Dealing with Buyers
Not everyone is cut out to sell real estate, even when it's their own. Dealing with potential buyers can be time consuming and frustrating. Do you have the time? Can you ignore your personal feelings during negotiations and keep from getting excited or upset if the buyers are less than tactful about your property? Are you able to keep track of small details? If you answered “yes” to these questions, give the FSBO option a try. After a few attempts, you'll know if it's the right route for your property sales.
The majority of home-buyers use a real-estate agent to find them a home. Selling by owner will cut out many of those buyers. One solution is to let agents know you will work with them, offering half of the normal commission if they bring you a buyer.
Most sellers decide to sell by owner in order to save a commission fee, but that mindset only makes sense if you know exactly how to proceed with marketing and selling the property. Statistics show that a high percentage of FSBO real estate is sold for less than market value, usually because sellers aren't savvy about the local real-estate market or don't know how to negotiate a contract that looks out for their interests.
As a real-estate investor, you can't let that scenario describe you. You won't become an expert overnight, but continued hands-on experience will eventually make you one. There's no better time to get started.
Don't Take It Personally
Since you'll deal directly with potential buyers, get prepared to hear complaints about the property. They hate the carpeting. Who would have ever chosen those awful paint colors! The house is way overpriced. You'll hear it all. Toughen up and don't take it personally. You have to remain calm and detached in order to negotiate successfully with less-than-tactful buyers.
Most buyers who contact FSBO sellers are looking for a deal. After all, you're not paying a commission, so you can let them have it for far less than other properties. Stay aware of that attitude when you start to negotiate the contract — the property has the same market value, no matter who is selling it.
Do You Understand the Paperwork?
If you are providing forms for the buyer, do you have access to preprinted, standard forms that are specific to your state's laws? Don't rely on generic forms that do not cover the real-estate laws in your state. The offer to purchase and its addenda are critical, since they determine how every aspect of the contract moves forward. If the buyer presents you with a signed offer, be sure to have them reviewed by an experienced real-estate attorney.
Handling the Buyer's Deposit
The buyer's good faith deposit is not yours until closing, and it should be held in trust by a neutral third party. Your contract should contain wording that describes what happens to the deposit if the contract falls through. If buyers cannot get financing, the deposit is normally refunded to them. If they back out for no reason, the deposit can go either way. Address the what-ifs in your contract, and make sure the buyers understand how their deposits will be handled.
If a contract states that
Making Sure Your Buyers Are Preapproved
You'd be surprised how many buyers don't go to a real-estate agent because they know they aren't qualified to buy a house. For some reason, they think that FSBO sellers can always help them get into a house with owner financing. Don't waste your time negotiating with unqualified buyers. Ask to see a preapproval letter right away, and never sign a contract without one. Do not settle for a prequalification letter, which is not an in-depth look at the buyer's finances.
