BECAUSE THEY HAVEN'T WALKED THE WALK
A nice way of saying THEY DON'T KNOW WHAT THEY ARE DOING.
If my participation in Active Rain does nothing else, I sincerely hope that I can give real estate agents and brokers a renewed since of pride in what we do and how we serve. For some years now, since FSBO listings got into our MLS under the guise of Exclusive Agency listings, there is the perception that these sellers are competing with licensed listing agents and brokers. But, they are a small percentage of active listings and, in my opinion, always will be. FSBO sellers that use the For Sale By Owner services are also still a marginal percentage of homes SOLD. Some basic research this morning shows the source of listings in my market area which includes:
Homefinders.com market area
Approximate number of listings of homes for sale include:
FSBO from Internet sources 3,000
MLS only FSBO 500
All active listings 67,000
It's hard to get your arms around these numbers because so many FSBO listings are "under the radar" with only a sign in front of the home and an occasional newspaper or PennySaver ad.
Compare those numbers to the number of listings in our MLS of approximately 67,500 active residential listings of homes for sale, excluding approximately 500 FSBO properties from the most prominent "All contacts with owner" companies. We know who they are and we sell these listings. To me, it's just inventory. My job is to find the best home for my buyer's needs and FSBO listings or offerings are just inventory. We show them. We sell them. We settle them. But, they are a VERY small percentage of listing inventory.
A FEW OF THE THINGS WE DO
The only way the average MLS only owner can sell a property is for a Buyer's Agent to manage the showing and sale from first viewing to settlement. We handle all of the below.
1. Make the appointment
2. Show the home
3. Provide the required disclosures
4. Write the contract and escrow
5. Manage financing for the buyer
6. Manage inspections
7. Manage the title work
8. Schedule the settlement and manage settlement services.
And a dozens of other tasks that the owner/seller cannot do because they don't know how and if they tried it would be risky for buyer and seller. Their goal in listing with the MLS or FSBO company was limited to one thing and one thing only - SAVE MONEY. However, their goal of saving money requires that the home sell and settle. How often have we arrived at a home listed for sale and while walking through the garage see "FOR SALE BY OWNER" signs sitting in the corner.
THAT FOR SALE BY OWNER SIGN IS BEGINNING TO LOOK VERY OLD
Quite often the FSBO goes to Home Depot, buys a For Sale By Owner, puts the sign in the front yard and waits for something to happen. Little will happen because:
The sign and phone number can't be read from the street.
There is no brochure available.
The phone message says nothing about the house.
The seller may or may not return the phone call within 24 hours.
The buyer or buyer's agent has no access except by appointment with seller.
The seller is available to show the home only on weekends if they don't have company coming.
If the house is shown, there are often loose pets.
If the house is shown, there are usually no disclosures (required by law even for FSBO sellers).
If the house is shown, there is often no brochure.
All of the above are matters that experienced agents avoid when listing and showing a home.
EVEN A BROKEN CLOCK IS ACCURATE TWO TIMES A DAY
If the seller lists their home in the MLS through the deceptive route of the Exclusive Agency, the listing company will often provide the seller with the required federal, state and county disclosures to be completed and distributed to buyers who tour the home. So, the disclosures are done and if a buyer wants to make an offer, the buyer's agent can write the contract and manage the sale through to settlement. The biggest risk in these sales is to the buyer's agent in avoiding giving agency level advice to the seller. The buyer's agent may perform custodial services for the FSBO or Exclusive Agency listed seller, but the buyer's agent CANNOT give agency level advice to the seller. We should NOT provide explanations for any documents. This is a service that is provided to a buyer or seller CLIENT, not a customer. We can carry the paperwork back and forth, but we cannot help the unrepresented seller understand what they are signing. THAT IS WHY THESE TRANSACTIONS ARE RISKY FOR THE BUYER'S AGENT. We sell FSBO homes, but we are VERY careful and if they have agency level questions, we give them only one piece of advice, contact an agent to represent YOU or hire an attorney to represent YOU. We represent the buyer and cannot give you agency level advice which would include:
Contract language
Contract negotiations - we'll carry written offers, counter offers back and forth, but will not negotiate for the FSBO seller.
Disclosure language
Home inspection negotiations
Title services - HUD-1, Deed, Survey, Appraisal, etc.
The last FSBO I sold was 2004 and the seller went through the transaction glassy eyed and relied on me because he "trusted me" even thought I told him IN WRITING that he should not. But, I found a great FSBO home in Bethesda Maryland when touring. We got through it, but I documented every word, every action and every telephone call.
WHEN EXPERIENCE COUNTS
I have a lot of experience and I know full well that in matters of real estate, THE LESS SAID THE BETTER. I like to reduce everything to the written word and get acknowledgements all over the place. But, new or newer agents have not yet learned to keep their mouth shut when speaking with an unrepresented buyer or seller (or anyone else for that matter). I've had new agents, and some not so new, call me and relate long conversations with buyers/sellers or other agents that just made me cringe. They tell me their conversations looking for affirmation. But, all I can do is ask that they avoid such conversations in the future because ANYTHING YOU SAY CAN AND WILL BE HELD AGAINST YOU IN CASE OF A DISPUTE. Let the documents work for you and follow the contract. A lot of smart Virginia and Maryland real estate brokers and attorney wrote the contract and addenda and we don't have to practice real estate sales verbally. New agents like to talk about their new found knowledge. Experienced agents have learned to LISTEN.
NATIONAL STATISTICS??
FSBO and MLS only listings will be a part of the real estate landscape forever. I do not believe the national statistics that credit FSBO sales with 8% to 11% of all residential real estate sales. If so, they are not in my market area. The 30 pages of documents to complete a contract is reason enough for a smart seller to leave the work to the experts. That would be licensed, experienced real estate practitioners.
I often have FSBO sellers telephone me and ask how they can get their home listed on Homefinders.com. I tell them that they can't. I'm always very polite to FSBO sellers because I believe that any property owner has the absolute right to sell their own property without the help of a real esate practitioner. But, I don't give free advice to them. If they ask where they can get some information about selling their home, I politely suggest that they start with real estate school.
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Lenn, I can only speak for CA in regard to FSBO's ... unless the FSBO wishes to be represented by a Realtor or a Real Estate Attorney, I won't go forward with them. The E&O and the fact that CA is very litigious...with a FSBO who wants to play the card of not knowing is not something that I choose to be involved with. I won't take on the liability of a FSBO unless and until they are properly represented.