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For Sale By Owner In Houston, Texas

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Are you a homeowner looking to avoid the costs of hiring a real estate agent? Or a potential home buyer that found your dream home, only to see that it is marketed for sale by owner in Houston and not through a real estate company? What are the pros and cons for both the homeowner and the potential home buyer in each of these situations and is it worth listing or looking at homes that are for sale by owner?

There are pros and cons to every situation and listing your home as for sale by owner in Houston is not a different case. There are many options to weigh on whether or not listing your home for sale by owner would be in your best interest. 

The pros of listing your home for sale by owner in Houston include:

  • Saving money: This is the biggest pro of listing your home for sale by owner. The cost of a realtor can be up to 6% of the commission of your home which is a good chunk of change. This can give you more money to put into your next home or next endeavor. 
  • The time the home will sit on the market: Contrary to popular belief, homes that are listed for sale by owners in Houston do not sit on the housing market for a long time. They tend to sell sometimes in as little as two weeks according to the National Association of Realtors’ 2018 Profile of Home Buyers and Sellers.
  • Personally knowing people can be of benefit to both of you: Whenever you and the potential home buyer know each other it makes negotiations go a little smoother than strangers haggling over the best deal for themselves. Whenever you know someone you oftentimes will be more lenient with demands and negotiations between each other and it can make you be able to sell the home more quickly than you would whenever the home buyer is a stranger. 
  • The homeowner is involved in every aspect of the process: The homeowner is not putting their trust into the hands of anyone else to handle the paperwork, legal aspect, or marketing of the home. This is a positive for people who want to have their hands in the entire process and have the time and commitment to the selling process. 

With pros, there are also cons to listing your home as for sale by owner in Houston. Taking on the entire home selling process can be overwhelming and stressful for the homeowner and it is a lot to think about when deciding if this is the right way to go for your Houston home. 

  • Saving money on the realtor commission may not always be the truth.
  • According to KWmemorial.com, “The main reason that a seller will choose to sell FSBO is to save themselves the cost of agent commission. Take the agent out of the equation, make more money. While this makes sense in theory, a new study by Collateral Analytics found that in truth, FSBO sellers actually end up with less money than if they used an agent!”. 
  • This is because homes that are listed FSBO are likely to be sold under value and for a deal which may even be more than a realtor’s commission will cost. The homes listed sell for less because the homeowners are usually trying to sell the home quickly and are more open to negotiation than a real estate agent may be. 
  • It is harder to market your home as an individual.
    • Oftentimes the first place a potential home buyer will look for their new dream home is online on real estate websites. These are the most reputable to potential home buyers and the easiest to navigate seeing as it puts them in contact directly with a realtor if that is what they wish. 
  • More buyers feel more comfortable working with a realtor. 
    • Buyers want to be assured that everything during the sale is being done by the book. Most potential buyers will have more confidence in a licensed realtor than an individual who is looking to sell their home. This is because selling a home involves a mountain of paperwork and legality issues that would normally be handled by a realtor who makes a living doing this and has had training for this. 
  • Sellers may be ripped off by buyers wanting to ‘score a deal’.
    • Many buyers will seek out FSBO homes to try to get a home for a steal. This may end poorly for the seller with buyers who try to negotiate hard to try to get the home for way lower than its value. This can put added stress on the seller with pressure to lower their asking price and may make them sell at a lower price than they wanted. 
    • If the buyer has a realtor, they are expert negotiators and can sometimes out-negotiate a homeowner and make them again lose money on their most valuable asset. This can oftentimes be avoided if both sides are evenly ‘matched’. If both the buyer and seller have realtors who are both expert negotiators the playing field is more evenly matched and the seller has a better chance of coming out with their asking price or a price that both parties are happy with. 

Above we have listed the pros and cons of listing your home as for sale by owner in the Houston area, but what about potential homebuyers who want to buy a home that is listed for sale by owner? What are the pros and cons of looking for homes listed not through a realtor? There are things that need to be looking out for whenever a potential home buyer is looking to buy homes that are listed for sale by owner and we will discuss them all below.

The pros of buying a home that is listed for sale by owner are:

  • Lower cost.
    • Many homeowners who are listing their homes for sale by owner are needing to sell their home very quickly for a variety of reasons, which could be in the buyer’s best interest and help them get the best value for the home.
    • A homeowner who is not going through a realtor to manage the home may be more open to negotiation. It is easier to be firm whenever it is not your personal home such as a realtor representing a client, but a homeowner may be willing to sacrifice price and value for a quicker sale. 
  • The seller may pay for the buyer’s real estate agent.
    • Most real estate agents are not excited to work on a for sale by owner home because oftentimes that means that they will be doing both agents’ work. This is double the work for one agent which also means double the liability if something goes wrong. Oftentimes the seller will take this into account and pay for the buyer’s agent which will save the buyer money in the long run and would be an added benefit for the buyer. It is also a benefit for the seller because they can use paying for the agent as a negotiation tool so that they will not lose more money in the sale. 
  • The buyer may be able to bypass a realtor and just hire a real estate lawyer.
    • Many real estate lawyers will be able to draw up a purchase agreement who will handle the paperwork for the buyer and make sure the legal end goes as smoothly as possible. This is a huge weight off both the buyer’s and seller’s shoulders, but it should be discussed beforehand who is responsible for the payment of the lawyer or if it should be split between the two parties.

When looking for a for sale by owner home there are also cons to consider before jumping in, even if the home in question seems like perfection. There are many things to be wary of whenever purchasing a home through the current homeowner and not through a reputable real estate company. 

Some cons of purchasing a home that is listed for sale by owner:

  • There is no set standard on who pays for what during closing.
    • The usual standard is that the buyer pays closing costs while the seller must pay both realtor’s fees plus the buyer’s agent’s commission which is usually 6% of the sales price. Whenever the buyer is purchasing a home solely from the homeowner, there are no set rules on who pays what. This is something that needs to be decided and can turn into some hard negotiations. 
  • Earnest money.
    • Earnest money is money put into an escrow account to determine good faith and to confirm the contract. On average this is 1% to 2% of the home purchase price. This money is usually put into the listing agent’s escrow account but if both parties are working without agents, the money needs to be deposited somewhere. It is best not to deposit it into the sellers account directly because if the contract falls through, that money will be hard to retrieve. It is recommended to give to a third party to hold such as a title company or escrow account and finding one of these just adds to the to-do list for both parties. 
  • Code of Ethics.
    • Real estate agents are bound by a code of ethics which legally binds them into disclosing all information on a home they have. Homeowners are not bound to this same code and will sometimes not disclose certain details about their home in order to close on a sale. There are repercussions for this, but going in knowing the homeowner is not legally obligated to disclose all information means that the buyer does not from that layer of trust that they would have with a realtor.

For sale by owner homes are not something to automatically discount. They may be a little more work on both parties ends, but the buyer could end up with their dream home and the seller could walk away with a price that makes them happy. Do not look over FSBO homes in the Houston area!

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