California has a large population and huge selection of homes available for sale. Many of them are for sale by owners. They are referred to FSBO’s. Most people who sell their homes without a real estate are trying to save money on the commission. If you are working with a real estate agent and you find a FSBO property, you should have your agent approach the seller to find out if they will cooperate with your agent and pay them a commission. The savings can be passed on to you as the buyer because they only have to pay one commission so your agent may be able to negotiate the sales price lower than if the seller had to pay a full 6% commission, which is typically split between the seller’s listing agent and the buyer’s agent. So if you are looking for a way to secure a property in a neighborhood you want and you have not been able to find one that you like that is listed with a Realtor in the local MLS, FSBO’s give you a wider range of choices for more properties to view.
FSBO Short Sale Opportunities
With so many sellers trying to avoid a short sale, the only way for them to do may be to sell their home on their own without a real estate agent representing them. Still others don’t realize that even if they are upside down, they could hire a Realtor, because their lender will pay the real estate brokerage commission. If you are looking for a short sale opportunity, you may want to approach an upside FSBO. Make sure the property qualifies for a short sale before you waste your time though. If you are negotiating the short sale with the seller’s lender, then have them sign an authorization letter. Otherwise, the seller’s lender cannot speak to you about the seller’s loan matters. The seller may end up hiring a professional short sale negotiator or their own attorney to negotiate with the lender. You may want to have a Realtor represent you or an attorney. Be sure to remind the seller that their lender will pay your agent’s real estate commission as long as they include it in the contract and submit something a listing agreement in writing between the seller and the Realtor so the agent can get paid.
Short sales can take a long time to get approved, and there is no guarantee that they will get approved. So before you enter into a transaction with a FSBO for a short sale, make sure you are committed to closing the transaction and have your money lined up to close quickly once the lender approves the sales price. Lenders prefer cash offers on short sale transactions so they know the buyer can close.
Why Deal with a FSBO?
The single most important advantage of dealing with a FSBO is that you have some wiggle room on the sales price if you take into account the fact they the seller is saving money by not having to pay a commission or at least a full commission if they are only paying your Realtor. You might save even more money if you negotiate with the seller on your own without a Realtor. It is recommended that you have an attorney help you with the negotiations and closing then, unless you are an experienced investor and are familiar with the real estate purchasing and closing process. Also the seller may be able to provide seller financing if they own the property free and clear. In today’s tight mortgage market, seller financing is a welcome option if you are unable to secure a traditional loan, but want to take advantage of the affordable homes prices in California.
So be sure to include FSBO properties as part of your California home property search. You may find the right property this way at the right price. You should look at as many properties as you can. FSBO’s give you a larger pool of homes to choose from, and you are not competing with other buyers/investors so you don’t have to worry about getting into a multiple offer situation, which is quite common on a foreclosure property listed in the MLS.