Private Sales: 6 Important Things Home Buyers Should Know

Private Sales: 6 Important Things Home Buyers Need To Know

Traditionally, a home is bought or sold with the help of a real estate agent. However, that person is usually paid a 3-6 percent commission that can translate to hundreds or thousands of dollars. That money is essentially lost profit to the person selling his or her home. Therefore, some people have chosen to sell their homes on their own in an effort to skip paying that commission. As a home buyer, what should you be aware of when attempting to deal with private sales?

The List Price Should Be Lower

slide07_thumbIf you are buying a private sales home, you should be able to negotiate a slightly lower price. This is because the owner is not paying a commission to a real estate agent. Therefore, if the home is listed for $100,000, you may be able to get away with an offer for $96,000 or $97,000 without hurting the seller's ability to make a profit.

Assuming that you decide to have a real estate agent help you during the home buying process, that person should be able to point this out during negotiations. However, your ability to pay less than list price will depend on how many offers have been made on the house, and the sellers motivation.  Plus whether you are buying in a buyer's market or in a seller's market. What you offer may also depend on how much you like the home and whether the seller may offer other concessions.  See also:  First Time Home Buyer Mistakes

Private Sales Homes May Have Issues

slide08_thumbIn theory, any home could have significant issues that may need to be addressed either during the buying process or after the home has been purchased. However, one reason why an owner may choose to go the private sales route is because it has significant issues. Therefore, the seller may be looking to sell it as-is for as much as it can get on the open market.  If you're seeing the home at an Open House, make sure to ask questions!

Before you buy any home, make sure that you have a thorough inspection done. If there are mould issues, a pest infestation or problems with components such as the roof, ask if the seller is willing to fix those issues for you. It may also be possible to ask if the seller will give you a price discount to help you pay for those repairs. Even if the seller declines to offer any assistance, the home may still be worth buying if you get a good price.

The Seller May Not Be As Responsive to Your Needs

slide06_thumbWhen a home is listed for sale that you would like to see, your agent will call the seller's agent to set up a showing. However, when an owner sells the house him or herself, your agent may not be able to get in touch with the owner. It may also be harder to schedule a showing if the person selling it has to work or is otherwise not available when it is convenient to you.

If you decide to make an offer on a home that is for sale by owner, that person may or may not be willing to work with you when it comes to making fixes or otherwise offering concessions. In most cases, a selling agent will advise a seller to make minor changes or may even help pay for them on his or her own. The owner may take a more hardline stance or simply not fully understand how the selling process is supposed to work in respect to working with a buyer.

The Seller May Not Understand How to Complete the Transaction

slide10_thumbTypically, a real estate agent for the seller will make sure that the transaction closes in a timely manner. That person will also make sure that the title is clear and that there are no other issues that could prevent or delay closing. However, there is no guarantee that a homeowner understands how to complete the transaction on his or her own.

Those who don't have any experience in the real estate field or in selling their own homes may make one or more mistakes. This could prevent you from closing on your home in a timely manner.  This in turn could have ramifications if you need to be out of your home or apartment by a certain date. Banks may also be wary of making a loan if they can't be sure that the transaction will go through properly.

Private Sales Homes May Not Get Many Offers

slide04_thumbOne of the nice things about buying a home from an owner is that it may not have many offers on it. This is generally because a homeowner doesn't know how to market the home.  Or doesn't have the same type of reach that a real estate agent would have. Typically, the owner trying to sell the home on his or her own relies on talking to friends or family members as part of their marketing effort.

Bo Kauffmann Real Estate Agent Winnipeg

However, a single post or two on Facebook or through Twitter is generally not enough to get many people to express interest in a property. A real estate agent typically has a targeted email list of thousands of people.  A professional agent has many avenues of marketing which reach farther than any private sales efforts can do.

While this may be an issue for the owner, this is the perfect opportunity to get a great deal on a home that you can live in for years to come. A lot depends on how much the owner expects to get.  It may be possible to buy a home with the intent of flipping it.  Or using it as a rental for the time being.

Watch Out for Issues From Lenders

slide09_thumbA seller may be attempting to sell a home before it can be foreclosed upon or before another lender can take action against that person. Therefore, it may be a good idea to ask if there are any liens on the property that may not be satisfied after the sale of the home.

In some cases, the lender may be able to repossess the property before your transaction closes or make the closing more complicated that you would want it to be. If you have a real estate agent, he or she will mention this.  He will make it something that you are aware of before you make an offer or before you actually close on the transaction.

Buying a home directly from the owner can work. However, it can also make it more complicated if the seller doesn't know what he or she is doing during the closing process. Ideally, you will have a real estate agent of your own and conduct due diligence before making an offer or signing any paperwork making you the new owner of any property.

Private Sales: 6 Important Things Home Buyers Need To Know Private SalesAbout the Publisher

Bo Kauffmann is a residential real estate agent with over 18 yrs experience in helping buyers and sellers achieve their goals.  Inducted into the REMAX Hall of Fame in 2010 and receiving the REMAX Lifetime Achievement Award in 2019, Bo has sold over 500 houses and condos in the Greater Winnipeg market.  He is an accredited buyer representative (A.B.R.) and a Luxury Home Marketing Specialist.   Bo provides exceptional service to First-Time Home-Buyers, Seniors looking to downsize and Home Sellers of all ages.   He can be reached easily   By E-Mail or call/text him   Call/Text Here

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