While only a small portion of homes on the market are for sale by owner, they can often be a great deal for a home buyer. When a homeowner decides to sell their home on their own, it's typically because they don't want to pay commission to a selling agent after the deal closes. The commission is only a small portion of the overall sale price, but some homeowners would rather have that money for themselves rather than pay it to an agent.
As a buyer, the overall process for purchasing a home that's for sale by owner is very similar to buying one that's listed by a real estate agent. However, there are some tips that you should keep in mind when you're buying a home that an owner is selling without a real estate agent. Below, you'll find the three most useful tips for buying a home that's for sale by owner.
1. Prepare to Negotiate on Price
Homeowners who decide to sell on their own don't have the help of a real estate agent to set a price for their home. Real estate agents price a home based on comparable houses that have sold in the neighborhood along with the state of the current market. Homeowners are likely to simply price their house based on prices of houses that have sold nearby without taking into account square footage, renovations, or when the house was built.
Because of this, prices for homes that are for sale by owner are often significantly off-base from what the home is truly worth. When you're considering purchasing a home that's for sale by owner, you'll typically need to start your negotiations based on the price that you think the home is worth rather than what the owner has priced it at—without the aid of a selling agent, they're likely to have priced it incorrectly.
2. Scour Lesser-Used Sources to Find Homes for Sale by Owner
When you sell your home with the help of a real estate agent, they'll always submit it to the Multiple Listing Service (MLS.) From there, it will propagate to all the major sites that list homes for sale. However, submitting your home to the MLS costs several hundred dollars. If a homeowner is selling their home on their own in order to avoid paying a commission to a real estate agent, they may not want to spend the necessary money for an MLS submission.
You'll have to search around more in order to find homes that aren't listed on the MLS. It's a good idea to check regional real estate sites that charge a lower fee to list homes for sale. You should also drive through neighborhoods you'd like to live in, since many homeowners put "for sale by owner" signs in their yards. Online groups for the city may have postings from homeowners as well.
3. Always Use a Real Estate Agent of Your Own
Even if the homeowner isn't using a real estate agent, you should always use a buying agent for the transaction. You'll have to pay a commission after closing, but it's worth it in order to ensure that the home sale is done legally and according to state procedures. Without a buying agent on your side, you may make errors in the contract that will result in your being unable to back out of the deal once you've made your offer.
Overall, it's worth considering houses that are for sale by owner when you're searching for a new home. Although there are some caveats in the buying process due to the fact that they're not working with a selling agent, the overall process of negotiating price, drafting an offer, and having the home inspected are the same. In order to find them, make sure you're checking all possible sources where homeowners can post their homes for sale. Contact someone like Lacie Walton Real Estate Agent to learn more.