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What are some basic pros and cons of buying a house from owner?

  • March 06 - US
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Answers (7)

Advantages

1.  When you are buying through owner, you might end up getting a good deal (builder might be selling at x psf) but the buyer who has bought the house earlier might be willing to sell it cheaper.  In today's market condition, buying a house in a project from secondary market is cheaper than primary market

2. You might also get benefit of low additional charges ( parking) etc. which builder keeps on increasing from time to time.


Disadvantages

1. Buying through a owner, is legally more challenging as might involve more legal proccedures.  You might have to run errands to bank for loan approval.. In case you take it directly from builder, banks takes care of loan processing.

2. Buying though a owner might involve lot of upfront payment ( lot of it in cash)
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  • March 10
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I've seen some lawyers do this, they are highly qualified in Real Estate Law and know how to protect themselves. Otherwise the courts are full of these cases.
  • March 07
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I was there.... Selling my own home in LA.   As an agent in both Hawaii and California, I tried selling my own primary home.  I become emotional it's THE WORST THING YOU CAN DO from a sellers perspective and the agent representing you needs to be TOTAL UNEMOTIONAL.  But it's hard when its your own home. I couldn't do it...So

I hired an agent friend, it was worth it for me.  He got me a good deal and I was able to go about my life. Just saying...
ALOHA

  • March 06
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Everybody has a point of view, and an answer may be both true and self-serving at the same time.

The problem with being "unrepresented" is that usually, but not always, you are under-educated, as well. No two books will provide you with the education that you could receive by shopping with a good agent.

But, if you find a house you like and the deal is good enough, then, maybe that is good enough.

All the best,
  • March 06
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The real estate agents are giving you Realtor speak.  The question is whether you know what you are doing or not.  If you know real estate, buying a FSBO property can help you get a great deal.  Hell, Lynne just said that FSBO properties, on average, sell for 12% less than comparable listed properties.  That could mean a great deal for a buyer.

Of course, you need to know how to value the property and see the paperwork through to closing.  An appraiser can help with the first and a book or two with the second.  It isn't that hard, really.

The main con of buying a FSBO property is that most owners are asking way too much, which is why they don't sell.
  • March 06
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The obvious pro is that the seller is not paying a real estate commission, therefore he may sell to you for less than if it was listed with a broker in the MLS.  However, market value is market value and he can sell the house for that value.  It is a proven statistic that for sale by owners sell their homes for 12% less than the market value because they lack experienced advise from an agent on what the actual value of their home is.  

On the flip side, if you do not use an agent to buy a for sale by owner home, you run the risk of paying much more than the house is worth, due to not knowing true market value of the home, or the experience to acknowledge the condition of the home and possible repairs that will be needed on the home. 

Lastly, many for sale by owner transactions fall apart before closing because the parties lack the knowledge of how to get the transaction closed.  
  • March 06
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For Sale Buy Owner (FSBO) has a benefit to the owner in that they do not have to pay a commission to the real estate agency that would have otherwise assisted in selling their home. Sometimes the owner may not feel that the real estate agent has the owners best interest at heart because the owner feels his home may have more sell-able attributes than it actually does. Keep in mind that the owner does not have the expertise or knowledge (not to mention they are partial) to be thoroughly capable of rendering an unbiased educated valuation of their home. Although tools have come into play for the owner to promote the sale of their home they are at a strong disadvantage compared to the real estate agent who has many more effective and wide spread capabilities to promote and educate the buyer on the home. Contrary to what the owner may believe, a good real estate agent will have the owners best interest at heart and only want the best for his client. 

When the home is listed by an agent the advantages to the buyer are many. One major aspect of the buying process are the pitfalls that may be encountered during the purchase of a new home. The agent is fully aware of these pitfalls and in most cases has the expertise to effectively alleviate these problems that may arise. For instance, problems with CO's (Certificate of Occupancy) or title discrepancies that could jeopardize the buying process.

I am an agent for Century 21 and yes, of course I am biased as well when it comes to the agent handling the listing. None the less what I speak is true and I am currently working with FSBO clients as a consultant and am very aware of the issues I have explained here.

  • March 06
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