Does "By Owner" Mean Buyers Overpay?

Thank you all for your comments. I'll try to get back to all of you who were kind enough to read our post and share your thoughts with us.

Christine - The success stories seem to happen when the buyers have a good agent by their side to help. Thanks you for being the first to comment, we really appreciate it.

Mike - Every market is different and glad to hear you have success with the FSBO's in your area.

Ginger - It certainly helps to have an agent.

Bliz - I've seen those situations happen as well. If a buyer wants a home that badly that they'll overpay, more power to them. My perspective is like that old saying " a fool and his money are soon parted."

Kelly - FSBO's are consistently not priced well as they don't have an agent guiding them, or they don't care and just want to price it based purely on what they want.

Praful - Agreed, a good listing prospect as many end up giving up after 60 days.

Laura - Cool to see you are a Feng Shui expert. Most FSBO's could properly use your help.

Ralph - Thanks for reading and your kind remarks.

Bob - Seems like the consensus, but we still need to be aware of them.

Christine - Thank you so much.

Debbie - I don't fault them for trying, but many buyers just seem so naive that I felt compelled to speak out. Hope all is well with you.

Gita - Sellers and buyers are always looking at getting a deal and I suppose some think the FSBO route is the way to go.

Ron - In a free marketplace, there seems to be a place for almost everyone, including the limited service brokers.

Gab - Great points, and you just gave me an idea for my next post. Hope all is well.

Chicago - It's certainly their right to do so.

Ed - The appraisal is key to making sure the buyer doesn't overpay and is especially critical in a transaction where there is no one representing the seller.

Nina - Appraisals not coming in at value is certainly not an isolated problem that only occurs with FSBO transactions. However, on a deal with 2 experienced agents on either side, this problem can addressed much easier, although it's still never easy.

Michael - Most FSBO's, at least in our market, will pay a buyer's agent. We end up doing more work than in a typical transaction though.

Scott - I guess some sellers feel they should give it a try and don't understand the complexities of a real estate transaction until they go through it first hand.

Ritchie - Well said.

Eve - I'm not mean spirited, but buyers sometimes get what they deserve. We had a buyer basically go through a FSBO purposely without us and ended up buying a home in a different school district than she wanted. It just happened that this one particular street fell into a neighboring school district and the buyer had to make her kids change schools. This is something we could have easily pointed and I don't feel bad.

Marc - I guess most of us here are a little biased, but we know the importance of representation more than most people.

Joe - I would certainly have no doubt you are a better negotiator and bring value to your clients.

Pamela - You bring up a great point in regards to the disclosures.

Bill - Sometimes buyers get desperate and emotion takes over.

Karen - Not having an agent is like trying to steer a boat without a rudder. This is even more true in the luxury market that you see every day.

Helen & Larry - No deal for sure.

Suzanne - Thank you so much for commenting. I wish every buyer would be aware of all the pitfalls of buying a FSBO.

Renee - Thank you so much. You are welcome to use it anytime:)

Wayne and Jean - Most do give up after 30-60 days, so a good target for prospecting for some.

Jimmy - Thanks for the comments. Love your city, St. Augustine!

Carla - Very well said.

Charita - Appraisal protection is a good point, but just because a home appraises for, $375,000 for example, doesn't mean the home would sell for that amount if listed by an agent. We had a client pay this amount by owner and there is no way it would have sold over $350,000 in the open market. How the banker got it appraised that high is a mystery, but the seller made out very well and the buyer is happy, but admittedly overpaid a little bit. In the big picture, they got what they wanted and were ok paying a premium to get it. Nice to hear from you and hope all is well.

Sharon - Calling is a high risk transaction is a very good way to put it. Thanks for commenting.

Keith - Thank you for your kind remarks.

Gary - You can always second guess yourself but if you got a price you were happy with, then no reason to have regrets.

Eilean - Excellent advice and a great contribution to this discussion. If there is no agent involved, I think buyers have a much more difficult time detaching emotionally.

Dana - Presenting a home in a bad light is certainly one of many pitfalls of doing it yourself.

Peter - You hit on some great points, too many to address here but you gave me some ideas for another post.

Lenn - "just make an offer" would apply to a listed home as well. For some reason, many buyers seem unwilling to do just that, perhaps for fear that their offer won't be accepted. If not, they are no worse off than they started but some may not want to get emotionally attached to something they don't think they can have.

Matt - The discount brokers are still agents and give some guidance. I haven't worked with too many so don't have the experience to comment on them.

Dana - I suppose most buyers don't have resale in mind when buying and possibly overpaying for the FSBO.

Scott - Nice to hear a perspective from a home inspector. It doesn't surprise me that most FSBO's have the attitide that they won't make repairs. They are consistently frugal throughout the entire process and most likely in all aspects of their lives.

Jack - I used to prospect to FSBO's when I first got into the business. I don't give them much thought now though but would certainly contact one on behalf of a buyer client.

Trent - Will respectfully disagree on that based on experience. Overpaying is a relative term though because it could mean paying $100,000 too much or just $5000-15,000 more than they should have to. For example, on a $400,000 home, an appraiser could easily appraise it for anywhere between the $385,000 it should sell for on the open market to the $400,000 purchase price that the FSBO seller insists on getting. To some, paying $15,000 extra to get the home they want isn't a big deal, especially if timing and other factors are involved. 

Rich - There are a lot of pitfalls to buying FSBO and thank you for mentioning a few great ones.

Aaron -  A big difference between "upgrades" and plan old "maintenance". Whenever I get a printout sheet from a seller with a long list of maintenance items, I can't help but laugh ( not to them of course ).

Yvette - It can work but I think a very small percentage of people can pull it off successfully.

Brien - Great point. It is pure lunacy for a buyer to think a seller is going to pass on the savings to them.

Utah - A great topic, whether or not to go after that 3% if circumvented....

John - I like your way of thinking and to your point, if all parties are happy than great. I tell my buyers that I'd be happy to show them FSBO's and explain the pitfalls. I end by saying they may likely have to overpay on any home that has an unmotivated seller but if that makes them happy, than I'm happy.

Theresa - Perhaps these buyers were blinded by emotion and wouldn't listen to reason. The risks involved in buying a FSBO seems to be a theme of many comments.

Terry - Most sellers don't until they try for a little bit. I see nothing wrong with having them get it out of their system, that way, they can then list with an agent and have no regrets.

Tom - Probably a very smart thing for a seller to do.

Jon - There are certainly some success stories but likely more horror stories.

Sarah - I sold by owner as well before becoming an agent and feel the same way.

Graziella - Good points but sometimes the FSBO seller isn't ready to hear how they cannot do it themselves.

Michael - It is more work representing a buyer on a FSBO, something that those not in the business just don't understand.

John - I don't see that as being lazy, just your preferred way of doing business.

Edith - Seems to be a hot button for many. Thanks for commenting.

Teri - I agree that less FSBO's is better for buyers.

Lyn - "buyers beware" is an ideal statement regarding the FSBO market.

Myrl - Lack of representation is a great point of why by owners are risky.

Paul - Many buyers have the perception they will save 5% or so but that is not the reality.

Keith - Makes sense. Sometimes they deserve each other.

Bryan - Glad you see things in positive and things have worked out for you here.

John - Agreed, thanks for commenting.

Raymond - An interesting idea. Curious how many appreciate that enough to call you when they give up?

Marte - Thanks, healthy discussion is a great way to learn.

Janice - Thanks for taking the time to share your thoughts. Your comments are a little different than most, but I do appreciate hearing the side of the frustrated seller. I was on the mortgage side for 13 years before going into real estate and at that time, had little respect for agents and didn't think they did much. Now, 9 years later, I have a new found respect for what an agent does on a day to day basis. Sometimes it's very rewarding and there are certainly times when it is extremely stressful and frustrating. Sure, some agent subscribe to the 3 P's, Put up the sign, Put it in the MLS, and Pray! However, a good agent brings a lot to the table and will be able to clearly articulate their value to a seller. It's always too bad when consumers have bad experiences with an agent ( or agents ) as it damages the reputation of a lot of very hard working professionals. Thanks again for the comments and your contribution to the discussion.

Patrick - As a numbers guy, I appreciate you sharing those stats with us. Thanks for your comments.

Michelle - It definitely makes a huge difference when a buyer uses an agent when buying a FSBO.

Kimo - I suppose there will always be a place for by owners.

Linda - Fantastic comments! Thank you so much for adding to our lively discussion.

M.C. - Selling real estate certainly isn't as easy as some may think . Thank you so much for sharing your insightful thoughts, we really appreciate it.

Pat and Steve - Thanks

Michael - Thanks so much for reading and your comments.

Michael - Funny name for a dog.

David - Some FSBO's do present a challenge when they eventually list and I agree that these are not ideal sellers for us.

Mary - We all have our FSBO stories and thanks for sharing yours.

Keith - Thank you!

Aly - Most sellers don't have an idea of all the problems that could come up during a transaction. You are so right that experience is invaluable when navigating someone through what can be a very complicated transaction.

Ron - It is very interesting reading all the comments.

Travis - It does make sense but can be a waste of time for others.

Sylvia - It's interesting to hear about the different markets.

Jared - Here in Cleveland, we don't see a lot of underpriced FSBO's, likely due to the very conservative nature of people here. 

Bill - I like the idea of asking a seller the things they like about their home.

Ric - Good advice, some FSOB's are willing to sell, you just have to screen a lot of them to find the ones that are.

Gene - Her points were well taken. I think as a group, we work very hard and do a ton for our clients. Now, there are those that do very little and make the rest of us look bad.

Geoff - Yes, savvy buyers avoid them, but a ton of inexperienced buyers don't know better.

Bob - Having an agent represent a FSBO buyer is a great idea.

Amy - Glad you enjoyed it and thank you for reading.

Jill - Most buyers have no clue how complicated a transaction can be.

Marnie - Agreed.