Four Reasons To Avoid a For Sale By Owner House

1. Money 2. History 3. Quality 4. FIRPTA

The FSBO- Buying a For Sale By Owner is not as good of an idea as is used to be. So many things can go wrong nowadays. The main reason to buy a FSBO is now the reason to avoid one – MONEY.

Remember the saying “Buyer Beware?” I think in regards to a FSBO, this is a good idea. Do you believe people are usually honest? How do you protect yourself from being a victim of a dishonest home seller? Answer: You work with a Realtor- and 99 times out of 100 they’re basically FREE to the buyer. So why wouldn’t you work with a Realtor? Why would a seller not pay for you to have a Realtor?  (which is what a FSBO is doing) IT’S ABOUT MONEY!

Protection. In a typical real estate transaction, the seller or builder pay your Realtor a finder’s fee for bring you to their home. Personally, I think that having a Realtor with experience and skills that I don’t have on my team is wonderful! Ask yourself, why would Mr. FSBO not pay a Realtor fee for himself and for you? The common answer is “It saves him the commission money”. Why are you willing to take the risk of representing yourself for the largest investment you’ve ever made? You should get the Real Estate commission, right? Since you both want the Realtor’s commission, who’s going to get it? And who’s going to protect your interests? Do you know how to check what a fair price would be? Should you believe the information Mr. FSBO gives you? Does Mr. FSBO wants to give you a “Good Deal?” Whose side is Mr. FSBO on? Do you know a lender with good fees and rates or a home inspector that checks for cracked roof tiles and window seals? Are the windows installed backwards? Wouldn’t it be nice to have the knowledge and guidance of an experienced professional looking out for you? With Nevada’s custom being that the Seller pays Realtor fees for both sides, why wouldn’t Mr. FSBO want you to have representation?

THINGS TO THINK ABOUT….

HOUSE HISTORY. Did the house you’re looking at ever have a water leak or mold that the Seller is trying to hide? I asked a seller what he did to fix the mold created by a roof leak once, and his answer was that he sprayed it with bleach and then painted over it. Bleach is a myth and it does nothing to kill mold. Would you have known that before reading this? A seller looking for a fast, cheap way to fix a problem, seems very scary to me. Meth Labs homes are another big concern. A drug house can be for sale at a GREAT price. If the house is repainted and the drywall not removed there are still chemicals that can harm a family in the home. Chemicals could have been poured into a sink or poured onto the rocks that your children will play with. Does the FSBO contract ask for house history? There is a 10 second test we do in every home to test for chemicals. If you’re buying a FSBO, make sure you do one! Sometimes Seller’s are hiding things.

Quality. When a seller is just cheap in general, you need to be careful. I’ve seen many sellers put “band-aids” on to cover things up or fail to mention things and we have many forms and disclosures. What’s under the throw rug? Is that plastic instead of glass on the oven? The air-conditioning doesn’t go into that room? Well the air-conditioning works upstairs and down. Why do I have to tell you about that room? Did Mr. FSBO have the last water heater he installed permitted? Are there earthquake straps on it? Does Mr. FSBO always buy generic and the least expensive product available? I saw a plumbers house where the bar sink drained into the rain gutter downspout that drained to the front street gutter. These are things I think about when I know that someone tends to take the easy and least expensive path in life.

FIRPTA. Do you know about FIRPTA? FIRPTA is a law that holds 15% of the sales price of the home for the IRS to ensure that Mr. Seller files a US tax return. That makes sense. What is the amazing clause in that law is that the buyer is responsible for the seller paying this withhold or the buyer can be stuck with this debt.

Example: David Smith AKA Mr. FSBO sold you his house for $400,000. Two years later the IRS asks you for the 15% or $60,000 that David Smith should have had withheld. It was up to you to have it withheld or a citizenship affidavit signed. You’ve never heard of this law or any affidavit. Mr. Smith was born in Malta and moved to America when he was two so he had no accent. David Smith is such a common name that he cannot be located. Guess what? You owe the IRS $60,000 because you bought a FSBO to save a couple thousand dollars.