We have all seen it: The big black and orange private sale sign in your neighbour’s lawn. As you look around Halton & Hamilton, private sellers, or FSBO’s (For Sale By Owner) seem to be popping up all over. And with this rising popularity of private sellers, have risen some misconceptions that I would like to clarify for some.
First things first, it’s important to understand how financing a FSBO works. Many times first time or un savvy buyers may get confused. We find there is a misunderstanding that buyers think “For Sale By Owner” means the home seller is the one offering the financing on the home. And in most cases, this isn’t true. We find this often when buyers with little or damaged credit think they will finally be able to purchase a home of their dreams and get around dealing with a bank or a lender. Or they think there will be some tremendous savings on the home by skipping out on having a Realtor® involved. In our opinion, this usually is a huge mistake as individuals such as mortgage brokers are experienced and trained to deal with the creative financing possibly needed in a transaction like this. Also, they are usually able to help them repair their credit and obtain a favourable mortgage that would work in their best interest.
It is definitely a smart idea to find a mortgage company that is experienced in the financing of FSBO sales. These companies differ from most mortgage companies in that their services are more comprehensive than most and they have a true understanding of the private sale process. They have expanded their offerings to include many things not usually covered by traditional mortgage companies like banks and other typical lenders and can offer extra support when it comes to things such as closing contracts, title issues and inspections.
The closing of a home contract is one of the more confusing aspects of the purchase process and should be handled by a trained professional. These “DIY” kit’s you can buy don’t teach you the legal and financial ramifications of a home closing gone bad. And they certainly don’t teach you how to handle the situation fully other than getting you to go speak with a potentially costly lawyer every time you have a question.
Another misconception deals with the fact that the buyer is saving money by dealing with a FSBO situation. The truth is that usually the seller is the one trying to save money on agent commissions. If they have subtracted the price of the agent from their asking price, it is possible to save some cash. But this is hardly ever the case. Most FSBO sellers are listing their homes at market value as if an agent was selling the home. Then they attempt to do everything themselves and pocket the cash that would normally go to the agent.
We hope this information was helpful to all of the readers of our blog. There are many more great articles to come! Be sure to share with your friends and family!
The Premier Home Group
Ryan Smith & Lindsay Russell
Keller Williams Edge Realty, Brokerage
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