Unfortunately, there is a negative stigma that has developed towards private house sales over the past several years. Maybe it’s propaganda from the vast pool of real estate agents, maybe it’s the housing market crash clouding people’s perceptions, I honestly don’t know. For whatever reason, it seems as if many buyers are hesitant to pursue houses for sale by owner (FSBO) and are more inclined to buy from a real estate agent or broker.
I want to dissipate this negative stigma.
Private house sales are to be embraced, and I want to tell you why.
As you continue reading this article I’ll be going over a few of the common misconceptions buyers give themselves to not check out FSBO listings, and then I’ll finish with a few tips for dealing directly with the seller.
Sound good?
Misconception #1. FSBO Sellers Have Something to Hide
The first excuse many buyers give themselves for avoiding the FSBO market is that they believe all private sellers have something to hide. They feel like avoiding a real estate agency is code for saying “I know this house won’t pass a real inspection, and I’m hoping that you won’t think to hire your own”. Or something along those lines…I’m not exactly sure what the thought process is, actually.
Regardless, the fact of the matter is that FSBO sellers play by the exact same rules as everyone else, including the real estate agents. They have to disclose just as much accurate information as a real estate agent would. Conversely, a real estate agent is no guarantee for a quality inspection, or for a realistic appraisal / listing price.
Misconception #2. FSBO Sellers Can Run Off With Your Money
Another very common misconception among buyers is that private sellers somehow have the magical ability to run off with your money. This is absolutely not true. As I said before, all private house sales are under the exact same laws that govern any brokered house sales, the difference is that real estate agents go to school for their training and the sellers learn by the book.
When buying a house, real estate agent or no, it’s always prudent to bring your own legal counsel to review contracts, and to spend some time on your own learning what to look for and expect from a seller.
One of the best ways to avoid being scammed (And again, 99% of FSBOs aren’t scams at all) is to be careful writing your contingencies. By making sure there are clear rules dictating when it’s okay for you to back out of a deal you’re greatly decreasing the already small chance that you’ll unfairly lose money.
Misconception #3. Private Sellers Aren’t Serious About their Listing
This one doesn’t even make sense, but I’ve heard it frequently before. Somehow people think that private house sales are only for people without the motivation to bother with a real estate agency…As if selling a house by yourself is SO much easier.
Obviously, this is completely untrue.
The fact of the matter is that many times private sellers are MORE passionate about their listings. Private house sellers have to put more hours, more work and more emotion into making sure a deal goes through the way they want it to.
Many times the reason a seller decides to opt-out of the conventional real estate agent approach is actually because they want to sell the house faster, and they know that a lowered asking price is one of the best ways to do that.
So, now that we’ve cleared up some of the more common misconceptions about private house sales, let’s talk about some actual tips you can use to ensure that you and the seller can come to a mutually beneficial agreement.
Buying Tip #1. Hire Your Own Buyer’s Agent if You’re Uncomfortable…But be prepared to pay for the entirety of their commission.
Obviously, one of the reasons that a seller is opting to sell without an agent is because they want to avoid paying commissions, so it would be silly to ask them to pay your own buyer agent’s commissions.
However, many times paying this commission is worth it because you’re likely going to need legal help somewhere along the line, so why not go ahead and get help with the rest of the transaction while you’re at it? If you have no experience in real estate then it’s highly recommended that you hire someone who does.
Buying Tip #2. Don’t Start with the Asking Price
This is probably a fairly obvious tip, but since failure to follow this one piece of advice can make the difference of thousands of dollars, I thought it worth mentioning here.
Private house sales 101 would tell you that the only way to go from an opening offer is up, so keep that in mind when you make yours. In other words, you’ll never get the house for less than your starting offer, only more.
If you hired a buyer agent they would be able to tell you this, but for those that don’t, make sure you keep this in mind.
Buying Tip #3. Hire Your Own Outside Inspection
This should actually probably be one of the contingencies for the sale of the house. Even if the private seller has already had the house inspected / appraised, you can’t make your purchase from that information alone. You need to have your own inspection to be prudent; make sure you hire an inspector with a good reputation who will genuinely look for problems in the house, not just some agency lackey who’ll do a once over and be done with it.
Additionally, if it were me I would advise hiring a separate pest inspection and making that a contingency for the transaction, as well. Sometimes a pest inspector will see things that the normal licensed inspectors won’t, and you certainly don’t want to run into an infestation your first month in your brand new home. Skipping this step can be both costly and frustrating down the road.
Anyways, I hope that you’ve gotten some solid guidance from this article. FSBO is going to keep becoming more and more common as the Internet makes private house sales easier and easier to carry out without any help at all from an agency.
This trend towards private house sales isn’t a bad thing at all, but quite the opposite! It’s good because it allows the sellers to take home more money and you, the buyer, get a better deal.
I encourage you to get over your fear of dealing with private sellers (hopefully this article helped with that) and look around at some of the available listings online. I think you’ll be pleasantly surprised with what you see.
