Real Estate Flipping –Buying a ‘For Sale by Owner’ Home

The Benefits and Drawbacks

Real Estate Flipping is a growing business. From a strategic perspective, buying a new home or flip for the best purchase price is a key factor in the property’s resale. Depending on how much work you want to put in, your experience level and negotiation skills, there are a number of purchasing avenues available. With this in mind, one can buy with a realtor, direct from a development company or on their own with ‘for sale by owner’ (FSBO) deal. Each real estate purchasing option has its strengths and weaknesses, thus, in this segment, we’ll examine the FSBO option as it applies to the buying process in the real estate and house flipping cycles.

Benefits
-you control process
-you can maybe get a better purchase price because the owner will not have to pay anyone commissions
-the property may not be marketed as effectively as a realtor’s property, thus may be cheaper or have less demand
-deal-making process may be less polished not using a realtor, thus, the buyer may be able to use less conventional negotiation tactics like requesting items from the home they want 'thrown in' to the deal

Drawbacks
-less safeguards in place, thus more risk
-more work for buyer - looking for properties, paperwork, phone calls, meetings, etc…
-more work by lawyer, thus potentially higher costs
-the brunt of the negotiation strategy falls on buyer
-less standardization in the offer process in that typical subjects, etc… may not come as easily to non-real estate professionals
-one or both parties may not know how a deal should work