So you found the home of your dreams, and it’s a FSBO. What do you do now?
Purchasing a home can be the most important financial decision you make in your lifetime. Whether you are familiar with the home buying process or not, it’s important to make sure that you are well protected, both legally and financially, in your purchase. Sellers who choose to sell their home “by owner" are usually doing so to save money on real estate commissions. However, most are not familiar with the process of selling a home and headaches can arise for both seller and buyer during the transaction. Here are some helpful tips to keep in mind when considering purchasing a FSBO.
1. Don’t rely on oral agreements – Although legally binding, oral agreements are difficult to enforce. They usually end up being a matter of he said/she said, and one party ends up unhappy with the deal. It’s important to make sure that all aspects of the transaction are clearly outlined in writing. This includes not only sale price, but other details such as when close of escrow will be, financing terms and whether or not appliances are going to convey with the home.
2. Make sure your earnest money is deposited with an escrow company – To protect your financial interest in the purchase, it is important to make sure that any earnest money you provide, along with a copy of your purchase contract, is deposited with an escrow company. The escrow company will provide you with a written receipt for your earnest deposit.
3. Get a professional inspection – When purchasing any home, there is always a possibility that the seller may not fully disclose defects in the property. Either they don’t know about them, or they don’t want you to know about them. Even if the seller has already had a professional inspection done, and offers to share a copy with you, it is still a good idea to hire a professional home inspector of your own during your inspection period. A home inspector will check for property defects and provide you with a report to assist you in making your purchase decision. Make sure that your home inspector is qualified to evaluate heating/cooling units and perform a termite inspection. If not, you will want to have professionals in those fields perform evaluations for you as well.
4. Include contingency clauses that give you an out if needed – It’s important as a buyer to include contingency clauses in your purchase contract that allow you to cancel the contract if necessary. For instance, you find significant defects in the structural integrity of the home and the seller isn’t willing to repair them. Or, the appraisal value of the home doesn’t accurately reflect the sale price and you aren’t able to secure adequate financing.
5. Hire a REALTOR® to assist you with the transaction – There are a lot of things that can go wrong when buying a FSBO. To protect yourself in the transaction, it’s a good idea to have competent representation from a professional who understands the complexity of real estate transactions and is licensed to perform them. A buyer’s agent will look out for your best interests throughout the transaction. They will assist you with checking the market value of the home, negotiating purchase price and terms, completing contracts, setting up escrow, scheduling inspections, and much more.
About the Author:
Bonny Puckett is a successful REALTOR and investor in Arizona. She has more than 13 years of experience in real estate, investing, development and mortgage lending. Bonny enjoys sharing her knowledge with others to help them understand the benefits of owning property and become successful real estate investors. Learn more about investing in Arizona real estate.
