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  Dear
Steve,
What are things I should look out for when buying a for-sale-by-owner
property? Are there any specific major questions on the transaction
I should be asking? Are there any useful guidelines I can go by?
-- Just asking
 Dear
Just,
For-sale-by-owner properties, generally
referred to as FSBOs (pronounced FIZZ-bos), carry with them a few
additional buyer concerns. For starters, because the seller doesn't
have an agent, there's no intermediary to buffer the bargaining process
and to present your offer with that sage, grounded-in-reality perspective.
So emotions can flare sometimes during negotiations.
Hold fast, though.
There's also the matter of your agent's commission,
assuming you plan to use one. FSBO sellers, by nature, don't want
to pay any commission, so it's doubtful they'll want to help pay
your agent's fees. Get your buying intentions settled with your
agent before signing a buyer's agreement with her or him, or you
may be paying out the difference.
Sometimes FSBO owners who've had their homes out on
the market for awhile will relent and agree to chip in two or three
percent. But if it's a seller's market, they probably won't.
If you're going it alone, realize you'll be setting
up the visits, negotiating, filling out the offer sheets and performing
some of the due diligence without professional aid. One good thing
about the agent-free approach, however, is the FSBO seller may agree
to pass on some of the commission savings to you in the sale. (You
may still want the advice of buyer's agent or attorney on a FSBO
buy, however.)
If you've agreed on a deal, don't give your earnest
money directly to the seller. It should be put into an independent,
third-party escrow account by your agent, or by you, in agreement
with the seller.
Make sure you get your own inspection done. Some FSBO
sellers (and conventional sellers, for that matter) have been known
to take advantage of the less formal process by concealing or disguising
problems or flaws. Buyers of FSBOs should learn what their state's
disclosure requirements are and request the most extensive disclosure.
If you're especially wary, you might want to ask the
seller's permission to obtain a Comprehensive Loss Underwriting
Exchange (CLUE) report, which is similar to a credit report, but
contains a home's recent insurance history. They're available online
for a small fee from a company called ChoiceTrust.
Sometimes, a CLUE report indicates a water-related claim -- raising
the possibility of mold contamination -- which the sellers may not
want to disclose.
If you're acting alone, get "comps," or
sale prices of comparable homes in the neighborhood from a local
real estate company to make sure the house is fairly priced. Most
will do this for little or no charge. Many county property appraisers
or tax collectors will provide this information for free at their
Web sites.
Also, if you're buying in a seller's market, make sure you have
a mortgage preapproval before you make your offer. It can help legitimize
your offer among multiple offers.
Here's hoping your FSBO deal doesn't fizzle
out.
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