We felt the need to get the word out about some of the "nightmares" we have heard about or encountered with buyers getting involved with For Sale By Owners. Here are the top 5 reasons NOT to even think about dealing with a for sale by owner if you are thinking of moving:
1. Most For Sale By Owners won't negotiate. We have had experiences with buyers that we represent that want us to help them put an offer on a FSBO. We call the FSBO and they agree to pay a commission but will not budge from their price. Buyers aren't saving anything in fact they are in turn paying our commission if they accept. Remember their is only one commission to save. Who is saving it?
2. For Sale By Owners don't understand how to provide adequate documentation or disclosure. Again many times we have witnessed one or more of the following: (All ways that could lead to a lawsuit.) No lead based paint disclosure, very short uninformative disclosure forms, and unsigned counter offers and not using legal documents. Was their water in that basement? If so was it only an inch or more?
3. Bad real estate advice from an attorney. We like to ask how much the FSBO is paying for such terrible advice from their attorney. Most attorneys don't understand the protocol of buying and selling real estate. Their is a reason why they have a license to practice law and why Realtor's have a real estate license. We have witnessed attorneys advise FSBO's to ask for a ridiculous amount of earnest money, have their seller clients refuse to pay closing costs and generally not understand the art of 3rd party negotiation. Just today we had an attorney advise a FSBO seller to walk over $1000 on a $102,000 condo!
4. Even if you get your price Mr./Mrs Buyer wait til the home inspection! Just last week we had another FSBO tell us that his buyer walked after they found out that the FHA appraisal found $2000 of electrical problems. A Realtor would have told the buyer to get a whole house inspection first! It made for a lot of stress for both buyer and seller and the buyer wasted almost 2 weeks of time, when she should have been offering on a better house.
5. Your FSBO purchase may not even appraise! We have had 2 buyers who purchased FSBO homes and both homes did not appraise with the bank. What a hassle! Now both FSBO and buyer have to re-negotiate the homes purchase. Why would you want to buy a home with no equity. With our 3rd party negotiation skills we have saved our buyers thousands fo dollars with both our first offers, counteroffers and post inspection remedies.
***UPDATE*** Since last week's 7-9 inches of rain in the Cedar Rapids area, we have witnessed many basements that have been filled with water! Buyer beware when shopping for a house with out an UPDATED disclosure. In future months, many For Sale By Owners may not fully understand the seriousness of not having a disclosure that states exactly how much if any water was in their basements. Buyers should also consult their Realtor for literature educating them on the presence of mold. We work with experts in the mold remediation business and can help you make sure you are buying a safe home.
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