Understanding the Risks in a "For Sale by Owner" Real Estate Purchase

 Posted on May 27, 2020 in DuPage County Real Estate Attorney

There are a number of reasons that you may want to purchase a home that is being sold by the owner. It could be that the property has everything you have been looking for, or it could simply be a desire to complete an expedient purchase. Whatever the case, there are some risks that you should be aware of, and some factors you should consider, when purchasing a "for sale by owner" (FSBO) property. These risks and factors - and how you can effectively manage them - could prove to be crucial.

You May Have to Do Some Leg Work

Real estate agents are paid (and trained) to address many details for both the buyer and the seller. A FSBO owner, though interested in selling their property, does not have the same knowledge or experience, which means they may fail to provide you with important information. This oversight may not necessarily be intentional, but it is something you should be aware of. Furthermore, FSBO owners may lack the organizational skills needed to complete paperwork in a timely manner.

Be prepared for possible delays and never agree to anything until you have done your homework. At the very least, this should include an investigation on any previous insurance claims filed on the home, a market analysis of the area, research on zoning details and specific details of the property, and an experienced real estate attorney who can protect your interests by examining the contract and other details of the transaction.

Managing Your Escrow

When you purchase a home through a real estate agent, the escrow that goes toward your down payment is sent to a bank or other neutral entity. Buyers and sellers do not have to "do" anything extra to ensure this payment is secure. In a FSBO transaction, far too many prospective buyers make the mistake of giving the owner the escrow amount. This can result in all kinds of legal issues. Avoid this pitfall by searching for a neutral third-party who is willing to hold the earnest deposit until the process is complete.

Inspections and Contracts

When it comes to possible missteps in a FSBO transaction, there are two major ones that buyers often make: failing to effectively vet the home inspector and not hiring an attorney to review the contract. In a best case scenario, these two mistakes could cost you thousands of dollars in repairs or in remedying legal details surrounding the purchase. Worst-case scenarios are frightening and can include everything from learning that the home you purchased has a major issue (electrical problems, severe water damage, black mold, etc.) to finding out that there are years' worth of back taxes owed on the property. Do not become victim to these circumstances! Hire a thorough inspector that will check every nook and cranny, and always contact a real estate attorney before signing a contract.

Work With a DuPage County Residential Real Estate Lawyer

At Stock, Carlson & Asso. LLC, we protect the interests of our clients in FSBO real estate transactions. Able to provide knowledge, experience, and skilled assistance in areas pertaining to contracts, home inspections, zoning issues, and more, we are prepared to help you effectively and efficiently navigate the details of your real estate purchase. For more information, contact our Wheaton, IL real estate attorneys today. Call 630-665-2500.

Source:

https://www.thebalance.com/buying-for-sale-by-owner-1798295