'By-owner' services help buyers, too
What's good for the seller can be just as good for
the buyer. As the For Sale By Owner, or FSBO, movement gathers momentum,
some buyers are taking advantage of the increased availability of
homes to negotiate directly with sellers, cutting out the middleman
and saving money in the process.
Web sites linking home buyers and
sellers directly are proliferating on the Internet, making the search
for a new home, and potentially cutting out the real estate agent's
commission, easier than ever.
While commissions have never been as much of an issue
for buyers as they are for sellers, they affect the buyer indirectly
in the form of a higher home price. Without the traditional 6-percent
real estate commission, both the buyer and the seller stand to save,
especially in areas where home prices are skyrocketing.
Home buyers looking to go this route should proceed
with care: While bargains are out there, uninformed buyers can make
costly mistakes and actually pay more than they would had they used
an experienced real estate agent. "The biggest problem with
this situation is that the sellers want to save the commission money
and keep it for themselves while the buyer also wants to profit
from that situation," says Steve Hattan, owner of HomeOwners
Advantage in Chicago. "Both of you can't save the same
Purcell, a partner at Braddock and Purcell, a real estate consulting firm, agrees,
saying, "Buyers should be very careful -- it flies in the face of logic that
a seller would give a stranger a discount on his own home instead of keeping that
money for himself."
Where to Start
Web sites including ForSaleByOwner.com,
Owners.com and FSBO.com
link buyers and sellers. Once you register, it is free to do so,
most of these sites will send you alerts as soon as homes meeting
your specifications are listed on their site.
If you find a home that you are interested in,
you can shoot the owner a quick e-mail asking any specific questions you might
have and even arranging a day and time to see the house. If you're moving from
a distance, you can use e-mail to set up several appointments to view homes when
you're in town.
But keep in mind that many of these sites have lots
of homes in some big cities and not many in smaller cities or towns.
A FSBO buyer may have to use Web listings in conjunction with other
methods, such as looking through local ads, networking with friends
and relatives, and driving through the neighborhoods they are interested
in find to the types of FSBO properties they want.
There's a lot of free information to guide you through
the buying process on most of these sites, including how to figure
out what type of home you can afford, the ins and outs of getting
prequalified by a bank or mortgage company, free reports on cities
and school districts, moving tips, and data on what homes are selling
for in the area where you're looking.
Owner.com offers a free buyers' checklist that walks
you through the buying process, making sure that you don't miss
any essential steps along the way. FSBO.com offers reports for a
fee that include detailed information about a particular property,
recent comparable home sales in the area, property tax information,
and flood maps. Prices vary from $4.95 for a comparable sales report
to $29.95 for a complete property valuation report.
Low-cost or discount real estate brokerage firms,
many with brick-and-mortar offices, offer some of the same services
as the Web-only firms, including e-mail alerts and multiple listing
2 Sell. offers buyers both MLS lists and nonMLS listings.
Many of the low-cost or discount brokers will work with you in the
buying process for a reduced commission. Other firms in this space
Choice and HelpUSell.
To Watch Out For
When you go it alone, you need to do more research to make sure
you're fully informed about the ins and outs of home buying. "Buyers
without representation can get burned," says Purcell. He recommends
that buyers get prequalified by a mortgage company or bank, fully
understand the mechanics of the buying process and the contract,
and verify any numbers.
While there are many free real estate forms and contracts
on the Internet, these may not be customized to your particular
state or situation, which is why it is good to sit down with an
experienced real estate attorney and pay an appropriate fee to make
sure all of your ducks are in a row so that your entire transaction,
particularly your closing, goes smoothly. Unwary buyers may sign
contracts obligating them to buy a house without a financing contingency,
landing them in hot water if they can't get the needed financing.
Others may forget to include a home-inspection clause
and end up getting stuck with a real lemon, Purcell says. "You
can bet that if a home has a leaking roof or basement, the seller
will do everything they can to disguise it," he says. "Ask
lots of questions and be sure to get a home inspection before you
commit. Don't get so emotionally invested in a house that you can't
walk away. There is always another house out there."
Another issue to clear up with the seller is what
appliances and personal items will stay with the house. In some
states, appliances are considered part of the house, in others,
the seller takes them with them. Ask questions about everything,
Purcell advises, including items such as curtains and pool equipment.
"Some buyers have gone into a house after the closing only
to find that everything that wasn't literally nailed down is gone,"