• What Does it Mean to Buy a ‘For Sale By Owner’ House? Should You Entertain One, Or Steer Clear? Read On To Find Out

    UnknownIf you see a home that interests you that is being sold by this “For Sale By Owner” method, it is normal to wonder how what the difference is, and how to go about it. Buying a home that is for sale by the owner can have its challenges, because you won’t have the benefit of working with a realtor. Here is some advice on how to go about a home listed for sale directly by the owner. Also read: Homes for Sale By Owner.

    Agents work with other licensed professionals such as home inspectors and appraisers to help you see if you are not only making a good choice, but a good investment, because that’s what a home is, its an investment. They increase and decrease in value. Know that with a FSBO home, you are going in it alone. Read: For Sale By Owner: 7 Steps to FSBO Success.

    Before you start looking at houses, you should get a pre-approval letter from a mortgage company. This may seem like a no-brainer, but it is surprising how many first time home buyers don’t realize this. This letter is extremely important because it lets the seller know that you can afford to purchase the house. It also is a great way to negotiate. If another interested party doesn’t have a letter, they’ll put you first. loan_approved

    A CLUE report will show that you have a five year history of insurance claims that have been filed for the property you are looking at. You will need the sellers permission to run this report. See: Should You Sell Your Home Without a Real Estate Agent?

    It is a critical element because it will reveal problems that the house may be prone to, as well as show you the potential for higher insurance rates for the property as most insurance companies will use the claims history on a property when calculating rates.

    When you purchase a house through the owner, it is risky. Home inspections are a very important step to not overlook, as there can be hidden problems that were unknown, or, problems that were known by the seller but omitted altogether. A well-trained home inspector can find many of these problems so that you are fully aware of what you are getting into. Electrical wiring problems, or traces of lead throughout the home are just two examples.fire-hands-electricity-lightbulbs-lighting-1024x2560

    You really should have a real estate attorney help you through the sales contract. In some states, it actually is mandatory that a real estate attorney handle the transfer documents and closing. Be sure that you are properly represented. Just as a seller may be asking too much, sometimes a buyer might be offering too little. One way to find out how much the house is worth is to obtain a valuation report. These reports will use a number of different metrics such as trends, title records, market conditions and tax assessments, to determine the home’s value. You can also look at recent sales of similar houses in the neighborhood.

    Real Estate Law Book and Gavel

    When you make your offer, you will likely be required to pay out some earnest money to secure the deal. It is generally a very good idea to use a 3rd party that will manage the earnest money.

    It should go into an escrow account, because if something goes wrong between when you put the money down and the closing, you will be able to get your money back with very little hassle.


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    2 thoughts on “What Does it Mean to Buy a ‘For Sale By Owner’ House? Should You Entertain One, Or Steer Clear? Read On To Find Out

    • Yulia says:

      really good info, just started looking at houses to buy.. didn’t know about pre approved letters

    • Betty Brown says:

      Hi Yulia! The pre-approval process is rather simple, it just involves gathering a lot of documents. Lenders want to see the history behind how you’ve handled your finances over the years. Each lender requires different documents, so you’ll need to check with them on the requirements. Good luck!

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