Home Buying in 77066>Question Details

Emily, Renter in Tomball, TX

what are the pros and cons on buying a home from the owner?

Asked by Emily, Tomball, TX Thu Mar 7, 2013

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Al Geffon’s answer
Emily ...

Personally, I can't think of anything positive for buyers. The services and expertise of an experienced Realtor come at no cost to them, their interests are protected and professionally represented, and they receive a wealth of information not available to consumers who go it alone. There's so much more to purchasing a home than signing papers and writing a check ... believe me, it's a rare occurrence when all matters fall into place as anticipated.

Sellers, on the other hand, are simply looking to save money ... otherwise, there wouldn't be a reason to enter such a significant undertaking without their interests being represented. I guess they figure that since they can write their wills, incorporate their business, file for divorce, and pretty much do everything else online, selling a home should be simply a matter of following the prompts. There are several FSBO websites, and I've blindly inquired about listing a home on a couple. None would provide their success rate ... i.e. number of homes sold vs. those advertised.

The odds are great that the home will be overpriced ... most FSBO sellers factor in what I call "sentimental equity." They're also under the false impression that they can recoup every dime they spent since they've owned the place ... from the foundation repair to the drapes! Some sellers would entertain the idea of paying a buyer's agent while flying solo on their side ... again, it saves some money, but also pretty much assures them that the buyer is qualified. There's paperwork covering this, and it's possible to have a successful transaction (I've done a couple ... a little more work, but so be it). Your agent would have to approach the seller, not you.

Incidentally, the vast majority of properties beginning as FSBO's end up being listed with Realtors. It's pretty much like everything else ... if it were that simple, everyone would be selling their own homes. Given the fact that this market is thriving, and most Realtors are as busy (or busier) than they've ever been, that alone ought to tell you something.

I hope this helps ... best of luck.

Al Geffon
(713) 213-6350
Web Reference: http://www.har.com/algeffon
1 vote Thank Flag Link Sat Mar 9, 2013
Pros---Someone will save the commission....maybe the buyer...maybe the seller.
Cons--A ton.....maybe neither party really knows all the ins and outs of a real estate transaction.
Maybe both parties get screwed in the transaction when something goes wrong and neither party really knows how to handle or work though it.

I can tell you as a Realtor and Broker licensed in Texas I have the legal right to buy property and represent myself anywhere in Texas, but I would not dream of doing so. While I have knowledge, I know I don't know enough to represent myself in the purchase of property in Austin, Houston, El Paso or Amarillo. I would go hire a realtor there to represent my interests. I don't know the politics, I don't know the schools, I don't know the values, I don't know the mineral rights, I don't know all the local issues and ins and outs, I don't know the local tax districts, I don't know the local title companies, and so much more.

To me this is probably one of the largest financial transactions of your life. Why would you add so much risk to the transaction by trying to do it yourself?
1 vote Thank Flag Link Thu Mar 7, 2013
Bruce Lynn, Real Estate Pro in Coppell, TX
I would have a real estate professional or a real estate attorney in your corner. Sure it's great that the seller is saving money by not using a real estate agent. But don't let his cost saving measures cost you money.
0 votes Thank Flag Link Fri Mar 8, 2013
Honestly the only pro is that you can get into a house today that you most likely could not get into with traditional financing.

The Con's list is long - some of these may not apply to your situation:

1. Good chance you may be overpaying
2. Interest rate and fees are probably very high
3. If you do not understand all of the aspects of the purchase you could put yourself in jeopardy and lose your deposit money.
4. A sizable down payment is probably required and that is non-refundable should you not be able to eventually refinance if you are required to do so in a certain time period.
5. If the home has a current mortgage the lender could accelerate the payment and make it fully due. This never happens but they could do this if they wanted. As long as they get a check every month they usually will not do anything. But it's important to understand what could potentially happen even if the risk is very low.

I could go on and on. The main thing to understand here is there are a lot of risks. Make sure you use a real estate attorney and that you close in a title company. Also make sure you close in a title company and use a servicing company and have the ability to verify any existing mortgages are being paid as agreed in a timely manner.

Hope this helps.

Don Groff
REALTOR® | Mortgage Broker
Austin Real Estate Pros | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Fri Mar 8, 2013
The only difference is you're not dealing with a listing agent and instead are dealing directly with the owner. You can still have your own agent represent you in the purchase or you can go it alone and hire an agent to provide you information only on recent sales, etc.
0 votes Thank Flag Link Thu Mar 7, 2013

The only possible "pro" is saving the seller money. I said "SELLER", not you! They might not pay a commission and you would assume they would take that off the price, but maybe not.

For you as a buyer, not much! You have not reviewed sales in the area (I know, you see sale prices on Zillow...guess what, those are not sale prices but county assessed values), your not sure how to deal with paperwork, inspections are interesting because the seller said he won't fix anything, did you get a disclosure on issues, where do you get help with a mortgage and insurance information, etc, etc.

Unless your a seasoned Realtor or you have purchased min of 20 homes, I would HIGHLY suggest having a Realtor represent you! If the for-sale-by-owner is not willing to pay your agent, you pay it and work out a better price. Your Realtor will look out for your interest from day one and be there to closing and beyond that. Most people play "Realtor" once every 8-10 years, we do this everyday!! Let us know if we can help.

Mark McNitt
m 832-567-4357
Bernstein Realty, Inc.
0 votes Thank Flag Link Thu Mar 7, 2013
Don't buy a house without representation.....

Too many things can go wrong.
0 votes Thank Flag Link Thu Mar 7, 2013
We always buy a home from the owner, Emily; I think that our answer should be - there are a lot of ways that transactions are different when there are brokers involved, many more than we could list here. If you've ever been annoyed at a restaurant when they basically recited the recipe of all the entrees, a real estate menu could be ten times longer!

I think that the real estate community has helped standardize transactions, and if we're involved, the transaction is more likely to adhere to that standard than if we're not. Inspections, disclosures, contingencies, timelines - then, again, you may have a completely honest and forthright seller to deal with.

More importantly, to my mind, is that buyers get the most value by working with a broker from the beginning of their search, learning from their expertise about properties, valuation, and all of the other tings on the real estate menu.

All the best,
0 votes Thank Flag Link Thu Mar 7, 2013
FSBO's can be a good deal, the question is always, "for whom?" They can be a good deal for the buyer if you know more than the seller, have experience, research tools, know the law, contracts and have a great inspector.
They can be great for the seller if an unsuspecting buyer shows up and doesn't have the knowledge, experience or resources to assist them.
FSBO sellers want to save themselves the commission, so if they are priced according to the best comparables, you are not getting a bargain they are.
Before you buy a FSBO, discuss this with a great local agent. I've assisted buyers for a fee when they want to buy an FSBO. As an agent, I have the tools to prepare and protect a buyer. The fee may be paid by the seller or wrapped into the price.
An agent can also show you listed properties that are most similar so you can compare what you are getting for the money. Sometimes I've had buyers choose another house and were glad they did.
Get with a great local agent and discuss your plans.
0 votes Thank Flag Link Thu Mar 7, 2013
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