FSBO stands for "For Sale by Owner". Homeowners engage in FSBO for many reasons. One of the most common is to avoid paying realtor commissions. The average realty commission is 6-percent of the sale price. By eliminating the fee, sellers can reduce the asking price of their property.
Closing fees are still associated with FSBO properties. These can include surveys, appraisals, inspections, homeowners insurance, property taxes, and bank fees. Sellers should review their mortgage note to determine if prepayment penalties are imposed.
Most lenders impose fees for closing loans early. Some banks include prepayment clauses stipulating the length of time borrowers must hold the property. This timeframe can range from a few years to the duration of the home loan.
When buying for sale by owner real estate, it is important to have sales contracts reviewed by an attorney. FSBO contracts should include legalese protecting both parties in case of default. Certain legal documents must be filed to transfer the deed of trust. Many states require sellers to document the sale of their property through an escrow or title company.
Buying and selling FSBO property is no different than buying or selling a house listed through an agent. The same real estate laws and protocol exist and must be adhered to. Sellers are required to provide buyers with a disclosure statement outlining any known problems or defects associated with the home.
Sellers of FSBO homes should work with a reputable mortgage lender to assist in prequalifying potential buyers. Assisting buyers in obtaining a home mortgage can help sellers quickly close the deal. Obtaining prequalification lets buyers know what price range of homes they can afford.
Buyers who hold prequalification letters can oftentimes further negotiate the sale price because they have proof they qualify for a home loan. Sellers would rather reduce the asking price in exchange for a quick sale. In today's market, qualified buyers are few and far between. If you qualify for a home mortgage loan, you hold considerable power. Use it to your advantage.
Real estate investors often seek out FSBO real estate. Although rare, some mortgage lenders allow borrowers to act as their own real estate agent to satisfy a short sale agreement. Short sale refers to a type of real estate transaction used to prevent foreclosure. In essence, mortgage lenders accept less than is owed on the home loan in exchange for a quick sale.
Investors can often purchase short sale FSBO properties below market value. When negotiating this type of transaction, real estate investors should strive to buy houses with cash to further reduce the price. Cash real estate deals can close in a matter of days, as opposed to several weeks when working with buyers who require financing.
FSBO real estate can save sellers, buyers and investors, time and money. At Simon Volkov, we specialize in buying and selling distressed properties in Orange county and southern California, Arizona, Nevada and Washington. We work with buyers, sellers, investors, lending institutions, real estate agents and attorneys.
If you need to sell your house to avoid foreclosure, bankruptcy or satisfy a short sale agreement, submit information about your property via the "we buy houses" form.
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Published on October 17, 2009 at 02:38 AM