Learn what to do when the house you want is For Sale By Owner.

If you’re the type of homebuyer who leaves no stone unturned in your search, here’s what you need to know about For Sale By Owner (FSBO) listings.

Direct communication with the seller

When buying a FSBO home, communication goes directly between you and your seller. This can be helpful for buyers who want detailed information about the house, its systems, the neighborhood and its history—as long as the seller is willing to share.
Keep in mind that while sellers in Michigan are required to provide a written disclosure about a home’s condition, a seller may misrepresent the home or simply not be fully aware of the requirements.

Pricing may not align with market value

Some FSBO sellers overprice their home. Common reasons for this include:

• not getting or ignoring recent sales data for comparable homes nearby
• inflating the price for sentimental reasons
• basing the asking price on what the owner has put into the home
• financial need

A less likely scenario is an underpriced home. A seller who’s not obligated to pay commission to an agent and desires a fast sale may price the home lower than the market value.

Working with an agent on a FSBO purchase

In some cases, FSBO sellers are willing to work with a buyer’s agent and pay a commission. However, not all agents are willing to work with FSBO sellers because it’s more complicated working with a homeowner who doesn’t know the intricacies of real estate negotiations, paperwork and legal filings.

Also, a recent lawsuit is bringing changes to how broker commissions are handled by the National Association of Realtors. The practice changes were expected to be announced by July, but that date has been moved out to August 17. The result of the new practices may shift the dynamics in FSBO sales. Home buyers and sellers have to wait and see.

Get professional advice

To do thorough due diligence when purchasing a FSBO home it’s wise to seek good counsel.

Home and pest inspectors will discover and document specifics about a home’s condition.

A real estate attorney can help you understand the legal aspects of the deal and ensure that the title and paperwork are in order.

Some real estate agents serve as transaction brokers who facilitate the deal for a fee but do not have a fiduciary duty to either the buyer or seller. They can help write the sales contract, procure title insurance, ensure paperwork is filed with appropriate government agencies and coordinate the closing. You may be able to negotiate with the seller to split the cost of a transaction agent.

Another professional you may call on in doing due diligence is a surveyor who will identify property boundaries, the location of underground improvements like septic systems and wells and any easements associated with the property.

Fees for competent professional advice are worth it because they help you avoid potential problems later.

When you find a FSBO home to buy

Buying a FSBO home generally means more work for a buyer to locate the home and do due diligence compared to working with an agent. However, the financing process remains the same. Talk to us about a custom-tailored mortgage when you’re ready to buy.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.