I recently spoke to a friend of mine whose mom lived on the lake front here in Michigan City.  She was having some issues with her taxes and was too proud to tell anyone.  Well, she placed an ad in the local paper and never consulted a Realtor, an appraiser or even me.  I am sure she knew I would say something to her son.  Anyway.  She sold the home to the first guy that came along with a check in hand.

Oh, she made out well enough, but the son had a Realtor friend pull up some comps and poor mom under sold her home by $150,000 dollars. This home was on the lakeside and she had lived there forever and a day.  She never knew the real value of her home as she and her husband and had paid it off years and years ago.  They were from the generation that bought a home never refi'd it and I am sure the local bank loved her paying the interest from the 70's. 

But, now she is just sick about the loss of that income on her home.  The interest that should could have made on the 150K.  She still made out don't get me wrong, but the guy who bought made a hell of a deal and the kids are upset as they would have stepped up and helped out for the use of the lake house. 

But, it does go to show you that you should use a Realtor to help you list your home for the right price, market it correctly and so forth.  Yes, the 6% commission could be a lot to some people, but I am sure she would have gladly paid double that to get back some of the 150k that she believes she lost by selling her home to low.

Dave Woodson

Your Mortgage Consultant for Life

 

15 Comments on A FSBO Trap

JAN
21
2008
 Very good advise. I hate to hear about that much loss!
5:17pm • #1
434,022 Points 32 Featured Posts Outside Blog
Hate to hear about that happening to someone you know, but that's the risk that people take when they don't even consult a professional.
5:19pm • #2
191,604 Points 3 Featured Posts Outside Blog

Hey Dave,

There are some really cool older homes in MC.  Used to work at Bethlehem Steel in Burns Harbor before moving to Panama City.  If you know anyone looking to move to Florida, let me know.
6:30pm • #3
JAN
23
2008
316,597 Points Localism Sponsor Outside Blog Hit Router
They say that FSBO's often sell a home for nearly 10% less than if they had listed with a Realtor.  It's hard to hear of this much of a loss, especially when you know the person!
11:31am • #4
143,665 Points 1 Featured Post Outside Blog

Dave

Some people know it all! I know of a few of these people and when it comes to Real Estate they prove it to the world they don't know jack. Sorry to hear about your friends mom but understand she had the resources and decided not to use them... She got what was her due.
1:46pm • #5
247,003 Points Outside Blog
I know she did, but she is a very proud person.  Her pride however was her downfall.  Sad to say
3:20pm • #6

Dave, your post is certainly a sad one.  Unfortunately there are many elderly people who may not have a clue regarding the true value of the family homestead, especially in areas where properties have appreciated so much.  It's a heads up to families everywhere who are wrestling with issues surrounding elder care. 

While I agree with most of what you said, the reason that she sold her home for too little is not because she didn't have a real estate agent. As you said, an agent provided her with "comps", and it was the agent who gave her inaccurate information.  Had she had a professional appraisal done, and used the information to price her home, she would have sold it for its actual value, plus saved the 5-6% commission besides!

While it may not be advisable for all elders to sell "by owner", many older people have been around the block, are computer savvy, and are very comfortable selling without agent representation. It is also kind of strange that she didn't have a trusted family attorney who might have headed things off. Obviously, family support may have been missing in some way.  There are resources that provide moving management to families to help them work through the downsizing process.  They can be very helpful in the case of a long distance care giving situation, or working with a reluctant elder.  

3:58pm • #7
JAN
24
2008
130,478 Points
This is the exception.  It's so much more prevalent to see houses priced way over their real value due to "what they got down the street last year."  It does pay to investigate all options!
7:48am • #8
420,061 Points 4 Featured Posts Outside Blog

Wow Dave - Unfortunate. NAR published some stats awhile back that not using a REALTOR costs sellers 7-16% equity loss on average....costly lesson indeed - especially on what most consider their home as their argest single investment .

Sincerely,

Grace
4:10pm • #9
JAN
25
2008

Dave,  Thanks for your post.  Such a sad story.  It makes me mad that someone would take advantage of that elderly lady.  Thank you for your support of the valuable service that realtors provide.

Linda Schulte, Atlanta
7:30am • #10
JAN
26
2008
Great story, so many people  think they can do things on their own and come up with the same results. Same is true for overpricing, just because a neighbor sold a home for "x" amount doesn't mean that the house next door is worth the same. The use of a realtor or any other professional is a smart decision by a consumer. You wouldn't do your own heart surgery to save a buck would you?
7:12pm • #11
JAN
28
2008

That story is the difference between the rich and the rest of us.  The rich look to those that are professionals and the rest of us try to do it ourselves.  You can see what happens from this story if you don't take advice from the rich and look beyond your own abilities.
B b
12:40pm • #12
JAN
29
2008
158,433 Points 18 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master
That's kind of sad. Yeah, 6% might seem like a good bit but not compared to $150k. That makes me wanna cry!
8:20pm • #13
FEB
06
2008
1 Featured Post
The older  folks have great pride. They come forom the era you paid your bills and trusted everyone. Sad that she lost out on lots of cash...
3:38pm • #14
FEB
07
2008
1,450,994 Points 46 Featured Posts Outside Blog Called Shot Master
It is a sad story. It is unfortunate that there are people who take advantage of old people.
4:50am • #15


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