Things Investor Buyers Should Consider When Pursuing FSBO Investments

Brentt Taylor

If you have been searching to buy a new real estate investment home, you may have noticed that some properties are classified as For Sale By Owner or FSBO. Although many of them definitely appeal to potential buyers, there are certain caveats that you should be aware of as well. There are 6 important things that investors should be mindful of when dealing with FSBO investment properties and owners.

6 Important Investing Tips For FSBO Deals

What you should know about FSBO Properties

Since the housing market is still rather weak, sellers are trying to make what they can, and not having to pay a commission to a real estate agent seems like a good idea to them. Along with that, the demand for homes exceeds the supply in many places, and sellers can find potential buyers without relying heavily on real estate professionals. In addition, potential home buyers can shop for properties more easily today by searching through online listings instead of contacting an agent.

Note that, as an investor-buyer, it is best to work with a buyer’s agent who will represent your interests in closing the deal, whether the seller has one or not. Of course, he or she will be entitled to a three percent commission..

If you plan on buying a FSBO property, be aware of the following:

#1 In many areas, the seller is obliged to reveal certain matters related to the property, including ground pollution, mold problems and repairs that have been completed.

#2 The real estate agent you hire will be familiar with these regulations and discuss them with the seller before it is listed. At times, these relevant issues are only revealed at closing, such as the fact that an insurer that wants to know if the home is located in a flood plain.

#3 Very often, buyer’s agents hesitate to participate in a FSBO sale because they have to perform some of the tasks that the seller’s agent usually does, and they still only receive a 3 percent commission.

#4 Having your own real estate agent will ensure that one professional is involved in the process who knows exactly what is required to complete the sale, That way, you will have all of the necessary documents prior to closing or before you apply for a mortgage loan.

#5 There are also times when the person selling the FSBO is a developer, broker or agent, or someone else who is more knowledgeable in real estate matters than you are. They know what the upper range price is for that property, and they will make every effort to sell it at that level. Consequently, the term “bargain” will definitely not apply to this sale.

#6 Whenever you are purchasing property, you should find out if there are any potential problems by having a home inspection done. At that point, you need someone who will do a thorough job and is experienced in the housing industry. Unfortunately, real estate agents sometimes work with certain inspectors on a regular basis who hesitate to be overly aggressive because it might damage their relationship. Your best option is to hire your own inspector after getting a few recommendations from family, friends and coworkers.