FSBO is an acronym for “For Sale By Owner.” The term is used to identify property, usually homes, which are sold by the owner without help from a real estate agent. Typically, owners advertise their properties by means of websites, classified ads, word of mouth, and other means.
Why this is a good niche to consider?
- Calling homeowners is free.
- Direct contact by phone can be easier and less costly to market.
- Working with home owners directly – able to ask questions, find out their needs & build a rapport.
- You are more able to control the money down, contract terms as well as when and how the property closes when working directly with homeowner.
- You have increased ability to work out flexible terms such as buying “subject to” current mortgage, a lease option or owner financing.
What are downsides of this niche?
- Homeowners are usually not skilled in buying and selling property and are often emotionally attached. Therefore they often see their homes as worth more than the market warrants. This requires patience and good people skills on your part in educating them as to the process.
- Often properties are a FSBO due to low/no equity resulting in no money to afford a Realtor.
Good market conditions.
- In a flat or declining market.
- Vacancy rates for rentals are high.
- Rent rates are low.
Bad market conditions.
- In an appreciating market.
- Vacancy rates for rentals are low.
- Rent rates are high.
Steps to do this Niche.
- Look for ads that are for sale by owner.
- Call on ads the have motivated words (must sell, make offer, fixer upper, transferred, vacant, owner will carry).
- And/Or mail post cards or letters to for sale by owner from websites.
- Ask questions – find out why they need to sell and by when.
- If really motivated then set time to see property and meet owner.
- Negotiate at 50-70% of market value.
- Sign contract.
Where to find leads.
- The newspaper
- Small Mailing Papers like Penny Saver or Fickle Nickel
- For Sale sign on properties
This concludes my article on Investing in FSBO Properties.