With limited inventory, buyers and their agents are scrambling to find homes for sale.

Homes listed "by owner" are a tempting option to buyers, but are they really a great choice?

 

BY OWNER - THE WHO AND WHY

To begin, the purpose of this post isn't to be negative about those who sell by owner. It is their right to do so and we respect that. We do want to educate buyers though on this segment of the market and what is means to them should they entertain buying a home listed by the owner.

Let's start with the basics: Someone who tries to sell their home without using an agent is termed a "FSBO ( pronounced Fizbo ) - For Sale By Owner".  It is legal for someone to do this and represent themselves in the real estate transaction.

There are a few reasons why someone would want to sell by owner. The main reason is to save money.  In the past, most "by owners" were limited in their ability to market, usually opting for a yard sign. Today, there are more options for them.

With the popularity of the internet, someone selling by owner now has the ability to advertise on popular sites, like Zillow. Therefore, it is not unusual for a buyer to see these types of homes listed for sale while doing an on line search. Most "by owners" are willing to pay a buyers agent who brings them an offer. 

A GOOD OPTION FOR BUYERS?

The problem is that most "by owners" are not overly motivated. Basically, they will sell if they get their desired price. Otherwise, they will likely just stay in their home. This dynamic certainly doesn't favor a buyer as they simply have no leverage here.

This situation leads to one where a buyer will likely have to overpay for a home, sometimes well above market value. 

Also, since most sellers lack experience dealing with the complexities of a real estate transaction, the process can be quite trying at times.  Buyers need to consider if it's worth overpaying and jumping through hoops for the right home.

THE FINAL WORD

In our personal experience, many of our clients who have purchased "by owner" have admitted to overpaying. However, they justified the price because they fell in love with the home.

There is nothing wrong with looking at a home listed "by owner" provided you have realistic expectations of the possible end result.