FSBO Real Estate

Investing in FSBO real estate, or properties for sale by owner, has its own particular problems and opportunities. Dealing with an uninformed seller who thought he knew enough to handle everything by himself can be frustrating, but it can also be very profitable if you are prepared. First you need to understand the FSBO seller.

People try to sell a house on their own for one primary reason: To save the sales commission. Unfortunately for them, they usually underestimate the cost and complexity of going it alone. They'll often get frustrated and tired of the process, and be ready to drop the price and be done with it. If you help them solve their problems, your reward can be a good price on a good investment. Just keep the following in mind:

1. A seller isn't an agent. You have to be more careful in what you say and ask. Avoid negative comments about the house. Like it or not, the truth is that it's difficult to get a good deal if the seller doesn't like you.

2. Sellers think they're being smart. If you encourage that belief, they'll be more open to your offer. If they have a good idea, tell them so. It's not unethical to make people feel good about themselves when negotiating.

3. FSBO real estate has often been on the market a long time. Seller's are usually tired of the process, and want it to be done. This means you'll get a better price if you are willing to close quickly and easily.

4. Seller's usually don't have a plan. They don't know where to close, where to buy a title policy, where to keep a good faith deposit, etc. Have simple solutions ready for all these problems. If you walk the seller through the process while letting him feel in control, you'll both be happier.

5. Skip over problems and return later. After a seller has invested more time with you in a negotiation, he'll be more inclined to give you what you want.

6. Sellers have often spent more than anticipated. Classified advertising and other costs have already eaten into their imagined extra FSBO profit. You may want to be generous in negotiating the many closing costs - as long as you get your price and/or terms.

Real estate professionals will tell you that most houses "for sale by owner" net the seller less than those sold by an agent. By the time a seller realizes this, it's often too late to recover his money and time spent. At this point, he usually just wants to get the thing sold as easily and quickly as possible. If you help sellers with that, you can get a good deal on FSBO real estate.