Buying For Sale By Owner Homes And Qualifying For A Mortgage

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Buying For Sale By Owner Homes And Qualifying For A Mortgage

This ARTICLE On Buying For Sale By Owner Homes And Qualifying For A Mortgage Was PUBLISHED On September 27th, 2019

Buying For Sale By Owner Homes
Gustan Cho Associates

Most homebuyers purchase a home that is listed on the MLS by a real estate agent.

  • Not many folks are Buying For Sale By Owner Homes without a realtor
  • However, there are cases where Buying For Sale By Owner Homes is possible
  • There are homes that are for sale by owners that do pop up during the home buying search
  • In the past, Buying For Sale By Owner Homes was very popular

In this article, we will cover and discuss Buying For Sale By Owner Homes.

Shopping For A Home After Getting A Mortgage Pre-Approval

What are Shopping For A Home After Getting A Mortgage Pre-Approval

Homebuyers who are armed with a mortgage pre-approval can start shopping for a home.

  • Whether it is you or your real estate agent, the home shopping process starts with searching online
  • There are times when you or your realtor will run into FSBO (For Sale By Owner) when searching online
  • Your real estate agent may run into an FSBO home and check into the particulars whether the house meets your criteria

What happens if you decide the FSBO home is the perfect home for you? What is the difference in buying for sale by owner homes versus homes that are listed on the MLS?

Difference In Buying For Sale By Owner Versus MLS Listed Properties

What are Difference In Buying For Sale By Owner Versus MLS Listed Properties

Buying For Sale By Owner homes is just like buying any other property that is listed on the MLS.

  • In most cases, the only thing missing on FSBO transactions is the real estate agents
  • Since the sellers are not listing it with the agent, the sellers will take the role of the listing agent
  • It is up to the home buyers to hire a real estate agent to represent them

However, the key question is who is going to pay for the buyer’s agent?

Having A Real Estate Agent Represent Buyers

Why Having A Real Estate Agent Represent Buyers

One of the main reasons why home sellers want to sell their home FSBO is so they can save the 6% realtor’s sales commissions.

  • The question is who is going to pay for the buyer’s real estate agent?
  • If a buyer’s realtor runs into an FSBO home, the agent can see if the sellers are willing to pay for the buyer’s agent
  • Other times, the buyers can just represent themselves and deal with an attorney and/or title company
  • Many times, a loan officer can assist with the transaction
  • Buyer’s real estate agents normally are not too fond of FSBO transactions
  • Even though the agent gets paid, most realtors see liabilities and more work on FSBO transactions
  • If the seller is not willing to pay the buyer’s agent, the home buyer can make a deal with a real estate agent to represent them

Having an agent represent you in an FSBO purchase transaction is always recommended.

Entering Into A Purchase Contract When Buying For Sale By Owner Homes

Why Entering Into A Purchase Contract When Buying For Sale By Owner Homes

There are certain states like Illinois where real estate attorneys are used for home buyers and sellers on real estate transactions.

  • Other states like Florida, the use of real estate attorneys are not common
  • Most title companies will help with the purchase contract
  • The title officer will write up the purchase contract
  • Both parties will agree to the terms and conditions
  • The buyer will issue the earnest money check to the title company
  • The title company will hold the check in an escrow account

Buyers should also write their contingencies on the real estate purchase contract.

Real Estate Contingencies In Purchase Contracts

What are Real Estate Contingencies In Purchase Contracts

Contingencies are clauses that buyers have the option to opt-out of the purchase contract and have the earnest money returned.

Common contingencies include the following:

  • Mortgage contingencies
  • Attorney Review
  • Home inspection contingencies
  • Appraisal
  • Clear title from the home sellers

There is a certain period a buyer has to cancel the purchase contract. On the contract, it should state who is responsible for paying what. Fees paid by buyers and fees paid by sellers. Sellers concessions and repair credits need to be listed on the purchase contract.

For more information about this article and/or other mortgage-related questions, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com.

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