You can find amazing residential property deals if you buy a FSBO home. FSBO homes are residential properties that owners sell themselves. In my last blog, I wrote about how to sell your home yourself using the “For Sale By Owner” principle.
However, how can you successfully buy a “For Sale By Owner” home?
Here are my best real estate tips on getting a great deal when buying directly from the owner.
1. Get pre-approved
Getting a pre-approved loan is one of the first and most important steps if you want to buy a FSBO home. This will save you a lot of time looking around for properties that, in the end, you can’t afford. Usually, to get pre-approved your lender examines your finances and agrees on a mortgage amount they will lend you when you buy the property.
This can help close a deal quickly because your FSBO seller is sure that the finances will go through.
2. Make a list
Once you have a budget in mind, you should make a checklist to determine what you are wanting from your property. Some buyers want to buy directly from the owner to flip the property and make a profit. However, most buyers are looking for a great deal on a property to live in. So, list all the features that you want from your property. This will save you a lot of time and help you find a home quicker.
3. Save money
Even though you have a pre-approved mortgage, it is still wise to save as much money as you can. Remember that there are more fees when you close the deal. You may have to arrange a building inspection and pay for other closing costs. So, the more cash you have at your disposal to cover these costs, the more or your mortgage can be used to purchase the home.
Most FSBO sellers are willing to negotiate on the price. One of the best ways to find out a starting price is to look at similar properties in the neighborhood and start from there. Remember, don’t start so low that you offend the seller. However, once you make your offer, the only way is up. So, take that into account and make an appropriate starting offer.
You should also negotiate certain clauses in the purchase contract in case anything goes wrong. These could include get-out clauses if the home inspection reveals major defects and the seller isn’t willing to pay for the repairs. My advice when someone is wanting to buy a FSBO property is to have a lawyer draw up a purchase contract.
5. Home inspection
Sometimes For Sale By Owner sellers like to hide some of the problems with the house. Because you may not have the expertise of a realtor, you should always arrange for a home inspection. This will identify any potential problems with the property. Although there is nothing wrong with buying a property to fix up, you should know the size of the task ahead and how much it will cost.