I have shown FSBO's to my buyers ... it's not an easy process ... but I do it if the home seems to meet my buyer's criteria. However, I've only had one buyer actually decide to buy a FSBO. Those buyers happened to be my daughter and son-in-law ... also, known as "the kids". That "experience' is the purpose of this post, and I believe it represents what can possibly transpire when dealing with an "unrepresented seller".
"The Kids" were renting a home in a very small rural town and wanted to stay in this community for my grandaughter's sake in the small school system. The town offers essentially two types of homes: those built in the early 1900's and ranches built in the 50's and 60's. Prices ranged from $90K to $120K.
We went through the process of getting them pre-approved, then began searching the MLS for homes. We viewed those that met the criteria, but none were "just right". Then one day my daughter called to say that a FSBO sign had just gone up on a cute ranch on the same street as their rental. She gave me the phone number on the sign, so I called the seller to first see if he was willing to co-op and would he sign the required paperwork indicating that. He said he would, so I set up a time to show the home. He was to meet us there, sign the paperwork and give us entry into the home.
So far, so good!
I pulled comps for this specific home, checked what he had paid for the property, checked the Auditor's site for any delinquent taxes, etc, etc. He had volunteered during our initial conversation, that he had purchased the home direct from his sister. The Auditor's site said they had paid $107K for it a year previous. The price he was asking was $114.9K, but they had added a number of improvements since owning it.
Well, the house was darling! The improvements they had made were truly very nice. Ceramic tile, pedestal sink and brushed nickel in the updated bath. The kitchen remodeling was wonderful and it now has become our favorite place for Thanksgiving dinners. The elevated circular paver patio is so pleasant on summer evenings. This seemed to "be the one".
So far, so good!
We "casually chatted" with the seller after viewing. Here's what I learned in that "casual chat".
- The seller is a loan officer working in Dublin.
- They had planned to live in this home for quite some time (hence, the over-improvement), but now his boss's home is up for sale, and the very pregnant wife really wants to buy that home.
- He bragged about the subdivision it was in, and I know that prices in that community are around $500K.
So far, so good ... and getting better!
So the kids and I went back to their home to prepare an offer. There's no doubt about the improvements adding value, but to me, it indicated that (1) he overpaid his sister for the home and (2) in this small community, the price should still be no more than $108K. The main piece of info that we considered was the price of the home they WANTED to buy and their URGENCY to buy and move before a baby came in another month! So I told the kids "let's go for it". We prepared an offer for $108K with seller paying $4K in closing costs. I dropped the offer off to the seller at 10 pm.
So far, so good ... we'll see how it goes.
The seller called me the next morning to tell me they had signed the offer and were faxing it to me! I couldn't believe it! So we proceeded to move toward closing. Inspections went well. Remedy fixes went OK. The seller was so-o-o agreeable to everything we asked for. I attributed this somewhat to the seller being a lender and as such, more knowledgeable than an average consumer.
So far, so ..... WHOOPS!
The day before closing both the seller and I receive the faxed HUD. I review it for correctness and all looks OK. I get a call from the seller who is in a panic! You see, the HUD says he needs to bring $5K to closing! He tells me that ...
- he didn't know he would be paying $4K in closing costs (translated - he didn't really read the contract!)
- they had purchased and closed on the boss' home the previous week. (and how stupid was THAT!)
- his wife might go into early labor once he gave her this bad news (well, that baby's going to come out sometime in the next week anyway)
- if I were a "good mom" I would eliminate my commission so my kids could buy the home. (nice try! You qualified to buy a $500K home without selling this one.)
I called my daughter to give her the news that we might not be closing because the seller seemed to not have the money. She was OK with it. Her position was that we were looking for a home when we found this one, and we could just continue to look. The seller also called her to get her to try to convince "her Mom" to forego the commission in order for her to be able to buy their home. My daughter told him the same thing she told me.
So far, so ..... please, please, please ... I don't want to tell my wife that I screwed up!
As the day went on, both my daughter and I received pleading phone calls from the seller. My response didn't waiver, plus I added that I thought that with him being a lender, we had a right to expect that (1) he knew how to read contracts, (2) that he would have done a Net Equity review prior to putting his home on the market or prior to agreeing to a contract and (3) and that he wouldn't agree to a contract if he knew he didn't have the cash to close. The fact that he might just end up owning two homes, wasn't our concern.
So far, so ... maybe we'll see you tomorrow morning ... maybe we won't
Well, 10:00 came and went, as did 10:05 ... 10:10 ... 10:15. Finally the sellers walked in, carrying a fat envelope filled with $5,000 in cash in assorted denominations of bills. The wife was obviously not a happy camper, but we were unsure as to whether she was upset with the husband ... or me ... as she never said a word. They signed their papers. The title company made copies of all the currency ... a requirement I learned. And then the sellers left. My kids finished signing and we closed OK, having a good chuckle afterward.
I wonder if when this young couple decides to sell that $500K home, whether they'll decide it might be worthwhile to have a professional represent them!
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Amazing! He knew so much that he could represent himself, but couldn't figure out that he was going to be bringing money to the table. Just the fact that he let you know what position he was in by bragging about the home they were buying...These are the very reasons that agents do better for people. He knew enough to be dangerous!