Buying a “for sale by owner” or FSBO can save you around 6% of the cost of the house. However, there are a few things buyers should know about buying a for sale by owner.

What do you save on commission?

As a buyer, you don’t pay for either the listing or selling agents commission, the seller pays for both. Does that mean that commission fees don’t affect the buyer? Well, commission fees are sometimes factored into the price of a home, by the sellers.

No access to the Multiple Listing Service

Without an agent, you won’t have access to the Multiple Listing Service (or MLS), which is a tool only agents can use to find homes for sale. The MLS also helps to sell homes faster.

You’re losing an advocate

Things like a home inspection, appraisal, title to the home, getting the best mortgage rates will pop-up during this process. Having an agent to help you through this process may be worth the fees. Realtors have knowledge about fair market home prices, and many contracts are voided when a buyer and seller are negotiating because they cannot come to an agreement. 

FSBO homes could be overpriced

A buyer's agent will confirm the property’s value and help you come to the best negotiating price. A for sale by owner us most likely trying to avoid seller’s commission and so tries to sell on their own, being so focused on money, they are often overpriced.  

Be knowledgeable

If you are a good negotiator and can form a good relationship with the seller, than a FSBO home will be a whole lot easier for  you. 

Gather intel. You’ll need to gather as much information as possible. Then you will know if you need to be negotiating low or to start with a more aggressive offer. Each property is unique, therefore each negotiating situation is unique. Here are five things you need to do to gather intel on a property:

Who Owns The Property?

How you negotiate with an owner vs an investor, are vastly different situations, so knowing who owns the property is vital information. Ask your agent these questions:

• Who owns the property? 

• How long have they owned the property?

• Were they living there or was it an investment property?

Sales Record

Next thing you’ll want to know is when the property was last sold and how much the property was sold for. This gives insight into how much the owners will be looking for and whether or not they’ll be flexible on price. If they’ve earned it for thirty years, they will probably be more flexible than someone who only owned for 6 months. 

Why Are The Owners Selling?

Divorce, a deceased estate, moving to another city, are they being forced to sell? These are all possibilities that will help you understand why the owners are selling the property. 

Comparative Market Assessment

You can get a CMA done by your agent to find out what similar homes in the area have sold for. Knowing this you can know what to offer, and if the asking price is accurate to home value or not. 

Tools of the Titans

Next step is to dig deeper, and this will give you much more knowledge on the property and the agent. This are the tools you will need to use:

• Property Prediction - will hint at where the negotiation might end, and where you should begin

• Everything About the Agent - figuring out how good or bad your real estate agent is. The more you know the more you can prepare. You can check out sites like domain or ratemyagent. You want to know how many properties they’ve in the last year and how long it took and for how much. 

• Lowballing: 3 things to keep in mind

• Can you offer less than the asking price? Yes. But watch out, if an offer is too low, it can run the risk of just getting ignored by the sellers.

• How much should you offer on a house? You want to be within 10% of the asking price, any lower can run the risk of not being accepted and any higher you’re paying way over.

• What is considered a lowball offer? Anything below 10% of the asking price is considered a lowball. Say the asking price is 500k and your offer 400k, since this is lower than 10% of the asking price, there is a high chance of the seller not responding to this offer.

Mistakes To Avoid When Negotiating

Here are 6 big mistakes a buyer can make when negotiating:

1. Speaking Rather than listening - The one who does all the talking isn’t the one who wins. The who asks the questions is the one who’s in control, in doing so, you dictate where the conversation goes. 

2. Being Over Invested in the Result - In negotiating there are many things out of your control, the sellers limitations being one. So, don’t make yourself too attached to a certain end result. Keeping your emotions in check, and sticking to your game plan, will wield the most success. 

3. If you Fail to Plan then Prepare to Fail - It’s as simple as that, have your game plan set before you begin negotiating. 

4. Revealing All your Cards - Don’t reveal too much that might put you at a disadvantage.

5. Not Creating Dialogue - You want to keep and maintain a good dialogue throughout this process. Keep your cool, show respect, and keep everything “Politically Correct” so to say. 

6. Assuming Everything is Set - Everything is up for grabs and anything can be negotiated. If it applies to the terms, all that is on the table can be agreed upon. It’s terms vs price, if your counterpart is pushing price then you should push terms, and vice versa. 

Offers

Always make sure you put everything in writing. Be sure to ensure a deadline when your offer is no longer valid. 

Biggest thing to take away is that price isn’t everything. 

Are you stuck wondering if you should invest in a new build or an older home? Look no further because we are going to help you decide by giving you the best information to make your decision.

To start, let’s look at the 4 advantages to buying an older home: 

1. Some older homes have a bit more charm, a bit more character to them. A uniqueness that new builds just aren’t going to have.

2. Larger yard - they’re built on larger lots with larger yards compared to homes today.

3. Established neighbourhood, which includes more mature vegetation, more people that know the area and love the area, and you can drive through an older neighbourhood and get a better feel if you’d want to live there.

4. Closer to “downtown” areas, things like shopping, entertainment, perhaps your place of work - older homes are more likely to be close to these downtown type places. 

Now let’s go into the drawbacks:

1. More Maintenance. This really depends on how well the previous owner(s) maintained the property. You should always keep this in mind and perhaps set aside money, this could be 1% of the purchase price. Each year setting aside that amount is always a good idea. 

2. More expensive to replace wiring or plumbing should you need to. 

3. Smaller storage, closet and garage spaces (generally). 

4. It might require upgrades. An outdated kitchen or bathroom - things you have to consider in your budget that you know you’re going to change.

5. Can have a smaller square footage on average. 

OK, so what are the advantages to buying a new build home?

1. Little to no maintenance. You’re not going to have to replace anything right off the bat.

2. Modern conveniences. Extra outlets, etc.

3. Some builders provide warranty - know the terms and what they cover

4. More energy efficiency.

5. Generally more square footage with an open floor plan.

Disadvantages?

1. New builds are usually very similar in floor plans, called  “cookie cutter” homes.

2. Immature vegetation - shrubs and trees on the smaller side, need care.

3. House is yet to settle. Takes time, creates some imperfections in foundation etc.

4. More distance to the main areas of cities.

5. Can become pricey quickly.

You can definitely sell and buy a house at the same time… it just takes a lot of planning! So here are some tips for anyone who may be in this situation. 

First thing you want to do is get pre-approved from the mortgage from a lender. You roughly have an idea on the kind of profit you will make from selling your current house, and what you can put down for your next property. The lender can tell you what kind of loan options are available: how much do you have to put down, what would the interest rate be, how much your payments are going to be.

Get your house ready to go on the market. Things you need to do to your house to look ready for a showing. Pack up the things you aren’t going to need, maybe put it into storage. There are plenty of variables that are outside of your control when trying to sell, but among the few factors you can influence is how your house looks and functions. Before listing, invest the time and effort into making

Hire a competent realtor to help you. This person will be able to tell what you house should sell for. Trust a professional to get your house up on the market. 

Wait if you’ve got offers coming in. If they offer to close in 30 days that’s great. But you may want to counter back to get more time before the close. If you still need to find a place to go, give yourself more time for you to go and find your new property, then ideally you could close on both houses close to the same date. 

Some common mistakes people make when buying and selling at the same time include:

1. Waiting too long to list their house

2. They don’t get pre-approved

3. Not realizing that their home COULD sell for less than they want

4. Failing to compromise

5. Using two different real estate agents - complicated

6. Close in the morning or on a Friday