Jeff’s Carlsbad Blog for First Time Home Buyers

Pros and Cons of FSBO Homes

Posted in House Hunting by Jeff Dowler on November 15, 2006

In order to create the largest opportunity for you as a first time buyer, you and your REALTOR will likely check into homes being brokered by Unrepresented Sellers(FSBOs). There are some pros and cons to these properties.

An advantage to considering FSBOs is that it broadens the pool of potential properties in your price range for you to consider (assuming there are FSBOs).

There are some disadvantages, however. First, a FSBO does NOT have representation from a licensed REALTOR, so you will want to have your own Buyer’s Agent (NOTE: some FSBOs will NOT pay a commission to a Buyer’s Agent, so you either don’t pursue that home or you need to do it on your own, unless something can be negotiated with the seller). If you don’t have an agent either, then neither party has representation which can lead to problems. No one is there to protect YOUR interests. A related matter – the unrepresented seller likely does not know all the documents and disclosures that are required by law, and this can create a problem with your transaction and create a risk for you.

Second, the pricing on the FBSO home may be way off (great if it’s low, but generally they are too high), as these sellers have not gotten professional guidance on the market conditions and appropriate pricing, and don’t have access to the information needed to make an informed decision. Once again, if you have a Buyer’s Agent that person can assist you in determining if the asking price is reasonable, what the comparables are, and help you develop an offer price and strategy. Do you know how to do this if you are working on your own?

Finally, negotiation may be very difficult, since this is no intermediary between the seller and your agent and you. Sellers can be very emotional when they get offers that are not full price! Plus FSBOs generally are selling on their own to save the commission so they do not want to discount the sales price further.

Can you successfully buy a FSBO? Absolutely, especially with the help of a knowledgeable REALTOR, provided that the seller is cooperative. But don’t plan on getting the deal of a lifetime – it probably won’t happen.


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