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Housing market inventory across the state of Washington is expected to remain tight in 2024, as it has been for several years now. One forecast predicted that we would see a decline in the number of homes for sale next year.
Because of this, home buyers in Washington should explore all avenues for finding a property. And one of those avenues involves buying a for sale by owner or FSBO property.
In this article, we will explore some pros and cons of buying an FSBO in Washington and why it might be worth exploring.
You probably already know that real estate supply levels in Washington and nationwide have been declining for quite some time. And while new home construction ramped up during 2023, economists are still predicting tight inventory conditions in 2024.
In a forecast published in November 2023, analysts from Realtor.com wrote:
“Buyers will finally see lower prices (-1.7%) and mortgage rates of 6.8% (on average), but may scramble to find inventory (-14%) as current owners happy with their low mortgage rates and pandemic home purchases stay put.”
Home buyers in Washington should leave no stone unturned in the search for a suitable property. Traditional real estate listings make up the bulk of the market. But there are other types of properties available as well, including FSBO homes that are sold by the owner.
FSBO stands for “For Sale By Owner.” It refers to a home sold directly by the homeowner without the assistance of a real estate listing agent. This selling strategy is often used by homeowners in Washington who want to save money on real estate agent commission fees, among other reasons.
Buying an FSBO is not suitable for all Washington home buyers. Some buyers prefer the more traditional type of real estate transaction, where both parties are represented by a real estate agent throughout the process.
But if you’re open to buying a house for sale by the owner, it could give you more properties to choose from and, therefore, increase your chance for success.
Let’s start by exploring some advantages of buying an FSBO in Washington.
Motivated sellers: FSBO sellers are often highly motivated to sell their homes quickly and efficiently since they handle the process themselves. This can give the buyer greater flexibility regarding price negotiations, repair requests, or concessions.
Access to unique properties: FSBO listings may include properties that are not actively marketed through traditional real estate channels. This could give you access to “hidden gems” that might not be on the radar of other buyers.
Potential for faster closing: By eliminating the involvement of additional third parties, FSBO transactions in Washington often proceed more quickly than traditional real estate sales. Research conducted by the National Association of Realtors found that FSBO homes sold faster than agent-assisted sales, on average.
Greater control over negotiations: Home buyers in Washington could have more control over the terms and conditions of the sale when dealing directly with the homeowner. This may lead to better terms for the buyer.
Potential to get a better deal: According to the National Association of Realtors (NAR), FSBO homes sell for less than traditionally marketed homes. More specifically, FSBO homes sold for a median price of $310,000 last year, compared to $405,000 for homes sold by real estate agents. That means you could save quite a bit by including FSBO homes in your home search.
As with other home-buying strategies, purchasing an FSBO in Washington has potential drawbacks. You won’t necessarily experience all of the scenarios listed below. But you should at least consider them since they can potentially arise.
Increased workload: Home buyers navigating an FSBO transaction often have to assume more responsibility for the sale process. This can include coordinating showings, handling paperwork, and negotiating directly with the seller.
Inaccurate property info: FSBO sellers may not have the same expertise in property evaluation as real estate agents. This could result in inaccurate pricing, incomplete disclosures, or misrepresented property conditions.
Possible delays and complications: The absence of an experienced, neutral third party like a real estate agent can increase the risk of disputes between the seller and buyer. This could lead to delays in negotiations, complications during the closing process, or even litigation.
The hesitancy of sellers to pay buyer agent commissions: Buyers don’t typically pay their buyer agents a commission. Instead, it’s sellers who traditionally cover this cost. However, FSBO sellers may hesitate to pay buyer agents a commission, primarily if they sell their homes independently, to save money on the transaction.
So, you’ve decided to buy a for sale by owner house as part of your broader house-hunting strategy. The next question is, how do you navigate this type of transaction?
Here are some time-tested tips for buying an FSBO in Washington:
Before you start looking for FSBO homes, it’s essential to do your research and understand the market in your area. Review recent home sales in the area where you plan to buy to see what you can get within your price range. Find out which way the market leans in terms of negotiating leverage. Learn everything you can about local market conditions.
Even though you’re buying a for sale by owner home in Washington, it’s still a good idea to have a buyer’s agent represent you. A buyer’s agent can help you find FSBO properties in Washington, negotiate the price, and protect your interests throughout the transaction.
If you need a mortgage loan to facilitate your purchase, you can benefit from getting pre-approved by a lender. This is true whether buying an FSBO or a traditional real estate listing. Having a pre-approval letter in hand shows the seller that you’re a serious buyer with the financial ability to purchase the home.
Just because a home is being sold FSBO doesn’t mean you should skip the inspection. Hire a qualified home inspector to inspect the property for significant problems or hidden defects. You might even consider using a contract contingency that allows you to back out if the inspection on a for sale by owner home reveals a severe issue you’re uncomfortable taking on.
FSBO sellers may be more open to negotiation than traditional sellers. But you must tread carefully and make an intelligent offer on the house. This is where the real estate market research mentioned earlier comes back into the picture. Be sure to back up your offer with comparable sales data from similar homes.
Never give your deposit to the seller directly. In an average transaction involving a listing agent, you would typically have the listing agent’s brokerage hold the deposit in their escrow account. But you don’t have that option with a FSBO transaction. Once you make an accepted offer, be sure to have an independent and professional third party hold your deposit for you, such as an escrow or title company. This will ensure your money is safe.
Real estate markets across the state of Washington will probably continue to experience inventory shortages for the foreseeable future. As a result, home buyers should keep an open mind and explore all their housing options, including buying an FSBO in Washington. If you want to know exactly how to buy a house for sale by the owner, your best bet is to team up with a seasoned professional to help you navigate this unique real estate transaction.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.