What You Need to Know about “For Sale by Owner” Homes

November 25, 2015

 
Your preliminary housing search will show you many homes that are being sold by independent real estate agents, by agents who are working through an agency, and by agencies themselves. You’ll also likely see some attractive homes that are listed not by an agent or agency, but by the current homeowner.
 
What does it mean when someone is trying to go it alone to sell his or her home? And what does it mean for you when you become interested in a house that is “for sale by owner?” Here’s what you need to know.
 

It’s a private listing

A home that is listed by its owner, with no agent representing him or her, is a private listing. The owner has decided not to contract an agent to sell the home, thus avoiding any fees a certified real estate agent or agency would charge.
 
This also means the homeowner has to negotiate the entire sale process him or herself, and may not be acquainted with all of the laws and regulations governing home sales.
 
You can contact the homeowner yourself if you are interested in a “for sale by owner” home. You can also certainly still have your agent contact the homeowner to help facilitate the sale on your end—but the owner has the right to choose not to work with your agency on the sale.
 
Usually, when an agent has been contracted to sell a property, he or she already has background knowledge about the home, has inspected and photographed it, and can tell if the home will fit your needs. The agent will also have a good idea if you can negotiate a sale around the bid you are willing to place.
 
A “for sale by owner” listing will require more research on your part, which will also require cooperation from the homeowner
 

More assurance is needed

If you are interested in bidding on a “for sale by owner” home, you will want to gather as much information as you can from the owner and local agencies. After all, you need to know what you are getting yourself into when you purchase a home.
 
Ask the homeowner for as much information as you can about the home’s age, its history of repairs and maintenance, and anything else he or she can tell you. You can also get records from the city or county to verify the home’s age, the property’s estimated value, property tax history, and any building permit it has had in previous years.
 
You will also definitely want to hire a housing inspector, any number of safety inspections, and an appraiser to verify the home’s soundness, its state, and its value. Of course, the person trying to sell the house must agree to have all of these inspections done, but he or she isn’t bound to agree—if that’s the case, it may not be a good sign.
 

The process may differ

Without an agent guiding the homeowner through the process of selling his or her home, the steps may differ from when an agency is guiding both parties. Particularly if you are working with an agent and the homeowner is not, the process can also become frustrating—especially for the homeowner, who must negotiate with you, your agent, and your lender, and also deal with inspectors and appraisers coming into the home. 
 
Although you will still be able to view the home, request inspections, secure funding, and place a bid, there is no guarantee that the process will run as smoothly as it would if an agent was working as a direct intermediary serving both parties’ interests, rather than just your interests as the buyer.
 
Purchasing a “for sale by owner” home can be a smooth process, particularly with a homeowner who has done so before. That said, it is still in your best interest to have an agent working on your behalf. 


 

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