Awhile back, my business partner had the great idea of creating a monthly sort of newsletter so to speak of what was going on with a property we purchased back in February. Once we were adding value and making repairs and updates, we would mail out and let all the owners on our street know that we were new to the street, what was going on with the building, and drop that we were always looking to buy if anyone ever needed to sell.
That paid off this weekend as we found a motivated seller on the street. We want to save the owner the process and money of using realtors, so we are going the FSBO route. Both of us have never purchased this way, so we were looking for any advice or feedback anyone may have as we prepare to go through this process.
My last two have both been this way. The problems I ran into were deposits I don't have the ability to escrow money and I wasn't willing to cut them checks so how do you handle it. Both P&S listed large deposits and I had the cash. In one case I got a bank check and took a copy of it. The bank accepted that and it was given to them at closing. On the second we got right to the end and I just dragged my feet till the week of the closing and then he relented and rewrote the P&S to say no deposit. Both properties closed. That has been my only issues so far the title company and bank do all the heavy lifting and will walk you through it.
@Doug Phillips my last deal was off market like this and we ended up paying an agent a 1.5% commission to act as a transaction broker, which worked out very well. We found the agent's expertise to be invaluable in finessing the deal for several key reasons: determining fair market price, negotiating the purchase and sale contract, connecting us with a great inspector/lender/ title company, scheduling everything, handling all the paperwork, down payment, escrow, title work, contract deadlines, inspection objection negotiations, closing, etc. and consistently moving the deal forward to make the process smooth and efficient. The seller initially felt the building was worth more than we wanted to pay, which I find is typical with FSBO situations, so the agent was critical in the initial negotiation by providing accurate comps and bringing the seller down to earth from a neutral third party standpoint, saving us $$$ on top of covering their commission. Since the seller was a family friend the agent helped the deal from getting weird when we wanted to pay $50k less than the seller thought it was worth. If you think the seller has overvalued their property, which many do, an appraisal could also potentially solve that problem, but an agent acting as a transaction broker is very helpful in reframing a seller's pricing expectations using market data and expertise in massaging the deal. If you're confident in pricing and you've already agreed to the price, as well as completed an accurate CMA to be sure you're not leaving money on the table on your end, you might take a different approach, perhaps by using a lawyer to help with the paperwork and a title company for title work/ escrow/ closing.
Wow thank you for all that! We actually believe the property to be much cheaper than the current market value for this area, and the seller has run the property by various realtors and they told the owner they could get a lot more than our asking, but enter "motivated seller" and they are ready to unload this property. I agree with you, I think a lot of FSBO instances are priced much higher than the correct amount. I'm glad to hear your situation worked out for you!
I may be in the same scenario soon and I was wondering if you completed the FSBO transaction? If so, what was the process like for you?
We actually did, it was very smooth.
We ended up closing in October and in January, started 2 renovations: 1 in the basement and 1 unit on the first floor and finished in April. We had just completed 4 remodels at our other building so we brought in private money and a construction loan for these two. We're now looking at another possible FSBO with seller financing terms; I will let you know how that goes!