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Buying a House for Sale by Owner (FSBO) in New York

Buying a House for Sale by Owner (FSBO) in New York

“FSBO” is the abbreviation of the English phrase “For Sale By Owner“, which translated into Spanish means “Para la venta por el dueño“. For the sake of familiarity, in this post, we will use the abbreviation in English, FSBO.

Another way to broaden your search is to visit FSBOs, that is homes that are being sold directly by their owners. It’s impossible to know how many sellers venture out as FSBO, but most estimates place it at around 5% of all homes for sale in the United States.

Under normal conditions, those are houses your Realtor can’t show you. There are urban legends where Agents ask the buyer to sign a representation agreement and then negotiate privately with the seller the commission payment. If you want your Agent to include FSBO properties in your home search, you should talk about it from the beginning.

In very few cases, FSBOs can save you money because the seller has undervalued the house or is willing to share the commission savings with you. But you can never count on that. Generally, sellers make an effort to advertise and show their homes with the intention of not sharing any of their profits.

In fact, most FSBO sellers are behind on their mortgage and other debts and are trying to save every penny and avoid the stigma of Short Sale or Foreclosure. A good listing agent would tell them – simply – that they need to go to their lender and do a Short Sale. So, trying to work things out in an FSBO sale becomes a problematic situation for both parties. In our experience, we see that the vast majority of those offers are canceled because the seller did not investigate their closing costs and cannot close due to lack of funds.

Your Agent’s Role in Purchasing an FSBO.

Typically, most agents don’t look at FSBOs because most FSBOs are priced incorrectly, which includes a boatload of ethical issues that arise when dealing with a seller who has little idea what the temperature of the market is, the process of selling real estate and everything that is involved legally.

Therefore, you should decide beforehand if you want your Agent to show you FSBO. One option is to search for yourself using the resources indicated below. In any case, if you see an FSBO ad that looks interesting, the smart thing to do is to talk to your Agent before visiting the house.

That allows the Agent to deal with the important issue of how and how much they will get paid. Your Agent will call the FSBO seller and ask if they will “cooperate” regarding the commission. Don’t be surprised if the answer is no. Your Agent will then return to you and review the commission to see if you will pay it. You should agree on the rate in advance.

How to Find FSBO Homes?

Because real estate brokers do not represent FSBO sellers, they do not have access to the MLS database (unless they have made a special effort to find and pay a broker for the discreet task of listing the home). That means you’ll find most FSBOs on independent websites (like the ones below) or advertised through more traditional means (local newspapers or yard signs).

Manage the Different Personalities and Skill Levels of FSBO Sellers

An FSBO seller does not have an agent to educate them on the reality of the real estate market and act as a buffer in negotiating with buyers. That means the success of buying a home from an FSBO—from setting a price to closing the deal—depends largely on the seller’s personality and their knowledge and skills of the real estate business.

At best, you can find an impartial FSBO seller, a lawyer, or a retired real estate professional who sees no reason to ask for additional help for a family process. In the worst-case scenario, you may find a seller who considers himself a know-it-all or totally toxic, who overprices the house, who refuses to discuss commissions, and cancels the sale the moment you mention the concerns. Inspections or repairs. Sometimes, the most experienced salesperson enters these negotiations based on his emotions.

Can I Buy a House for Sale by Owner (FSBO) Without an Agent?

If you don’t yet have or want an agent, you can buy an FSBO yourself, but be prepared for a steep learning curve. Unless you are already friends, a sneaky salesperson might try to take advantage of you. And any deal can get mired in disagreements. There is a reasonable possibility that you are friends or acquaintances; for example, the seller tells you of his intention to sell the house before listing it. In any case, you are going to need a standard written sales contract to protect both of you.

Do I Still Need to Hire a Real Estate Attorney or Agent?

If saving money is a key concern, you should consider hiring a Real Estate Agent for certain parts of the transaction. A few hours of advice can save you a lot of headaches and expenses later. One option is to hire a Real Estate Agent to serve as your coach. Ask them to give you a Standard Purchase Agreement form, which protects you and the seller simultaneously. The Agent can also explain how to complete the form and review your work.

And whatever you do, never move forward without the services of a Real Estate Agent who will help guide you to closing.

If no agent is involved in an FSBO, the Seller’s Disclosure about the Property is still required. In any case, you should bring in a professional property inspector to evaluate the physical condition of the Property.

Ready to explore FSBO properties and make an informed choice? Reach out to us for expert guidance on your FSBO homebuying journey in New York. Let’s find your dream home together!

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