The number one thing we hear from our buyers everyday is there are no homes to buy on the market. This is the biggest challenge the real estate industry is facing in the Denver Metro area at this time. Inventory has never been this low and as such, people are wondering how they could find a home to buy.
Consumers have gone to the Internet to try to find homes to buy that are not on the market, on sites like Zillow, Trulia, and For Sale By Owner. While this may seem like a good way to buy a home and not have to compete against many offers, it does have its pitfalls.
Here are four things you should know before attempting to buy a home off market:
- First, many For Sale By Owners are not realistic about their home values. Homes off the market, not in the MLS, or not listed with a Realtor tend to be very overpriced; and why wouldn’t they… they’re not for sale. A homeowner approached by a buyer as a cold call or off the street would surely ask a premium price for a home they had not even thought of selling. So be careful that you are not overpaying. It’s ok when the seller does not want to have a Realtor represent them, but don’t you make the same mistake. Make sure you have a Realtor represent you on the buying side. In most cases, the FSBO will pay the Realtor’s commission, and you get an adequate representation that costs you nothing. Make sure that the Realtor runs comps on the property before you offer and make sure you are confident the house will appraise if you are getting a loan.
- Second, understand that when taking this approach of buying an off-market property, the leverage is squarely in favor of the seller and not the buyer. Therefore, your negotiations may be very one-sided. If getting the property under contract was difficult, expect more of the same when you get to inspection objection, any title or HOA issues, appraisal, etc.
- Most of the lawsuits that occur in real estate involves one party not being represented in the transaction, which is the situation most of the time in purchasing with a FSBO. Sellers not represented by a Realtor may think that the transaction is easy to close, but often we see them make various mistakes. The most common is filing out the seller’s property disclosure incorrectly. Failing to mention problems the house has had in the past is a surefire way to get sued after the new buyers take possession.
- Finally, having a Realtor canvass a neighborhood on your behalf is the best way to find an off-market property. A Realtor can knock doors, and phone prospects from a particular subdivision to try to find an off-market home. Most Realtors know all the right questions to ask, can run comparables to make sure you are not overpaying, can guide the under contract process smoothly sometimes for both parties, and ensure that they passionately represent your best interests.
As my Dad told me more than once throughout my life, “there is a wrong way to do things and a right way to do things”. Find an off-market property the right way, and you may find the home you always wanted.
Dan Polimino is a Broker/Owner with the Colorado Dream House Team, Keller Williams Realty DTC. Contact Dan at 720-446-6325, Keller Williams Realty DTC. Follow us on Twitter, Like us on Facebook, Watch us on YouTube, Questions? Subscribe to Our Newsletter
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