FSBO

For sale by owners, or FSBOs as the real estate industry labels them, are a misnomer.  At what time in any real estate transaction has the house NOT been for sale by the owner?  Let's hope never!  Because if it's not the owner selling the house, the buyer will never gain clear title!  A better description of the FSBO would be houses for sale with unrepresented sellers!

Unrepresented sellers have several challenges in selling their homes. 

• Studies have shown that unrepresented sellers actually end up with a lower price than if they had hired a professional to market the house for them.  The lower price may in part reflect the fact that a portion of unrepresented sellers sell to a friend or relative (at a discount?).  Maybe the lower price is impacted by agents presenting offers with the listing agent's commission deducted from the list price.  Possibly the frustrated seller gets desperate enough to accept any price!
• Marketing their home without the assistance of technologies REALTORS® have access to like the Multiple Listing Service, web sites, and address directories for mailings. 
• Safety issues as strangers come into the unrepresented sellers' home with no pre-qualifying for financing or verification of their legitimacy as buyers.  The seller must be present for showings making them physically vulnerable or their home open to theft.
• Sellers tend to tell too much when they are present at showings.  I know this personally as our third home was sold by an unrepresented seller.  In our tour of the home, the seller disclosed that he had a one year old fully assumable FHA loan (which we assumed and got the MIP refund when we refinanced 6 months later.  A factor his agent would have considered in figuring his net sheet but he didn't know about.); his company was paying him the commission if he sold within a certain time (We reduced the price by the amount of the commission.); he HAD to sell as they were relocating (Motivated sellers usually will accept lower prices.); and we heard all about the idiosyncrasies of the house (which didn't bother us but would have scared another kind of buyer).  The seller's chattiness greatly strengthened our bargaining position.
• No access to the stacks of forms now required to legally complete a transaction.
• No knowledge of point of sale requirements like city inspections, disclosures, and required repairs.
• Inexperience in figuring the net proceeds of an offer.
• No network of professionals to complete title work, mortgage verification, and the closing.

I know it's an overused adage, but truly----would you operate on yourself?  In like manner, why would one trust the biggest investment most people make to a non-professional?  The things that are overlooked by an unrepresented seller would not be missed with the experience of a licensed real estate agent on your side!

Comments

[Teresa Boardman]

June 30, 2006

Of course as a REALTOR I agree. To learn how people sell books to for sale by owners, check this one out: http://www.stpaulrealestateblog.com/st_paul_real_estate/2006/06/sold_sunday_nig.html

It seems to me that there are a lot of folks out there trying to make a buck off of for sale by owners.