What are the pros & cons of buying a house for sale by owner(without the intervention of a real estate agent)?

My father wants to buy a house, but he thinks he can get a better price if he deals directly with the owner. I'm not so sure about that, and that's why I'm asking.What are the pros %26amp; cons of buying a house for sale by owner(without the intervention of a real estate agent)?
Where do I start?





-Legal issues





Many sellers aren鈥檛 aware of what they鈥檙e legally required to do such as providing a seller鈥檚 disclosure (and what they鈥檙e required to disclose), performing municipal code inspections (these are required in many cities), etc.





-Pricing issues





People selling on their own don鈥檛 often have an accurate concept of their home鈥檚 value because they don鈥檛 bother doing the research to find out. In my experience they tend to overvalue their homes, and can鈥檛 be convinced that they鈥檙e wrong even when faced with hard data.





They might be in a financial bind, trying to sell a home where they have no equity.





Or they could be the worst kind of all, the owner who thinks their home鈥檚 value = (what I paid) + (cost of improvements I made) + (the profit I want).





-Contractual issues





If an agent is involved, there are standard forms specific to the local area used to submit an offer, and then to use when that offer is accepted. Without an agent, it鈥檚 vital that your father get an attorney to draw up these forms so that they contain the proper information. On their own, many buyers miss the important of making an offer contingent on inspection %26amp; financing. Without those, a buyer can end up stuck with a lemon of a house or be on the hook to pay cash when they can鈥檛 get a loan.





BTW, if the seller he chooses tries to use the local real estate commission鈥檚 forms without the involvement of a real estate agent, he鈥檚 breaking the law.





I think your father is wrong. The misconception is that he'll get the 6-7% that would have paid an agent, but chances are the seller isn't using an agent so he can pocket that himself. What are the pros %26amp; cons of buying a house for sale by owner(without the intervention of a real estate agent)?
The pro (singular) is that you can get the house for less, since no real estate agent commissions to be paid (these are paid by the seller, so they pass the savings on to you).





There are many cons with a FSBO transaction, both where the buyer has an agent and when he doesn't. First is that there is myriad paperwork that must be filed correctly and in a timely manner. If both sides are not 100% aware of the requirements, the transaction could get held up in escrow or fall out completely. An agent also knows typical concessions and contingencies that buyers request and that sellers usually grant. If the buyer's agent requests these typical concessions and contingencies, the inexperienced seller could balk at every one of them, causing the sale to not go through.





Then there's the negotiations about whatever the seller discloses in the transfer disclosure statement (TDS) or discrepancies with the property that the buyer finds during a property inspection. Instead of having your agents negotiate for the buyer and seller, the buyer and seller do this themselves. And, people can get really upset with each other during this type of negotiation, again causing a transaction to fall out of escrow.





There are just too many pitfalls involved in a real estate transaction that doesn't involve professional agents on both sides of the table. And, I would never go into a real estate transaction as a buyer without having an agent representing me.
The only pro is that he'll be saving money on the commission, but those savings can quickly disappear and become costly mistakes when you don't have an agent looking out for you. If he insists on doing this without an agent, he should have a real estate attorney look over any contracts BEFORE he signs them, he should insist on a home inspection, termite inspection, he should know how to negotiate closing costs and inspection costs into the contract, etc. etc. Bottom line is that a real estate agent is paid for doing more than just showing the house - there is a lot of behind-the-scenes work that needs to be done and looked after from start to finish. If he doesn't know what he's doing he can wind up getting screwed over for far more money than what he is saving on the commission.
If he has lots of negotiating skills and a thorough knowledge of real estate law, maybe he could get a better price.





However, a real estate purchase is a minefield of regulations and paperwork. Agents earn their money, believe me, and can help to negotiate a better price, even taking into account their percentage.
Sellers and buyers need to realize that two people don't save the comission. The seller wants to net more cash and the buyer wants to pay less. An agent will know how to keep her client (the one who pays), protected when the contract is written. He/she will know where to go for financing, termite letter, suggest closing attorney, etc. It's not an easy job. If your father is experienced in these things, he should go for it. Otherwise, he really needs a professional.
He probably would get a better price going personally to the owner. If he uses a real estate agent, they get a commission for helping him. Once they settle on a price, then they both need to get attorneys to handle the legal process. Real estate agent is not necessary in this type of sale.
Some people do need to ';look into the eyes'; of the other party to a transaction. In most cases, the numbers speak for themselves. If his offer is good, it will be accepted. If bad, it will be refused..