Buying For Sale By Owner Homes | Home Buyers Guide

In this blog, we will cover and discuss buying for sale by owner homes. Most homebuyers purchase a home that is listed on the MLS by a real estate agent. Not many folks are Buying For Sale By Owner Homes without a realtor. However, there are cases where Buying For Sale By Owner Homes is possible. There are homes that are for sale by owners that do pop up during the home buying search. In the past, Buying For Sale By Owner Homes was very popular.

Is Selling Under Contract Saving Money For Home Sellers?

There are homeowners who think paying a 6% realtor’s sales commission is a waste of money. Many homeowners try to sell it by owner and when the home does not sell, they will list it with a real estate agent. Other times, both the sellers and buyers know each other so they skip out the realtor. Regardless of what the circumstances, qualifying for a mortgage does not matter whether or not the home sale is represented by real estate agents.

How Can I Get Qualified and Pre-Approved For Mortgage?

Homebuyers who are armed with a mortgage pre-approval can start shopping for a home. Most seller’s real estate agents and/or home sellers will not show a home if the home buyer does not have a solid pre-approval letter. There are times when you or your realtor will run into FSBO (For Sale By Owner) when searching online. Your real estate agent may run into an FSBO home. Your real estate agent can check into the particulars whether the house meets your criteria. What happens if you decide the FSBO home is the perfect home for you? What is the difference in buying for sale by owner homes versus homes that are listed on the MLS?

Buying For Sale By Owner Versus MLS Listed Properties Comparison

Buying For Sale By Owner homes is just like buying any other property that is listed on the MLS. In most cases, the only thing missing from FSBO transactions is the real estate agents. Since the sellers are not listing it with the agent, the sellers will take the role of the listing agent. It is up to the home buyers to hire a real estate agent to represent them. Real estate agents get paid on commission by the home sellers when the home sells. However, the key question is who is going to pay for the buyer’s agent?

Having A Real Estate Agent Represent Buyers

 

One of the main reasons why home sellers want to sell their home FSBO is so they can save the 6% realtor’s sales commissions. The question is who is going to pay for the buyer’s real estate agent? If a buyer’s realtor runs into an FSBO home, the buyer’s real estate agent can see if the sellers are willing to pay for the buyer’s agent. Other times, the buyers can just represent themselves and deal with the home sellers directly without a real estate agent.

Step by Step Process of Buying For Sale By Owner Homes 

The homebuyers will deal with an attorney and/or title company to represent them. The home sellers will have an attorney and/or title agent of a title company on their side to represent them on their side of the transaction. Many times, a loan officer can assist with the transaction for homebuyers. Buyers’ real estate agents normally are not too fond of FSBO transactions. Even though if the agent were to get paid, most realtors see liabilities and more work on FSBO transactions. If the seller is not willing to pay the buyer’s agent, the home buyer can make a deal with a real estate agent to represent them as a buyer’s consultant. Having a real estate agent represent you in an FSBO purchase transaction is always recommended.

How Do You Enter Into a Binding Purchase Contract When Buying For Sale By Owner Homes

There are certain states like Illinois where real estate attorneys are used for home buyers and sellers on real estate transactions. Other states like Florida, the use of real estate attorneys are not common. Most title companies will help with the purchase contract. The title officer will write up the purchase contract. Both parties will agree to the terms and conditions.

Is My Earnest Money Safe When Buying For Sale By Owner Homes

The buyer will issue the earnest money check to the title company. The title company will hold the check-in and an escrow account. Buyers should also write their contingencies on the real estate purchase contract. Contingencies are clauses that gives the homebuyers the right to cancel the real estate purchase contract. Typical contingencies listed on the real estate purchase contract include home inspection, appraisal contingencies, finance contingencies, and other contingencies.

Real Estate Contingencies In Purchase Contracts

Contingencies are clauses in which buyers have the option to opt-out of the purchase contract and have the earnest money returned. Common contingencies on real estate contracts include the following:

• Home inspection contingencies
• Mortgage contingencies
• Attorney Review
• Home inspection contingencies
• Appraisal
• Clear title from the home sellers

Do I Have The Right To Cancel When Buying For Sale By Owner Homes?

There is a certain period a buyer has the right to cancel the purchase contract. On the contract, it should state who is responsible for paying what. Fees paid by buyers and fees paid by sellers. Sellers concessions and repair credits need to be listed on the purchase contract. For more information about this article and/or other mortgage-related questions, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.