Realtors and agents across the country dread the FSBO (For Sale By Owner), and it’s not just because these sellers are playing dress-up and pretending to be real estate agents. There are all sorts of headaches and hiccups that can happen when not working with a professional, and here are the top five:
A FSBO is the owner of the home they want to sell, and they are not a licensed real estate agent. They aren’t bound by the Code of Ethics that Realtors are, and may do and say whatever they want to get their home sold. This is like buying sand from a guy on the beach, or taking nutrition advice from Little Debbie.
It is required by law for disclosures to be made about the condition of the home, and if any repairs were made. A real estate agent will have access to the database of paperwork and have it properly documented, and know how to pull records to verify there aren’t outstanding liens, assessments, or back taxes owed. A FSBO may not even know this documentation is required, and possibly may try to cover things up.
Throughout a real estate transaction, there are so many back and forth negotiations going on you’d think it was a tennis match. This is because real estate agents are hired to best represent their clients, and there are so many complexities involved, including: the offer, closing date, financing terms, comps, appraisal report, inspection report, daily occupancy rate, and more—so it’s best to let the professionals handle it all. FSBOs, on the other hand, are representing themselves and don’t care what you need or want.
It’s easy to assume that a FSBO is broke; otherwise they would’ve hired a professional real estate agent. If the seller is broke, then what happens if the home doesn’t appraise? Or if the inspection report reveals the furnace and roof are on their last leg and need replacing? It’s also easy to assume that a FBSO is just cheap; otherwise they would’ve hired a professional. This may be worse, actually. Do you really want to buy a house from someone who might have also cut corners on their home instead of paying a professional to fix the plumbing, electrical, roof, etc.?
- Sense of urgency
Anyone who wants to sell their home, and wants it to sell it quick, will hire a real estate agent to get the job done. Maybe the sellers are relocating, or need a larger home and want to move over the summer before the kids go back to school. Or, maybe they’re just really smart and trust a professional to do the job right! You won’t find as much urgency with a FSBO, because most times they have no clue where they’re moving or when. And according to a recent report you could even run into problems getting them to vacate after closing!
In summary, why do some people think they are qualified real estate agents and list their homes FSBO? Statistics show that an overwhelming 85% of them do list with a real estate agent eventually, so that speaks volumes. As for the 15% that don’t? Well, most will probably die trying… in the same house that’ll be eventually sold by a real estate agent.
The Bottom Line
There are some wonderful homes on the market that are listed by owner. It’s not that you should necessarily turn a blind eye to them; rather, don’t go into the situation alone. If you don’t have an agent, hire one to represent your best interests.