out of the deal.
It’s always wisest to have experienced legal guidance by your side when you’re buying real estate, since this is likely to be one of the biggest investments of your life. They can review your contract, ensure legal compliance and guide you around the pitfalls of the transaction process.