Buying a Home For Sale By Owner in MN?

For Sale By Owner

Buying a Home For Sale By Owner in MN?

House hunting can indeed be a daunting experience. In this day and age, some buyers prefer to take matters into their own hands in order to retain control in the buying process, and this usually means looking at homes only available from the sellers with no broker involved, also known as β€œFSBOs”.cartoon couple is pointing at words that say Buying a FSBO (For Sale by Owner) - the Do's and Don'ts of the Hunt

This type of purchase, as with everything else, has its pros and cons. Whether you are a first-time buyer or an experienced multi-property purchaser, there are still points to be considered when thinking about FSBOs (For Sale by Owner).

Most homeowners who choose to sell their own home are doing it solely to save the commission for less closing costs and not get tied to one agency for a contract period. This means the home should be less expensive than if a broker had the listing to sell it.

But that is not always the case.

 

 

Comps

The homeowner has no way of doing proper β€œcomps” (comparable sales in the area).

Their suggested sale price might be way out of wack – and you, the buyer, might not even realize it.

A real estate agent can help pull current listings and recently sold properties to help dictate the true market value of the home.

Click here to view the current Real Estate Market report.

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Showings

Unlike having an agent schedule a showing while the owners are out, the Sale by Owner will be there to show you around and hover over you. The home most likely will not be properly staged or de-cluttered.

It is quite difficult to ignore all these distractions, not to mention that all this clutter could be hiding some significant damage or imperfections.

Ugly furniture, strange odors and dirty dishes in the sink can easily deter most buyers away from seriously considering what could be the perfect home, if it had been properly staged for presentation.

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Disclosure Statement

Most states have a requirement that the Sale by Owner will fill out a Disclosure Statement (real property disclosure), listing all known defects or factors that might affect the sale.

(Some states even have laws that force you to disclose deaths in the house, murders in the neighborhood, and even ghosts on the property – Not Minnesota though).

The problem is that most For Sale by Owner  don’t realize this, and most first time buyers don’t know it either. Without this information up front, you could easily be stuck purchasing a property you never would have even considered.

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Purchase Agreement

It is up to the Sale by Owner to have these agreements ready to present to the prospective buyer. Unfortunately, for many first time sale by For Sale by Owner, they don’t realize this. What to do? Bring your own!

They are readily available online and in major office supply stores.

Don’t be pressured into signing anything until you completely understand and agree to what you are signing.

It’s a good idea to review it, make revisions as necessary (yes, you can make changes), and then bring it back to the for Sale by Owner to further discuss.

Remember – if they sign first, you can’t make any edits after that.

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Deposits

This is not your down payment to the bank. This is a check that holds the property during negotiations.

Some Sale by Owner`s want this, others don’t. If you are asked for a deposit, make certain you know where the money will be held.

The for Sale by Owner cannot deposit this money until the PA has been fully executed.

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Multiple Offers

Just like any home on the market, it is quite possible that the FSBO you like will have multiple offers as well. However, unlike working with a real estate agent who handles all these details and keeps you updated, most FSBO Sal By Owners don’t feel obligated to keep all the prospective buyers informed.

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Final Walk Through

This is critical. Most likely you fell in love with a house that was still cluttered with furniture and wall hangings. Once the Sale by Owners clean out the house as they move, it is vital that you get to see the house empty.

Make sure that you have previously stipulated in the Purchase Agreement that the deal needs to be revisited if you find issues with the house such as wall damage, badly soiled carpeting, leaky plumbing, etc..

Learn more about the Final Walk-Through .

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Inspection

Always schedule a complete home inspection. This should include everything from a roof inspection to mold, to pests. A licensed home inspector will check everything to make sure it’s up to code as well.

At this point in the purchase process, you have the right to either back out of the deal or negotiate repair costs before proceeding.

Keep in mind that standard wording in the purchase agreement always states the house is being sold β€œas is”.

That doesn’t mean you are forced to buy it β€œas is”!

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Appraisal

A savvy for Sale by Owner will have already had an appraisal done by a licensed appraiser, but this is rare. This shows that the house has been priced in accordance with the appraisal. It’s usually very similar to whatever comps a real estate agent would provide to you.

It also helps the for Sale by Owner from wasting time by taking the house off the market for the wrong buyer.

What does this mean?

It means that once an offer is accepted and the buyer has his mortgage company perform their own mandatory appraisal, it could easily come back below the sale price agreed to.

For instance, if your Purchase contract has an agreed upon price of $200,00, but the appraisal comes back at $185,000, that means that’s all the bank will lend you (minus your down payment).

In other words, you need to come up with the difference if you want to proceed with the purchase. However, when the Sale by Owner has already done the appraisal, you know exactly what to expect once you apply for your mortgage. No surprises for you or the Sale by Owner!

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Is It Worth It?

Is it worth dealing with FSBOs to find your dream home? It could be – as long as you know exactly what you’re getting into. If you are prepared, do your research, learn the ins and outs of doing the deal, and follow all the advice above, you should be fine.

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The Van Mill Real Estate Group

When you choose The Van Mill Real Estate Group to represent you in your purchase for Sale by Owner , there is typically no real estate agent fee to you. Provided you choose a home with the for Sale by Owner (even new construction) offers a full commission to the buyer’s agent.

This allows you to have an agent that is representing your interests, expanding your selection of properties, and helping educate you on appropriate market value to make an educated decision on price.

The Van Mill Real Estate Group manages the offer, counter-offers, contracts to close, inspections, negotiations for repairs, and is present for the final walk through and closing.

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