1. Secure a seller's permission to buy what's known as a "C.L.U.E.
report" -- a five-year insurance claims history of a
particular property.
C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. A
C.L.U.E. report is similar to a credit report, but with
insurance-claims data. The reports require seller permission, but
cost only $13 and are available online from a company called
Choice Trust.
"The big thing to look for is a water-related claim... and the
possibility of mold," Mr. Watson says. "Sellers don't always tell
buyers about this."
Mr. Watson says that C.L.U.E. reports will reveal any claims
that sellers haven't mentioned. But, equally important, they will
help buyers who have become owners. Many buyers purchase a
one-year initial insurance policy when closing on a home. Most
insurers will, at renewal, look at a C.L.U.E. report to evaluate
recalibrating rates and coverage. If a C.L.U.E. report wasn't used
initially, he says, owners may get a rude awakening upon learning
their own - or their home's - insurance history is damaging.
"They can cancel on you if you don't get a good C.L.U.E.
report," he says.
2. Get a competitive market analysis (CMA) for the
neighborhood where the home is located.
Real-estate agents -- even if not involved in the transaction -
may be willing to provide them. This is a document that
outlines selling prices on homes of varying sizes in different
neighborhoods. Separately, Choice Trust will, for $9.95, sell
property-value data gathered from tax assessors' offices - at
either the street address or ZIP code level.
Fred Turner, vice president and co-owner of Homes for Sale By
Owner Inc., a Chicago-based producer of FSBO magazines and
seminars, says that he encourages owners to do this research on
the assumption that their prospective buyers may be doing it. For
instance, he recommends that FSBO sellers get three separate
real-estate agents to provide CMA quotes -- if they can locate
willing agents -- or go to the city's deeds office to look at
"green sheet" data used to determine property taxes. In major
markets, some limited home-price data are available online at no
charge at
www.homeradar.com and
www.domania.com.
If you can, try to research recent FSBO sales in your
neighborhood. A CMA will only represent MLS data - that is, data
on homes sold by agents, which exclude homes sold by owners -- so
"it's not the whole picture," Mr. Turner says. He adds that he
once bought a home from a seller who was represented by an agent
at 25% off the original price.
Learning that a FSBO is overpriced before a bid is made can
save a lot of time and effort, as buyers and sellers often learn
in the middle of the purchase process or from a bank declining to
make a loan because it's for more than a home is worth.
3. Hire a "vicious" home inspector to check
electrical wiring, moisture levels, carbon monoxide, asbestos,
lead, electromagnetic fields and radon.
Many sellers aren't lying to buyers when they don't disclose
problems in their home, Mr. Watson says. "They just don't know or
tell them [the extent of a problem]," he says.
"It's a seller's market right now. I'd say about 25% of the
transactions we do are for sale by owner," Ms. Carroll says,
noting her market is particularly active with respect to FSBO
transactions. "Initially, [a FSBO listing] doesn't raise any flags
for the buyer," she says. "Afterward it does."
SeattleRealEstateByOwner.com