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Strike While the Iron is Hot...and other advice for non-real estate professionals...

By
Real Estate Agent with REMAX EXECUTIVE REALTY

There is a saying, Strike While The Iron Is Hot!  and for a certain for-sale-by-owner that I sold last week, they are about to find out why.

Our market is beginning to see For Sale By Owner properties again.  There are 2 primary reasons for this: the market has low inventory & many people own their homes for very close to market value (vs. having ample equity).

There is a temptation to FSBO, and for some this can work.  Recently I've had 2 FSBO experiences, and they both have something interesting to say.

The first is a house that I found out was going to come on the market.  I asked the owners if, before listing, they would allow me to show the home to my buyers.  Incentive: save the 2.5% listing fee.  My buyers have been in a hotel for 3 months and are more than ready to move. 

They made an offer through me as their buyer-agent, which the owners accepted on the basis of price.  Then they threw stumbling blocks in the way regarding personal property  Finally we had it all sorted out - except for the hot tub.  The homeowners didn't want to be bothered removing the tub, and the buyers didn't want this piece of personal property. On a greater than $600,000 sale, these lucky FSBO owners argued for a week about a sub-$250 issue?!

In the meantime, a new listing came on the market - $70,000 lower in price than the FSBO.  The buyers went to the open house, thought the place was great, and informed me they were reconsidering the FSBO deal.  They told me they were willing to lose the offer deposit to be free to negotiate on the new listing.  If the FSBO owner had struck while the iron was hot, we would have been through our home inspections by now and on our way to purchase and sale.  It would have been much less likely that the buyers would so easily depart from the transaction.  I am waiting to see what will happen next!?

In the second FSBO example, I am acting as the "shadow agent" for a homeowner who will soon become my buyer.  Last year they listed their home and it didn't sell.  Although they did reduce their price, eventually they ran up against their biggest fear - having to bring money to the closing due to low final sale price.  Rather than do this, they took the house off the market for 6 months.

When they suggested they wanted to try in the spring as a FSBO, I told them I would help them through the process.  They have followed all of my suggestions, and after a month of self-marketing they have accepted an offer.  I am now advising them through the home inspection-purchase and sale process, but they've begun to experience another FSBO problem - clear communication. 

Post home inspection they now have no idea of the result?  The agent is not communicating with them (and is under no real obligation to do so) regarding the inspection results.  These owners will have to wait for the buyers to decide what they do / do not want to do next.  If there was a peer-to-peer realtor connection here, we would know the results.  Instead the owners are in the proverbial "cold" - and may face a withdrawal from the buyer with very little explanation.  If there is to be any negotiation, it would likely be more easily and effectively achieved via the professional agents.

There are so many pitfalls to the FSBO process - these are only 2 examples of the kinds of things owners are up against when they choose to take this route.  As the first owners said to me, "we are both stressed and we not sure acting as the "listing" broker is worth the "large chunk of commission $" as you say. Though, I do have a new respect for your profession if you deal with this daily.  Looking forward to hearing your suggestions..."

My suggestion: use an agent!

 

Posted by

Margo Otey

Hi Performance...Outstanding Results!

REMAX EXECUTIVE REALTY

(508) 439-9717

 
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