Buying from a 'For Sale By Owner' May Be Hazardous
to Your Health
Many circumstances may lead homeowners to try and sell their houses
by themselves, without agent representation. Maybe the seller finds
himself strapped for cash, and needs to save on the commission.
Perhaps he has a relative or friend who successfully sold his home and
who tells the seller, "There's nothing to it!" Most likely, the seller
can't see turning all that commission money over to an agent who 'just
sticks a sign in the yard', and 'puts an ad in the paper'!
For Sale By Owners, more commonly known as "FSBOs," invariably
under-estimate the amount of time, work, and skill necessary to
successfully negotiate and coordinate a real estate transaction from
start to finish. A large number of people who start out as "FSBOs" do
eventually end up listing their homes with a real estate agency, but
not without first experiencing a good deal of frustration,
disappointment, and inconvenience.
Having said all that, the potential rewards awaiting homeowners are
high enough to insure that the "FSBO" will be around for a long, long
time. However, with the advent of the Accredited Buyer's
Representative, (an agent who solely represents the buyer during the
entire real estate transaction), the idea of BUYING a home directly
from a FSBO, without an agent, could now be a foolish, and costly,
Buyers would do well to opt for a Buyer's Representative relationship
when purchasing ANY property, but most especially when dealing with a
FSBO. Here's why:
Negotiating Power. Because a Buyer's Representative works
ONLY for the buyer, having such an agent by your side during
negotiations can save you thousands of dollars. Your agent will be
armed with ALL the relevant comparable sales (not just the really
favorable ones that the seller may provide for you), as well as any
other financial information you may need. For instance, your agent
can arrange for you to be pre-qualified by a mortgage company. This,
alone, makes you much more desirable to a FSBO and greatly increases
your negotiating position. Since FSBOs, by definition, do NOT have
agents representing them, the use of a Buyer's Representative gives
you a tremendous advantage at a serious and financially important
moment in your life!
Protection. Even if the seller is the most honest, most
forthright person on the face of the earth - he or she may still
fail to disclose something important, or inadvertently discriminate
-- through ignorance. The old saying goes: If you shoot me, and I'm
dead, it doesn't matter if you meant to do it!" A Buyer's
Representative, as a trained professional who knows the area,
protects your interests. For example, would you be happy to
discover, one month after settlement, that a purposed highway is to
be built in your backyard, and the seller hadn't received a formal
notice, so he hadn't disclosed it to you? A good Buyer's Agent could
uncover this fact BEFORE you buy.
Objective, Professional Opinion. Primarily, you come across a
FSBO by riding around and seeing a sign on the lawn. The house looks
good; you get out of the car and knock on the door. The people are
nice, the home is great, and, before you know it, you are mentally
placing your furniture in the living room, and you are totally,
emotionally involved. While loving your potential 'new home' is a
good thing, the addition of a more objective, professional opinion
is certainly a valuable asset. Your agent can either reinforce your
emotional decision, or bring you back to reality, depending upon the
facts. Either way, you're a winner.
Experience, Expertise, Information. A Buyer's Representative
can fill in all the gaps, and answer all the questions you have.
Your agent can provide you with information on the school district,
the neighborhood demographics, the cost of living, shopping,
transportation, job opportunities, and much more. Through today's
technology and the Internet, as well as your agent's intimate
knowledge of the selling area, you can cross the threshold of your
new home for the first time without feeling like "the new kid on the
Cost you no more to Utilize a Buyer's Representative. In many
instances, FSBOs have already "built in" an agent's commission when
pricing their homes, and will gladly accept a written offer from you
that contains provisions for them to pay your Buyer's Agent's fee.
This is not unlike "new construction". When you walk into a sample
home, do you see two different price sheets: one for those who are
alone; a higher price sheet for those accompanied by a real estate
agent? Of course not. If the builder is "lucky" enough to have you
walk in by yourself, then he/she keeps the portion of the commission
that was earmarked for the Buyer's Representative, he does not
rebate it to you! The same holds true for the majority of FSBOs.
While they are looking for as much money from the sale of their
homes as possible, they also realize (or, at least, the rationale
ones do) that many buyers will be uncomfortable without
representation, and they - like builders - plan accordingly.