Kari McCoy commentary: Should you buy a for sale by owner (FSBO) home

Question: Dear Kari, My sister and I are ready to buy a home together. My friend suggested we should look at a home for sale on her street that is a for sale by owner (FSBO). My friend says they are really nice people and are moving out of state. My sister is extremely skeptical, but my friend makes it sound so easy. Can you help us please? Answer: Wow, this is a great question, one I do not get often. I can understand how simple this could sound. A buyer wants to buy and a seller wants to sell, they meet and match. I have heard of this working out in some situations just fine. That being said, I must share with you the number of lawsuits and lives that have turned upside down in court for several years that far outweigh the pluses, unfortunately. A for sale by owner is a home that is being sold by the owner who has not hired a listing real estate agent. This means the homeowner will be taking care of all the home sale process, disclosures and negotiations themselves. Typically, the reason why sellers do not higher a listing agent is because they do not want to pay a compensation fee to a listing real estate agent out of the proceeds of their home sale. Let's take a close look at what a buyer's agent can really offer: When working with a buyer's agent, know that they have a fiduciary duty to their clients. This means the agents are obligated to look out for the buyer's best interest first and to follow the buyer's instructions implicitly. The following are some of the buyer's agent duties that should be considered when entering a buyer's agent relationship: · Help buyers get pre-approved for a mortgage by a good reputable lender with the best interest rates and fees. · Contact homeowners and set up home showings for the buyers. · Negotiate buyer's earnest deposit money. · Make sure all pages of the purchase contract are signed by both buyers and sellers or the contract is not valid. · Create a well-written purchase contract with several contingency timeframes to protect the buyer. · Discuss buyer's options of seller's concessions, adding more money to the buyer's pocket. · Negotiate closing costs between buyers and sellers. · Provide buyers a full understanding of the agreed-to purchase contract. · Help the buyers select a reputable title/escrow company and explain the process of the preliminary report forthcoming on the home. · Continually negotiate for the buyer's best interest. · Provide names of top home inspection companies that have good reputations. · Schedule and be present for all inspections and tests on the property. · Carefully comb over all inspection results and suggest further inspections, if necessary. · Make sure all required seller disclosure statements are completely filled out and explained in depth to the buyers. · Fill out a buyer's request of repairs for the seller and negotiate the terms. · Make sure seller completes all state government items on the home. · Create a market evaluation on the home to determine if the seller's asking price is warranted. · Make sure the appraisal is for the purchase price amount. · Make sure the buyers stay within the contingency periods allowed so they do not lose the buyer's deposit money. · Set a date for the final walk-through of the home to make sure any repairs are completed by the seller. · Review the final paperwork from the lender and title company before buyer signs the final escrow closing papers. · Order a title search from a reputable title company and open escrow. · Make sure the seller has full and clear rights to sell and there are no liens or judgments on the property. · Help shop for homeowners' insurance. Buying a home is probably one of the most expensive purchases you will ever make. One could complete this task on their own if they so desire. In some situations, buying an FSBO home could make sense, such as buying a home from a family member, good friend or a neighbor down the street. That way, you could have a good idea of what to expect. However, the process of buying a home directly from an owner can become complicated and quickly heated, finding yourself in a prickly place. That is why it is advised to partner with a trusted professional Realtor or hire a good real estate attorney to help the home-buying process go much more smoothly. Happy home hunting. Kari McCoy owns the Kari McCoy Group, Residential Real Estate, at Wyndemere Real Estate. Call her at 916-933-5274 or e-mail her at sold@karimccoygroup.com. License #00841588