Profile picture for jayaprathap_psg

Buying 'For Sale by Owner'

Whats the advantage for the buyer of buying directly from owner rather than going thru an agent?

  • January 01 2009 - Woodbridge
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (37)

No advantage because most times the seller is the one who pays the realtors commission.If you hired a realtor you would be represented and having someone working in your best interest. 
  • March 19 2013
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Profile picture for shawnspaw
There is no advantage in my opinion. Most FSBOs are overpriced in this market. You also might not have that much needed barrier between buyer and seller that Agents provide.
  • October 19 2010
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Profile picture for LadyDianna
"The sky is falling. The sky is falling." Ring a bell?
  • October 19 2010
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People typically feel that they will be getting a bargain by buying a fsbo and that just isn't the case.  A fsbo is usually priced at market or above.  Most fsbo's I call on to list are typically priced above what I would list to sell.  A home owner is emotionally attached and usually prices their home for what they would like to sell for rather then what the market says it is worth.  I don't believe there is an advantage.  When you find a home you love no matter where you find it is a wonderful thing but a Realtor may know the neighborhood, what the selling price should be and help you through the process. 
  • October 19 2010
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I agree with Sergio. Most of FSBO are overpriced.
  • October 19 2010
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It's always a good to work with an agent so they can give you accurate information about the comps in the area.  You'll want an expert to make sure everything is done correctly.  This is the biggest purchase most of us make in our lifetime, why take a chance?
  • October 18 2010
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The advantage is all in the owners' favor!

Most for sale by owners are grossly overpriced.  Therefore, if a buyer buys directly from the owner, he/she is likely to over pay.
  • September 22 2010
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As you are aware--the purchase of a home is the largest single investment of any person's life.  Why on earth would you not seek professional guidance?  There are so many pratfalls and issues that arise throughout the purchase process.  Realtors can walk you through the process and save you time and money. 
There is nothing wrong with buying a home that is for sale by owner.  However, even if this scenario it is in your best interest to have professional representation to protect your rights and ultimately save you time, heartache and money. 

  • August 24 2010
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Did you buy yet? what was your experience
  • August 23 2010
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I think you definitely need an agent to explain the process to you.
  • August 23 2010
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The buyer has the opportunity to not have the process explained to them, not get the best price for the house, and not no for sure what inspections they should get.  Its only the biggest purchase they have ever made in their life, why would they want help from a professional? 
  • August 22 2010
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Does the fact that the original thread began in January of 2009 make these comments any less valid today?  No! Obviously this is a topic that has compassionate people on both sides of the line.  We can agree to disagree.  I have sold FSBO!  I understand both sides of the coin.  I have considered purchasing FSBO as well.  If someone feels confident enough to make a huge purchase without representation, certainly they are entitled.  The risks in my opinion far out weigh any benefit! Especially for a buyer who doesn't pay commission to a Realtor anyway!  These services are free to a buyer so why not have an educated, trained professional in your corner helping you navigate the process and not have to pay them a cent?  Not using an agent makes no sense!  If the seller will not sell to a buyer who is represented by an agent then a buyer has to determine how much they want that property and whether they are willing to take a chance that everything is on the level.  Inspections and title insurance will help, but its not everything.

  • August 22 2010
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Profile picture for Alyse Sands
The only reason a seller would NOT use an agent to market a property is to save money on commission.  In that case, the only reason for a buyer NOT to have representation is if the property is priced less than listed homes on the market.  That's unlikely...if they were going to make the same amount as if they were paying an agent, they'd be smart to have a professional to market the home and take it through the process.

A buyer and seller who both have no regular experience in home-selling, being involved in a sale can result in a bad situation.  As an experienced agent, I can anticipate problems and nip them in the bud.  If you're a buyer dealing with a seller who IS experienced at selling homes, then beware of being taken.  Sellers do not know the laws and are not held to the standards that agents are.  I advise you to find a buyer's agent and let them do what they do best for you.

OH and "azrob", this post came up near the top of the list of things to answer...you'd think that newer posts would come first and we wouldn't have to check dates.  First of all, my response is sensible and from experience and universal to new posters who may have the same question and, secondly, it wouldn't have come up at the top of the list for me had you not felt the need to post a comment to an old post, as well. 
  • August 22 2010
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Well you have gotten a number of great answers. I will say that in my experience there is not an "benifit" to buying directly from the seller in fact, there really is NO benifit. I would recommend that the buyer always be represented fully.
Good luck
  • August 22 2010
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There is no advantage because the owner can charge you for closing costs that are not your responsibility to pay.  The title company is a neutral party to the transaction and will not be responsible to alert you of this matter.  If you decide to go through with this make sure you get a property inspection because the seller probably will not inform you of the repairs that have been done to the property.
  • August 21 2010
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Profile picture for SoCal Engr

Interesting comment.

  • August 19 2010
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As stated below, it's done to save on costs/commission. However, for a potential 20-30 year "investment" it is well worth it to have proper representation!
  • August 19 2010
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True! No one said anything about not getting an inspection.  However, a first time home buyer who has never been through the process doesn't always realize that it is their responsibility to get one to protect themselves.  Usually their REALTOR tells them that.  But if they are doing this on their own they need every bit of education they can get! 

  • August 03 2010
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Unrepresented sellers are a fraction of the market, for good reason. They are looking to "save" on commision but often cost themselves thousands due to poor marketing and exposure.

If you are a buyer looking at such a house, you would be foolish to not have aa realtor represent your interests.
  • August 03 2010
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Profile picture for Mr Caveat
hey, we cant let the 8 month old thread die already?

and

Without proper disclosure, inspections, and an agent representing you who understands the contract you are signing, you just never know.  A home can look perfect to an untrained eye, and yet have major problems!

who ever said anything about not getting an inspection? who? WHO? PS, dont rely on disclosure, get the inspector.
  • August 03 2010
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An owner who wants to save the commission will try to sell this way.  However, as stated below you run so many risks making a purchase this way it would make your head spin.  Without proper disclosure, inspections, and an agent representing you who understands the contract you are signing, you just never know.  A home can look perfect to an untrained eye, and yet have major problems!  Just imagine buying a home and moving in only to find it has major defects that will cost thousands to repair just to get the home liveable!  I've had this happen to me before I became a Realtor!  The house I purchased was brand new!  It still had thousands of dollars of repairs that were needed, but yet to us it looked perfect!  Please be careful! Using a Realtor is a decision you will not regret!
  • August 03 2010
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Profile picture for blue screen exile
The issue with disclosure laws is they are not enforceable.  Sure, a fine or worse if you don't fill out the form; but if the form is filled out, and there is a major discrepancy between what is disclosed and what the actual condition is, the only recourse is a civil suit; and since it is one party's word against another, it will be very difficult to prove that a seller did or didn't know about a given condition, unless it was intentionally hidden and there was evidence that the seller hid it.

You would be more successful suing an agent involved as they would be more likely to know about these "hidden" conditions; (like trimming all the roof shingles at the next shingle above so that it looks like no wear from the ground but in reality no life at all left in the roof); but even there, they will claim they didn't know.  So the REA doesn't help you at all there.  What helps is an extremely qualified and thorough home inspector, but if you got that recommendation from an REA, the report is already compromised.

Some people are good at getting people to admit they are lying, or seeing through half truths.  dealing with two middle people will make this much harder.  But a good inspector can see where people have tried to hide issues much faster.

And since the REA's admit that few REA's are good at estimating value; the REA have very little added benefit there, unless you are extremely good at filtering professionals and their qualifications, experience, and truthfulness.  But if you are that good at filtering professionals, maybe you are just as good at filtering property conditions, neighborhood conditions, and market trends?  If you are better than the REA's, then maybe the REA's are just getting in the way?  Maybe you just need to take the test and get your license so that you can pay yourself the commission?  You would still need a broker..., or have to take that test and get that license too.

And why are we answering a year and a half year old question anyway?  Just because Nicaury was looking to do some prospect "marketing"?
  • August 03 2010
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Profile picture for Reallyfedup
This must be a state by state issue.  In Illinois disclosures are required to be filled out by the seller on all properties that transfer.  There are some exceptions such as foreclosures, gov. seizures things such as this.

The questions begin with I am aware of......

The seller can answer no  yes  or  N/A   Of course they can always put that they were unaware of something, however, should the buyer be able to prove that the seller knew, then they may have some type of recourse.  However, if the seller discloses it then it would fall on the buyer to prove that they were unaware of the issue.

If the seller never disclosed it and the buyer discovered something later, again buyer would have to prove it, the buyer would have cause for recourse.

Regardless of whether or not the seller discloses the truth, in IL the forms are required to move forward with the transaction.  I don't think the police will come to your door if don't fill them out, but I wouldn't know because no one has ever not done it since they are required and part of the contract.
  • August 02 2010
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Let's be real. If there was not a requirement for the seller to disclose potential issues, they would never be disclosed - it's not in the seller's interests. Even with the requirements, sellers may not disclose unless forced to - which is why the buyer should know what to specifically ask about.

Exactly -- regardless of what might required the only time a seller is held accountable is if he puts it into writing. 

And yes I looked at the link.  Sorry about reducing you to minutia and giving you a headache etc. But there is no protection when buying a property, everyone needs to do their due diligence.  BTW disclosures are the only way to cover a legal liability which you like to expound on ad infinitum*, that a seller won't sign; a REA might ask to be completed and a buyer wants; but the REA and buyer falsely put too much emphases on. 

* BEA -- I have read your position on other posts: is a bad agreement for a buyer

Is a ELA (exclusive listing agreement) bad for the seller?

Should all sellers be required to disclose under the pains and penalties of pergury all facts regarding their property? 

And I was using the word "criminal" to make a point -- it seemed one sided in the sense that only bad REA are taking advantage of buyers, not that there are everyday sellers trying sell a property by any means possible.

Lastly, the State can pass any statue it thinks justified -- it will never protect any market participant.  It is always up to the participants to regulate the market.  In my opinion the best thing is to have as many REA out there as possible competing, this will ferret out the bad actors.  But I'm a market guy, not a government guy in how to solve these innate problems.
  • August 02 2010
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Profile picture for SoCal Engr
@ Erickson

Did you even look at the link I provided? On the very first page it says...

"The California Department of Real Estate has published this booklet in response to an apparent need for information concerning disclosures required in real property transactions.  This booklet is limited to the most common disclosures required by statute and does not include disclosures required by agreement between the principals (buyer and seller; borrower and lender; lessee and lessor, etc.)."

Now, I am not a lawyer, but...

When I see the terms "required in real property transactions" and "disclosures required by statute", it gives me a clue that these are not suggestions. The specific statutes requiring disclosure of any given information is even referenced. Since the referenced statutes are California code, well...

As to whether it is a criminal offense not to disclose, I won't pretend to know. I'm sure a quick phone call would establish the nature (criminal or civil) of these statutes, but my guess is "civil".

Since I've been reduced to explaining myself in excruciating minutia, my recommendation is that the buyer become familiar with their local requirements for disclosure - and be sure to ask the seller about these items.

Let's be real. If there was not a requirement for the seller to disclose potential issues, they would never be disclosed - it's not in the seller's interests. Even with the requirements, sellers may not disclose unless forced to - which is why the buyer should know what to specifically ask about.
  • August 02 2010
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@ Sol_cal those disclosures do nothing for a buyer. There is no state criminal requirement that a seller disclose anything; regardless of State.  When buying a property there is a reliance on the owners factual disclosure; this never happens.   Why would a seller open themselves to a law suite?  In my experience most sellers want to disclose as little as possible.  A buyer needs to do their due diligence and like you say rely on their own judgement; not the REA, Seller or inspector. 
  • August 02 2010
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Profile picture for SoCal Engr
@ Erickson

"...It is a state requirement. California's is online, I didn't spend a lot time looking for New Jersey's."

That would apply to the requirements, not the actual disclosure. For further clarification, here is the link to California's online document. I didn't include it in my original post since the question is being asked from New Jersey.
  • August 02 2010
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The biggest benefit is dealing directly with the seller.  You can ask a lot of questions from the source of the information without the buffer of a listing agent.  You just need to know all the questions to ask.

@So_Cal in CA the seller is required to disclose all the defects in their property online?  I have never heard of such a thing. 

In MA I am aware of no disclosure law per say.  Maybe if there is a record at the building department, for example an oil tank was removed via permit and then and only then, there would be a record.  A lot of the time, owners do work with no permits or records to their homes.  In MA, I have been told by a listing agent, that an owner can do their own electrical work, no licensed electrician required.  Well for the electrical defects found at inspection we required a licensed electrician to fix the defects and made it a part of the P&S agreement; a buyer could negotiate this no problem.

A home inspector are only good start in uncovering property issues and no REA will be able to uncover an owner that is dishonest about the property history.  I like to have an home inspection, to find the surface issues, then bring in multiple contractors in each specialty to uncover whatever we can.  Another great due diligence is to go to the building and look at the file.  Read the permits, talk to the building inspector and be a detective. Make sure there is an occupancy permit issued etc.

As far as to what to pay; you the buyer need to do your homework and understand the current market.  If you have all the facts of recent sales and have previewed those sales, then you should be in good shape.  One piece of advice I give to all my buyers is: once you have the market information and want to negotiate with the seller; make your offer on your terms and price,  if you are countered, have a final price in mind and be prepared to walk regardless of how close.  If you can't walk away at X price then you are not negotiating.  

Yes as a REA I have never pressured my buyers to make a decision -- even when we were $3,500 apart on a $300,000 deal, once going over that X threshold. And I think there are buyers that don't want or need a REA.  Personally I want to work for only clients that appreciate what I bring to the table and understand what I can't. 

If you can do it yourself, then do it.  If you understand the process and can hire the best professionals for each role, then do that.  But if you do it yourself, make sure you do your homework, learn your market and find an advocate on your side to give you unemotional advice as well as have experience in the role to give advice.

Best,

Eric



  • August 02 2010
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Profile picture for SoCal Engr
1. You have no representation of your own.

Ultimately, you are your own best representative. You should be independently checking all paperwork, disclosures, etc. While a good REA can definitely make this easier, there are also guides as to what should be done.

2. There is usually no "Seller's Disclosure" statement to warn you about potential property defects like underground oil tanks, structural problems, recent repairs, termite treatments, etc.

Only if you go into the transaction "blind". If you know to ask for it, the disclosure is not "something magic" that only REAs can get. It is a state requirement. California's is online, I didn't spend a lot time looking for New Jersey's.

3. Unless you know how to value real estate (a skill that is rare even among real estate agents), you won't know if you are overpaying to begin with. A good buyer's agent will help protect you from that mistake.

Somewhat disconcerting. "A good buyer's agent will help", juxtaposed against "a skill that is rare even among real estate agents". The good news is that CMAs can be obtained from agents, or you could actually pay for an appraisal prior to submitting an offer.

4. A good buyers agent will look for trouble with the property that could cost you money later. An extra set of professional eyes can be invaluable.

This is also what the home inspector is for, which you will be paying for anyway even if an REA is involved.

5. You have no one at your disposal to handle the appraiser, attorney requests, home inspector, contractors providing estimates, local municipality for zoning compliance and inspections, etc.

Correct-emundo. The real question here is "how much is your time worth?" For some, not having to deal with these people is worth the commission.

6. Emotional buffer. Going head to head directly with a seller can get ugly. A calm and professional Realtor can transit messages without inflection and help prevent boil-overs.

Again, correct...unless your REA is part of the problem...which sometimes they are. How good are you, really, at negotiating without getting personal?
  • August 02 2010
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The only case when it might be advantageous to the buyer is if it is a transfer between family members or something similar where the home is clearly being sold for under value by a totally trusted seller.
  • August 02 2010
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