3 Important Things to Know About Buying Homes for Sale ‘By Owner’

There seems to be a lot of misinformation circulating about the whole notion of buying a home for sale by owner. Perhaps you are in the market for a new home and have run across what you consider to be a sweet deal but are afraid to make an offer. That “By Owner” listing has you a bit confused and you want to know that everything will be handled smoothly and legally. Perhaps the following information will help you understand that from a buyer’s perspective, there doesn’t need to be much of a difference at all.

1. The Main Difference to Understand

In a traditional real estate transaction, there are typically two agents involved. One would be the seller’s broker and the other would be the buyer’s broker. Sometimes this is the same real estate agency and other times both the buyer and the seller are represented by different brokerages. In either case, in a traditional transaction, the seller lists a home with a broker who then gets an agreed upon percentage for selling that property.

When you see a “By Owner” listing, that seller is not going through a brokerage. That’s the main difference. It doesn’t mean that a buyer can’t work through a buyer’s agent. It simply means that the owner has decided to sell the property without that service. Obviously the main reason to forego working with a broker from the seller’s perspective is to increase the amount of money realized from the sale. No commission is paid to a broker.

2. What a Buyer’s Broker Can Do

However, a buyer can choose to be represented by a broker in order to make sure all the paperwork and legalities are in order. Sometimes this may be to a buyer’s advantage if a home appears be in need of repair or renovation. It can also be advantageous if you are living out of the area and want to be represented without continually traveling back and forth as arrangements are made.

A local agent, for example, can do everything from handling the transaction to getting estimates from qualified professionals if renovations would be required. An Illinois broker could contact experienced Chicago Engineers to get bids on what it would take to make any home extensions, if extra living space would be required. In other words, they could handle everything from the appraisal to the closing on your behalf.

3. The Bottom Line

While you would agree to pay your broker a fee for handling the transaction on your behalf, the seller would not come off any points. That’s really the bottom line. You will still get a sweet deal in the long run because the asking price is going to be based on the agreed amount for commission. The seller would get the same amount, you would come off a few points on your end and everyone walks away a winner. You get the house of your dreams and the seller makes a quick sale without paying a percentage to a listing brokerage. That is the main difference in a nutshell.