 Don't
buy FSBO without professional help
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 Dear
Real Estate Adviser,
What are some of the most important "don'ts" of buying
a home that's for sale by owner (FSBO)?
-- Ben
 Dear
Ben,
Unless you are exceptionally savvy and learned
in the practice of real estate, buying a FSBO home without any kind
of professional representation is the biggest "don't"
in my book.
Certainly, if you insist on bringing a buyer's agent
to the table in a FSBO deal, the seller can balk at paying any commission
at all to your agent (which customarily would be half of the typical
sales commission of 6 percent, for example). After all, the seller's
objective all along was to save on fees. So you might not get the
house you really want unless you're willing to pay the entire commission,
a scenario that might tempt you to skip the agent route in buying
that FSBO home you're eyeing.
Realize that there are a lot of things that can go
wrong on the FSBO buying end if you don't have competent guidance,
including problems with disclosures, property defects and easements,
nearby zoning issues, financing, insurability, neighborhood or crime
issues, and closing delays, to name only a few.
At the very least, you should insist on a contingency
clause in your sales contract that allows you an "out"
if the lender's appraisal value of the home doesn't accurately reflect
the home's sale value, which could mean you are probably not going
to get adequate financing for it. You should also pay for your own
professional inspection and a separate termite/pest-control inspection,
even if the seller has done the same.
Never rely on oral agreements, such as "all appliances
will remain with the house." Get it in writing. If you do decide
to buy FSBO without a broker, consider hiring a real estate attorney
to help you draft the purchase contract. If that's too expensive,
a title company can do most of the legal legwork for you, but they're
less prepared to work on complicated transactions. Some real estate
agents will agree to handle the documentation for a set fee or a
smaller commission percentage, even if they weren't involved in
finding the home.
Additionally, make sure you get comparative prices
(comps) in the neighborhood and proffer your offer based on those
comp prices, not the FSBO listing price. Keep in mind that some
sellers choose the FSBO route after an agent tells them they won't
be able to fetch as much as they wanted for the house. Hoping to
eventually get your business, some real estate firms will supply
these comps at no charge.
Prices are cooling in several areas of the country,
so don't hesitate to use that as a negotiating tool if applicable,
especially since you know the owner is also going to be saving thousands
on commissions. Another tip: Never pay your earnest money directly
to the seller. Use a title company, escrow company, lawyer or another
detached professional third party.
Happy FSBO hunting.
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