Advantages and Disadvantages
Primarily, there are two choices for potential property buyers – either explore
the listings with Real Estate
Agents or try out the For Sale By Owners (FSBO) market. The reasons
for selling the property may be many, but the modes of selling are mostly these
two. Obviously, both of these modes have their pros and cons but as a buyer, you
must know the ins and outs of the concept of
FSBO before deciding to buy
property directly from the owners.
Here are afew things you need to know about
property for sale by owners to help you make an informed opinion about the
Advantages of buying property from owners direct
Buying property directly from the owner entails immense benefits for the buyer.
These benefits include –
No Commission: Buying any property that does not involve a real estate agent
is financially beneficial for both buyers as well as the sellers. It saves a hefty
commission amount for both parties of the transaction, who would’ve otherwise
spent a large amount of money as the Agent’s cut or Real Estate Agent’s
Commission. The percentage of this commission varies from country to country and
agent to agent, but invariably, this amount is significant and could very well pinch
the budget investors.
No Heckling: From The Agents: If you are dealing through a real estate agent,
chances are that you will be constantly heckled and convinced by the agent into
buying ‘A’ or ‘B’ property. The only motive they have is
commission from both the buyer and seller, while you may have several other considerations
and requirements to meet before you actually finalize your purchase. For instance,
mortgage conditions, arrangement of finances, sale of another property to meet financial
requirements etc. Amidst all this, if the real estate agent constantly heckles you,
the transaction seems more of a burden and invariably, wrong deals are entered into
in such a hurry.
More Choices: With real estate agents, you are offered a limited choice of
properties to choose from. But the FSBO listing can have numerous choices for the
buyers. And moreover, you are free to choose and explore the properties at your
own convenience, unlike the dealings with real estate agents in which you are bound
by the timings and convenience of the agent.
More Scope For Bargaining: Rest assured, most of the time, the FSBO properties
are priced on a higher scale than the actual market price. This gives you more chance
for bargaining by showing the seller the prevailing prices. Moreover, while you
are dealing directly with the owner, this gives you a better handle over the negotiations
than dealing through an interlocutor (read ‘real estate agent’).
Chance To Strike Outrageous Deals: One of the primary reasons for the owners
to sell the property directly is the requirement for immediate cash to meet personal
Disadvantages of buying property direct from owners
Along with the benefits, there are some crucial disadvantages associated with buying
property directly from the owner. These pitfalls include:
Price Uncertainty: Dealing with a real estate agent gives you an ample idea
about the approximate prevailing prices of the desired property. However, buying
property FSBO may not give such a luxury to the buyers, as the owners usually tend
to overprice their property. Of course, the bargaining option is always available,
but if you don't know the trends and prevailing market price, it's difficult to
effectively bargain also.
No Expert Advise Available: The FSBO property is not open to any kind of
advise by the real estate experts simply because they don't have access to these
properties. The condition, location, scope for appreciation etc. are all important
aspects for any property. And you have to rely on your own instincts and acquired
knowledge while dealing with FSBO properties.
No Expert Assistance Available: A good real estate agent helps you all the
way till the registration process is complete. These services are vital especially
for the overseas investors who don't have much acquaintance with the country or
region. However, you will alone in the case of buying property FSBO. You will ll
have to extend time, energy and money to hire a local attorney or other specialist's
to guide you in the peculiar procedure of the registration of a property.
Lack of Technical Expertise on the Part of Owner: An owner of the house may
not be aware about the actual covered area of each portion of the house. And moreover,
the measurements of individual rooms, kitchen, bathroom etc. are, generally, unknown
to the owners. This is an expert's job and only a skilful real estate agent can
tell you the accurate measurements and details about the property in question.
These are some of the important aspects that a potential buyer of the property FSBO should be aware of. Otherwise,
there is no rule of thumb as to whether you should buy property FSBO or not.