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For Sale By Owner: What You Need to Know

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Seller's Responsibilities

One of the biggest misconceptions among sellers is what makes a home appealing to buyers. Sellers should be familiar with nearby homes for sale and address issues like maintenance and cleanliness. Pricing should also be in line with the local market. While sellers are under pressure to be informed, they can save as much as 6% on the final selling price by avoiding an agent’s commission fee.

Sellers also assume they are in complete control, but there are considerations in properly navigating the process.

Seek Expert Advice
A real estate agent can serve as a transaction agent, acting as a consultant rather than a full representative. Sometimes they’ll even work with an attorney to ensure the transaction is completed legally and without error. Real estate offices may provide such services at a flat fee or with a lower commission percentage.

Marketing
To maximize the chances for a successful sale, sellers must get the word out. A “For Sale” sign is not enough. In today’s market, a network of friends, neighbors, real estate agents, social media and even local community groups provides the exposure one needs. Informational flyers are also helpful. Once again, see if a local realtor can work on your level. Some employ buyer’s agents for a lower commission.

Documentation
In addition to properly worded, binding contracts, sellers must also be aware of other documentation required by state law. Many states enforce real estate disclosure laws for aspects like the condition of the home. The seller is often liable for property defects if they are not disclosed right away.

 

Advice for Buyers

Buying a house involves several logistical steps. If you are not using an agent, here are several things you need to know:

Know What You Can Afford
Buyers often assume the upfront price is the actual cost of the house. Size, location, the condition of the local school system and even indirect expenses, such as commuting, influence what you ultimately spend. Other financial obligations such as monthly homeowners association fees and car or student loans add on to a monthly budget. Our mortgage calculator can help you estimate the potential costs.

Pre-approval for a mortgage loan shows the seller you are serious about, and able to, buy the home. It also serves as a strong negotiating tool. Your credit score is also important; the higher it is, the easier it is to get the maximum mortgage from a lender.

You Are Not Working Alone
Another misconception about For Sale by Owner is you can simply buy a house from any seller without any outside help. If you haven’t had much experience, you may want to reach out for some help.  Various professionals and others can serve as great assets when looking to buy a home.

  • Seller - Since there’s no agent to interpret your needs, the best way to become informed about the property is to contact the seller. Look for their email or phone number on the listing. The seller should be your first source for answers.  Focus on aspects such as age, function and renovations made, rather than easily-fixable decorative elements.
  • Real Estate Attorney -  An attorney can serve as an adviser while representing you. A legal representative also understands local ordinances, state tax laws and other requirements and can guide you through negotiations.
  • Appraiser -  Lenders usually require an appraiser to visit the house. An appraisal includes a valuation report that compares the asking price to recent sales in the neighborhood, plus added factors such as foreclosures and distress sales.
  • Inspector -  For a few hundred dollars, a licensed home inspector can assess the condition of the home and provide a report on structural issues and more.
  • Lender -  It is important to work with the lender throughout the process. Maintain contact as the lender may have specific requirements for the appraisal, proof of income and so forth.  Mountain America is happy to assist you through the process.

Several important matters must be properly addressed when buying or selling an FSBO home. The reward for buyers and sellers can be great when all is done right. While many prefer to work without an agent, expert guidance helps you stay up-to-date on the legal, financial and personal requirements of buying a home.

If you have more questions about buying or selling a home as For Sale By Owner transaction, contact one of our mortgage experts for more information.

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