Buying FSBO Homes

Many times a home owner will opt to sell their homes without the assistance of a licensed real estate professional. The primary reason a Mass. homeowner will do this is to save the 5% – 6% sales price commission fee due to the broker. There is a common misconception that a buyer will get a “deal” by buying a For Sale By Owner property. The buyer is under the impression that the seller will share in the real estate commission savings with them. This is not necessarily the case. Below are some tips to protect your self if you find a F.S.B.O. you are interested in.

How To Buy A Home From A For Sale By Owner (F.S.B.O.)

You will want to first hire a licensed Massachusetts real estate agent. Ask the seller is they are willing to pay the buyer agent commission. In most cases sellers are amenable to working with a buyer agent.

If you have your heart set on a F.S.B.O. and opt not to hire a Realtor, be aware that the buyer must now perform all of the functions that the typical buyer agent would perform. The buyer will need to:

  • Obtain a Mass. Lead Paint Transfer Notification and a Seller’s property disclosure form which will give you much needed information about the home
  • Call the city or town hall and find out about any upcoming assessments or betterments
  • Find out how long the property has been on the market
  • Perform a market analysis of the home to establish the fair market value of the home. This is especially critical with a F.S.B.O. as most sellers are not real estate professionals, and may not have priced that home properly. It is likely the home owner has an unrealistic value expectation. Don’t rely on online valuation sites – have a true CMA or appraisal performed
  • Ensure your offer has contingencies for things such as home inspection, financing, appraisal, and inclusion of any items such as appliances, and that your offer has an expiration date.
  • Hire an attorney to review your offer to purchase and purchase and sale agreement to ensure you are protected.
  • Make sure to meet all the dates outlined in your offer to purchase and have your attorney request extensions as needed.
  • Renegotiate if necessary after the home inspection results
  • All deposits checks for the home should be made out to the seller’s attorney and NOT the seller.
  • All offers should be written and signed by the seller before you spend money for home inspections or appraisals since the contract is not valid until signed.
  • Find out how much the seller owes on the home to find out if your offer will put them in a short sale situation
  • Since you may be the only person seriously looking at the home it should allow you to negotiate a much lower price than if the home was listed with an agent.
  • Check any contracts you have signed with real estate agents to ensure they will not be due a commission if you buy a F.S.B.O.

Mass. Mortgage Buddy Tip: If you are a 1st time Mass. home buyer and absolutely must buy a F.S.B.O. retain an experienced real estate attorney prior to submitting the initial offer.