A for sale by owner (FSBO) sign can be both good and bad for the homebuyer.
You can identify FSBO homes by taking a cursory look at their signs and listings, as they’re often vacant of real estate agent information. Some are handmade and come across as rather amateurish.
In general, most homebuyers shy away from purchasing FSBO homes for two key reasons: they miss out on advice from a trustworthy real estate agent and have no familiarity with the actual sales process.
Yet a growing number of homebuyers are pivoting to FSBO homes because of the prospects of saving the big bucks. But it’s never as simple as that. There are many moving parts involved in the sale of a house before closing time. The average homebuyer usually has enough on their plate as it is.
At the end of the day, it’s up to you to decide if the advantages outweigh the disadvantages.
Here are all the major pros and cons you need to know about FSBO homes, from a buyer’s perspective.
Pro: It’s easier to buy from a friend or relative
It’s easier for friends and relatives to buy a house from someone they trust. The FSBO transaction can significantly benefit both sides since neither of them has to provide real estate agent fees. Sellers who want to offer a friend a good deal can be more generous with their prices since they don’t have to put up with agent fees.
Cons: Everyday Meetings Are Not Easy
The average time a buyer spends going back and forth in meetings with an FSBO owner usualy falls in the range of several weeks, which can also stretch to several months if both parties are inexperienced. By contrast, a real estate agent can close a deal in 30 days – and that is if the process gets drawn out.
Without a realtor doing the legwork for them, prospective buyers will have to make daily phone calls and meetings, which means they’ll have to take out time from their daily routine to handle everything. By contrast, real estate agents just have more time to make daily phone calls and meetings. After all, this is their job description.
Pros: Sellers Can Bring Their Own Perspective into the Deal
While it’s true that most real estate agents do all the research needed to describe a home’s unique value and charms to prospective buyers, they can’t provide a better perspective than someone who’s been living there for years.
Sometimes it’s better to just learn about the experience of living there from the horses’ mouth. Of course, this doesn’t mean that the seller won’t hide behind half-truths and misleading claims, but at least it will sound more authentic.
Cons: You Have to Screen the Sellers Yourself
Real estate agents usually have this bit sorted out before they send you to a prospective seller. But as an independent buyer, you really don’t have the same experience and tools needed to conduct proper screening of a house and the owner.
This is really important because the last thing you want is a costly lawsuit or a buyer getting cold feet after taking half your money.
Besides, who is to say that there isn’t an underlying problem with the house that could come back to haunt you later (such as forged title deeds and other legal hassles). A real estate agent can do all of this background checking so you don’t have to.
Pros: You Can Negotiate Lower Prices
FSBO sellers usually believe that they’re getting more value for their house if they remove a realtor’s fees out of the equation. If you’ve got good negotiation skills, you could use this to your advantage and secure a lower price while maintaining the perception that the seller is getting a better deal by selling their house to you.
Con: You Will Get Sky-high Offers
Many potential sellers can detect a buyer’s inexperience about the real estate market from a mile away. This means they will be more prone to making exceptionally high offers to test what they can get away with. A competent realtor, on the other hand, will easily call someone’s bluff because they have done the research and know market prices.
Pro: No Barriers to Communication
This can be a good thing and a bad thing. Without the seller’s realtor acting as a mouthpiece on their behalf, you can break down the barriers of communication and find out more about the history of the property than you would otherwise. Armed with this information, you can then brainstorm numerous questions to ask the seller, assuming, of course, that they are honest with you.
This could help you secure lower prices.
Cons: You May Have to Pay a Lot More in the Long Run
While the prospect of foregoing a realtor’s commission sounds enticing, it could be a double-edged sword for buyers. You really don’t have the tools to scout the market for a realistic estimate for the price and maybe more tempted by offers that appear to be low (when in reality they’re probably way off). But a real estate agent, with the right experience and skillset, can negotiate much lower prices for you based on your budget.
Pros: There Are Many Resources at Your Disposal
There are many online resources such as social media, local sites, and even Craigslist that let you buy a FSBO house for sale based on your budget. Whether these sources can be trusted or not is a topic for another day.
Cons: There Will be Additional Costs
Buyers may have to get in touch with a home inspector to do a full home inspection report. Without a proper home inspection, they might find structural problems with the home that may require massive out-of-pocket expenses.
Other costs include services from escrow and title companies. Take a cursory glance at all these services you have to hire on your own, and suddenly the prospects of an FSBO house don’t sound nearly as enticing, do they?