You are in the market for a home – congratulations! You have many decisions ahead of you, though. Your first decision should be whether to buy a ‘for sale by owner’ home or a newly constructed home. A newly constructed home may be something you always dreamt of, but don’t discount the benefits of a FSBO.
Here are the top 5 reasons you may want to forgo the dream of a new home and opt for a pre-owned home instead.
LOWER ASKING PRICE ON AN FSBO
Let’s face it, most buyers are concerned about the price and for good reason! You are likely going to pay for the home over the next 30 years. That’s a long time to pay interest on money you could be saving yourself. Finding a home that not only fits your budget but also minimizes the money you must borrow is crucial.
Sellers that use an agent often have to inflate the price of their home to cover the cost of the agent. It’s the seller’s responsibility to cover the real estate agent’s cost. Since an agent can cost you as much as 5-6% of the sales price of a home, you may realize significant savings.
This isn’t to say every FSBO seller discounts their sales price accordingly. However, they are more likely to negotiate with you since they don’t have the large real estate agent fee to cover.
BETTER NEGOTIATING POWER
Again, because there is not a real estate agent involved in the process, you deal directly with the seller. This gives you a chance to develop a relationship with the seller. The closer the two of you get, the easier it is to negotiate the price of the home.
It’s a good idea to let the seller get to know you. Remember, he/she is selling you something very important to them. They want to make sure it is going to the right family. You never know when something you say will strike a chord with the seller. They may develop a connection with you that will prompt them to choose your bid over someone else’s, even if it is lower.
GET TO KNOW THE HOUSE BETTER
Typically, when a realtor shows a house, the seller is not home. This gives you uninterrupted time in various areas of the home, allowing you to make a good decision. However, there are some benefits to having the seller around. They can tell you stories about various areas of the home or other pertinent information that may sway you one way or another.
Spending time with the seller may seem intimidating, but oftentimes it gives you a better idea of what the house entails. Sellers love to talk about the memories they have in their home. Listen closely as it could give you an idea whether the home is right for you or not.
THE PROCESS CAN BE FASTER
When you deal directly with the seller, you know how motivated he/she is to sell the home. When you deal with a realtor, you are dealing with a professional that handles a multitude of homes at one time. He may not know the real reason the seller wants to move or how urgently he wants to do so. When you can communicate directly with the seller, you can get a feel for one another’s motivation. This can help in the negotiating process. If you know a seller wants to get rid of the home fast, he may be more willing to accept a lower offer. If he is just putting his feelers out there to see what he could get for the home, he would be less likely to take that lower offer.
LEARN ABOUT THE NEIGHBORHOOD WITH A ‘FOR SALE BY OWNER HOME’
Again, because you’ll have direct contact with the seller, you’ll get to know more about the area than you would from a real estate agent. While it’s the real estate agent’s job to know the area well, it’s not the same as someone who lives there.
A seller can tell you about the neighbors, the schools, and the immediate area. You may learn things you did not know about the area that could influence your decision. For example, if there isn’t a bus to the elementary school, it could be a deal-breaker for you. Or if the neighborhood is one that gets together often for block parties or other get-togethers, it may make you feel excited to live in a community where everyone gets along.
It’s the little details that you need that help decide if a home is right for you. While there is a level of professionalism that you receive when buying a home from an agent, a more personal touch is often warranted. Of course, the fact that you could save money in the long run is definitely good motivation to try to find a ‘for sale by owner’ home before using an agent.