You may believe that buying a home directly from a seller is your cheapest option, as you’ll save on the commission that would otherwise be paid to a real estate agent.
However, buyer beware: There are plenty of traps for the unwary in buying a For Sale By Owner (FSBO.)
The selling price
Take the value of the property: In an FSBO, the seller sets the price, usually without consulting an agent. However, regardless of what either you or the seller think the property is worth, it still must stand up to the scrutiny of a lenders’ appraisal.
Why? Because lenders, who have their own appraisal review departments, will only lend money against either the lower of the appraised value or the contract price.
As the buyer, you usually pay for the appraisal; if the property turns out to be overpriced, and the seller is adamant that, regardless of what…
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