Challenges Facing FSBO Buyers and Sellers

How do I find qualified fsbo buyers?

Finding qualified FSBO buyers is not as simple as it may seem, but with a few steps potential you can begin to distinguish the difference between buyers and browsers.

The first step is to understand the difference between pre-qualified versus pre-approved. Pre-qualified is an informal process where a potential buyer obtains basic information about how much they can afford without actually applying for a loan. The lender will ask a few questions about income, current debt obligations and credit but the information hasn't been verified.

Pre-approved buyers have actually completed an application and know what they are qualified to borrow. It still doesn't guarantee an FSBO buyer will qualify to buy the house; rates, credit or employment can change quickly especially over a period of several months while searching for a home. Pre-approval is an indication of a serious buyer but there are no guarantees.

Other methods of identifying a qualified FSBO buyer include: Willingness to put a serious deposit on the property, buyer paid inspection and appraisal services and use of a buyer's agent.

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What do fsbo buyers need to know to protect their interests?

For Sale By Owner buyers might think the opportunity to buy a home directly from the seller will save money but there are some things to consider. Many FSBO listings will pass along the savings to the buyer but frequently, the decision to sell a property by owner is due less to the benefit to the buyer versus the seller. According to research, FSBO property sales do not always sell for less than traditional listings.

Additionally, FSBO buyers should pay special attention to the condition of the property. Typically a real estate agent and seller must disclose known defects or problems related to the property. Not all problems are related to the home itself but rather the surrounding area such as a large tax assessment for paving new roads or new construction that would eliminate the beautiful view you think you are buying. FSBO buyers must learn how to protect themselves by closely investigating the property and surrounding areas.

Use these quick tips to evaluate potential FSBO properties:

1. Have an independent inspection and appraisal performed at your cost. Pay additional for a comprehensive inspection including water quality, electrical and pest inspections.

2. Put everything in writing.

3. Call the local zoning office, property appraiser, clerk of court and other relevant offices to request all available information on the property and surrounding area.

4. Request a C.L.U.E. report from your insurance agent or broker about the property. It can help establish past damages or insurance claims.

5. Make sure all work was performed by qualified contractors in accordance to required codes.

If you don't feel prepared or qualified to handle all of this on your own but are interested in purchasing a FSBO listing, then search for a buyer's agent. This type of real estate professional exclusively represents the buyer and can make sure your interests are protected.

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Should I sell my home FSBO?

For Sale By Owner websites and advertisements make selling your own home sound easy but there are some very real FSBO Challenges to consider. Understanding how FSBO listings work plus the advantages and disadvantages of selling FSBO versus listing with a real estate agent assures you select the right choice for your individual situation.

The most often cited advantage of listing a house for sale by owner is saving the real estate commission, but a closer look at how real estate commissions work deserves attention. A typical real estate commission is usually .06% to .07% of the selling price of the home. To keep things simple let's use .06% for this example on a $200,000 home. The total commission would be $12,000 but it is often shared by as many as four people. It works like this; when you list your home the listing agent and broker would be responsible for .03% of the commission (Approximately $3,000 or .015% each) while the selling agent and broker would be responsible for the other .03% or .015% each.

One of the challenges of listing your home for sale is enticing other real estate agents to show your home to their clients. To successfully do this you will need to provide an incentive by paying a similar real estate commission such as the typical .03% for the selling agent and broker. In our example above that means your total savings is now only .03% or $6,000. From that amount you must deduct the MLS listing fees, signs, advertising, lost wages for showing the home and much more.

To calculate if listing your home FSBO really makes sense, calculate the true cost of doing it yourself. Remember, it takes an average of six months to sell a home so when calculating the cost of advertising and other expenses use a six month average estimate of: Selling agent commission, MLS Listing fee, Signs, Posters, Flyers, Internet Advertisement with photographs, Newspaper Classified Advertisements, Missed Wages to Show Home, Market Research, Legal Fees to Create & Review Contracts, Escrow Company and Other Miscellaneous Costs.

Now compare the total savings against the time and money you will pay a traditional real estate agent and broker for listing and selling your home to decide if facing the FSBO challenges is the right choice.

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What fsbo seller tips should I know?

One of the main advantages of using a traditional real estate broker is the nationwide exposure via real estate search listing sites like HomesandLands.com. It's that exposure that allows your home to bring top dollar, but listing a home is just the first of many steps in actually selling a home.

Successfully selling a FSBO home takes patience, preparation and a lot of stamina. A FSBO Seller must be prepared to handle marketing, negotiation, legal concerns, financial questions, scheduling and even a bit of consumer psychology. So, how can you determine if a buyer is serious or just looking? Use these quick tips to help find qualified FSBO buyers.

1. Is the buyer pre-qualified or pre-approved? If you don't know the difference then think twice before trying to list FSBO because you may be getting in over your head.

2. Are you able and prepared to meet people on their schedule? Frequently?

3. Do you understand the legal requirements related to listing and selling your home? Security deposits, escrow services, discrimination issues, disclosure and many other topics must be addressed.

4. Are you highly organized and disciplined? It can take several months to sell a home but each and every visitor must be treated with the same level of professionalism and courtesy.

5. Can you remain objective about the home, the price and negotiation?

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How do I work iwth a buyers agent when listing my home fsbo?

The decision to list your home for sale by owner requires planning and preparation for success. One method of increasing the chances of selling your home for top price is to enlist the help of a seller's agent. These specialized real estate professionals can help a FSBO seller attract serious potential buyers to the home rather than spending months of wasted time showing the home to unqualified buyers. Here is what you need to know to work with buyer's agents when listing your home FSBO:

1. Be prepared to negotiate a commission. Remain open to paying all or part of the agent's fee in order to increase the odds of having your home shown and sold. It will still save you 1/2 of the typical costs of listing and selling your home via a real estate agent and broker.

2. Document and Disclosures. Selling a house requires extensive paperwork so begin early. Buyer's agents will require all available information about your home to show their clients. Contact the property appraiser's office, zoning, permit and other local agencies to obtain copies of tax bills and assessments, square footages, living area, age and construction of home, upgrades or work performed, warranties and other information. Disclosure forms are also required.

3. Buyer's agents will often request permission to buy a "C.L.U.E. Report". C.L.U.E. stands for Comprehensive Loss Underwriting Exchange and is a lot like a credit report, except it shows insurance claims for the property.

4. Obtain a competitive market analysis and appraisal in advance.

5. Hire a home inspection agency before showing the house. Avoid unpleasant surprises and take the opportunity to make small repairs or upgrades that may enhance the selling price of your home. Remember, all defects or problems must be disclosed so it's better to know in advance rather than have a sale fall through at the last moment.

6. Contact buyer's agents directly and let them know you have a home for sale. Use an online search tool like the HomesandLand.com real estate agent finder to locate buyer's agents in your area.

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How can I identify real fsbo buyers versus browsers?

If you are a FSBO seller then be prepared to meet and greet a lot of potential buyers before selling your home. Despite the popularity of for sale by owner websites and advertising campaigns, selling your home with a FSBO listing is hard work and one of the toughest FSBO challenges is showing the home. Showing the home might sound easy enough; after all, how hard can it be to walk people through a house right? It's not. Here's how to spot real FSBO buyers versus browsers and others:

FSBO Browser: Get to know this type well because you will spend the majority of your time dealing with browsers - not real buyers. Some browsers are bored and enjoy spending their time "window shopping" for homes with no real intention of purchasing. Others are scoping out the amenities and price in order to compare with other listings. Of course, there are the curious neighbors from down the road who just want to peek. Browsers come in all ages, shapes and sizes but they have one thing in common...they take up a lot of your precious time.

FSBO Bargain Hunter: The bargain hunter is on the prowl for desperate sellers. They will buy at the right price but be prepared for extremely low offers that border on insulting. Don't take it personally because most bargain hunters are simply playing a numbers game.

FSBO Brats: These potential buyers enter your clean and tidy home like a swarm of locust destroying everything in their path. They track muddy shoe prints down the recently cleaned carpet, touch everything in sight and allow the children to run loose like they already own the house. Brace yourself.

FSBO Beware: These aren't buyers at all but rather predators posing as potential FSBO buyers. They use the open house or tour to take stock of the home, find out your schedule and then later rob you blind. The ability to retain confidentiality and discretion of your private schedule is a tremendous privacy benefit of using a traditional real estate sales agent to sell your home. If you decide to go it alone then privacy and security are paramount concerns.

FSBO Burdens: Every FSBO seller should have a strong nerves before showing their home because it won't take long before you meet a sad story. These people may or may not have a real need but the end result is the same - a plea for help. It can be tempting to lower your price, take a small deposit or otherwise fall victim to their plight so establish your criteria in advance. It's for your protection as well as theirs.

FSBO Buyers: These are actual qualified buyers who are seriously contemplating a home purchase.

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