Real Estate Blog - My Daughter Made an Offer on a FSBO this Weekend...

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My Daughter Made an Offer on a FSBO this Weekend...

It's true - and I was party to this travesty! I'm sorry. I apologize to all my fellow real estate professionals for the error of my ways.

FSBO FSBO's, take note - there's a lesson in here for you!

You see, I'm visiting my daughter in the Dallas-Fort Worth area, and (like most impulse purchases) the day started out with good intentions: Breakfast, with a little detour to the gas station for a fill-up. But we succumbed to one of those little FSBO directional signs as we passed a corner between the gas station and Atlanta Bread Company. We found ourselves in the cutest little neighborhood about two blocks from the University of Texas at Arlington...

Susan is more savvy than the average first-time homebuyer - she has been the daughter of a real estate agent since birth, she worked at the front desk of RE/MAX ONE during college, she managed university-area properties professionally for eight years, and she often reads my blog. This FSBO, however, is still living in the past - in the Seller's market.

Susan made a good and fair offer - full price, with the seller paying her closing costs and prepaids, settlement in 20 days. And she did what home buyers do today, when the seller said "no" - she walked away without any further negotiation.

Boy, did this seller need an experienced REALTOR to advocate on her behalf - She just blew it big time! There was a way to bring these two parties together, but she didn't know how to make that happen. Before the seller even realizes it, weeks or months down the road, Susan will probably be living comfortably in another home.

Excuse me, Madame FSBO - this is what's known as a "Buyer's Market." Are you in denial about that? Living on another planet without TV, newspaper or the Internet? Clearly you and your amateur advisors need to read my Focus On Crofton blog today on the topic of real estate negotiation in a buyers market. Just as buyers are starting to come out in greater numbers, loan parameters are tightening again - which means fewer qualified homebuyers.

Sellers, take heed of these words from an experienced pro: you don't often get home buyers who are pre-approved for 1/3 again higher price, with no contingencies, and willing to settle for your imperfect property - and there are plenty of other homes available for them if you blow this opportunity!

Follow-up to this post:

UPDATE: 5/13/08. Susan found another house, made an offer, (listed with RE/MAX and her agent is RE/MAX) and the owner countered with "retaining mineral rights" and no closing help. Susan will move on again - after all, this IS a buyer's market with lots of other houses available and "moving on" is what homebuyers do these days. As soon as her agent gets back in town...

UPDATE #2: 5/19/08. Third time is charmed! More info to follow.

Posted by Margaret Woda, Maryland Real Estate on 05/13/2008 10:58 AM

Comments (63)

selling fsbo, buying fsbo, for sale by owner

Originally posted at: Fort Meade - USNA - Andrews AFB: My Daughter Made an Offer on a FSBO this Weekend...

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63 Comments on My Daughter Made an Offer on a FSBO this Weekend...

MAY

2008

Margaret....or could we say unmotivated Seller? Who the heck walks away from a full price offer without negotiations.....not sure I would even want to have that listing! But it IS a good point for FSBO's and what we CAN do for them.....how much money did that Seller just lose?

There are a lot of sellers that have a price in mind and will wait until they get it. Not all sellers are totally motivated to sell!

Unmotivated sellers abound whether they are FSBO's or over priced listings. At least your daughter has the background and the wisdom to know when to walk away. I'm still watching two listings that clients made an offer on sit and sit. The buyers are happy in their new home and the sellers are still making mortgage payments on empty houses. What a shame!

Wow. Wonder if the FSBO has been on the market for long, or if it's just been listed and thus the owner thinks they'll have better offers coming? A full price offer with only the closing costs sounds like a good deal in a tough market area - particularly with a 20 day closing time. Saving an extra payment or two alone will pay for a chunk of the closing costs!

Unbelievable! Well, not really. Closing cost assistance is one of the pet peeves of a lot of sellers until a real estate professional explains the bottom line to them and turns the "I'm not paying that" into "where do I sign". Too bad Mrs. FSBO didn't have that type of help.

Margaret - Yes, you're right it does provide good blog material. On the other hand, hopefully some FSBO's might come across this and get a reality check!

Hi Margaret,
I'm still shaking my head in dismay. Hopefully, some poor FSBO out there will read this and realize how much they need a professional to advise them.

Many FSBOs don't "have to sell." And they enjoy saying that. I don't quite get it. It's almost a snobbery thing.

Now, this FSBO is labeled by your daughter and everyone in your daughter's sphere of influence. Am I right? The FSBO doesn't know her home has been labeled either.

Actually, these sellers ARE motivated to sell this vacant rental property because they are retiring and relocating to Washington State. Obviously this is a strong and motivated buyer, since she made the offer within hours of seeing the property, so it wouldn't have taken much to close this sale. But now she has moved on and expanded her search area beyond the university surrounds and her price range to a much higher level.

Not only are there a few more blogs left for me, as a result of this experience, Susan can use this as an analogy in her own job - as in, why use a professional fundraiser instead of using volunteers for fundraising...

Well, the whole experience has made "good blog fodder" but probably won't make much difference to the fsbo. Susan will come out on top though ... she has a great role model in you! Enjoy your visit!

Indeed this is good blog fodder. I'm really suprised that the sellers would not even counter. Especially since you were off by 5-7% if all you were asking for is buyers costs and closing costs. Looking forward to the next blog in the series.

Best,

Scott

MAY

2008

Oh My Margarete: That persone must not have truly wanted to sell there home....

Margaret- What a good story, great blogging material! I hope that FSBOs will take heed to your words and hire an experienced agent who will in the end save them more money even than going it alone, most of the time.

Talk about shooting yourself in the foot. Wait until the next fellow comes along and makes them an offer 7% below asking PLUS asks them to pay closing costs and prepaids. Sadly this owner is like so many others on the market today... in a word... unrealistic.

I really appreciate your comments, thank you! Yes, many lessons here. I believe the next topic inspired by this experience will be "FSBO Opens Mouth and Inserts Foot." More on that to follow in the next week.

Thank you for sharing your experience! There's a FSBO in my area that put up a teeny tiny little sign as if they were whispering that their house was for sale. A few weeks later a larger sign went up, at least now you could see it as you drove by! Then the sign came down, then up again. I think they only want to sell their house on odd days of the week or something. :-)

that is too bad for the sellers. do you think they said no because that is what they owe? well good luck to your daughter and hopefully she will find another great home. :)

I made an offer on a FSBO (unrepresented seller) on behalf of my buyer..the seller responded with "that was a market stupid offer" that was over a year ago and his home is still for sale.......hm wonder who is stupid

Margaret: I THINK most things happen for a reason...and your daughter will get the "right house."

FSBO-SHMISBO

But FSBO's know so much more then anyone else.

We find the exact thing in the hobby Home Renters.... All for a couple bucks.

Just Remember %12 of $0.00 still ends up costing way more then if you just paid a Realtor to do what they do best.

I love hearing these stories. An experienced, savvy FSBO is one thing; an inexperienced unknowledgeable FSBO is a disaster waiting to happen to themselves.

Another clue why FSBOs sell for less with a much longer 'market' time!

I have to think that a lot of FSBOs cannot take any less for the home because they did 100% financing and rolled in closing costs just a few short yrsa ago. Therefore, they cannot take any less for the home.

I've talked with more than a few FSBO owners who could not sell their house and they've all told me they've refused offers because "the buyers had another house to sell" or "they were only willing to give us a $2000 deposit", or "they would only give us 60 days to find a new house". They don't realize that low offers, contingencies, etc etc are normal in home sales and they need a good Realtor who knows how to deal with them to get the house sold.

Being in tune with the market will give any seller the best advantage when selling their home whether it is a FSBO or listed with an agent. If seller concessions are the norm in that market, they lost out, BIG TIME! They are waiting for the full price, no contingencies or concessions and they will end up with someone not fully qualified because they don't know how to check qualifications and motives, costing them more money in the long run!

Margaret,

I have not seen many FSBO deal work. You are right, there needs to be someone helping iron out the wrinkles. Congratulations on the featured post! Have a safe trip home.

I guess they are not very motivated sellers. Good Luck on your search.

I always get a kick out this. One of the first things a FSBO will say "is well I really don't have to sell, but..." that is basicly saying, I'm not motivated, and it's my way or the highway.

I understand we all have a price in mind, but if you're going to tell me that you are not motivated to work with anyone to make the sale, why are we even talking?

In todays market for first time home buyers closing costs are almost always included. Too bad for the owner.

I made an offer to a FSBO once, which he accepted. After paying $400 for a termite, and home inspection, it turned out that the FSBO owner had to come up with another $1200 to fix the termite problem. He didn't like the fact that I hit him $25k short of his $250k to begin with, so he not only refused to pay any more money for the termite inspection (Which I offered to pay half), he just cancelled the whole deal, and refused to refund my $400. What a jerk. I ended up buying something right around the corner for a whole lot more, but the house was in a lot better shape too. I run into him from time to time as Flagstaff isn't a very big town. I sure learned my lesson's about FSBO's though.

I'm sorry, but I must preface this with an "I'm sorry" so that I don't offend anyone (which is pretty good because I'm not PC by any means). I love being a real estate agent, but I made my entry point into real estate via the FSBO market and did quite a few FSBO sales. I'm not knocking the typical agent industry, but the two weeks of schooling that I received were hardly adequate, and I've found that the resources for continuing education are not exactly plentiful. I learned more by teaching myself as a FSBO (being an Accountant at the time helped) than I have as an agent. I've never had one continuing education class on "keeping a deal alive", but I've had plenty of opportunity to learn as I've gone through life, and have willingly done so.

I guess I'm just one agent who understands the market of the FSBO and have found that most of the time they can be better deal makers than some of the agents I've come across. I'm not knocking anyone, but I do think that both FSBO's and agents have their goods and their bads. In summation, I'm just saying that I welcome FSBO's and have no need to hate on them or their preferred method of sales.

Nice blog Margaret. This FSBO really shot themselves in the foot. Not even a counter?

MARGARET - They'll be talking about this for a long time to come, when no other offer comes in close to this one, and they end up paying holding costs, while likely getting lower offers.

This post is certainly an eye opener for anyone thinking of going FSBO. I do think that some people have the proper perspective and objectivity that allows them to be very effective at selling their own home and more power to them. However, according to the statistics most home owners severely lack these abilities and it can cost them dearly. I'm sure it will all work out for your daughter and look forward to a future post that informs us all as to how her home buying experience went.

Margaret - I've got a few sellers that would give their left arm for a full price offer with closing costs.

Wow, what a mistake.

Margaret- YEAH! You got your gold star, very deserving. I was hoping this would be featured!

I thank EVERYONE for your comments, and will do my best to reciprocate your comment when I return to Maryland later this week. One exception:

Rob Gerichs, what about this posts suggests "hate on them or their preferred method of sales"? Clearly you have not read many any of my posts if you think this post or I come from that mindset. I did see this one FSBO home seller make five common homeseller mistakes that cost her a home sale and provided material for two blogs, so far. Most likely, some or all of those mistakes would have been avoided if the property were listed with an experienced real estate professional. This is a completely unemotional statement, not a hateful one.

Margaret,

Love that story...shame on the seller and I don't hold it against your daughter..she saw a house not listed and she should go buy it. After all the seller would lose more at that price after paying an agent. Now she might end up needing one and losing more as the market declines.

I have many concerns about FSBO's for my clients. One is the lack of disclosure that is many times associated with a FSBO.

FSBO - what does that mean? Free Service By Others? lol~ or does it mean Forget Selling By Obligation! :-) I have heard both sides of the fence for years, I think I'll just stick with Forget Stating Brad's Opinion on this one!! Thanks Margaret. I won't put the other acronym here that I have heard in the past. :-))

Wow, what a pity for that FSBO. Sounds like they need a realtor --and a clue! Let us know if your daughter does nab a property!

Thank you for sharing! Buyers and sellers alike are all so unpredictable. It never hurts to try different approaches when going after something you really want.

I love FSBO's they are my favorite! It only takes me a few moments to point out that there is a cost involved in selling a home, whether you pay a REALTOR or not. The question the seller needs to ask is, do I want to give the savings to the buyer and do all the work, or hire a listing agent and be happy. I hope all our sellers relize the type of market they find themselves.

Margaret: FSBOs do learn the hard way don't they ! By the seller losing out cost her more than it would have if she had put the marketing into the hands of a real estate pro !

Some Sellers are FSBOs because they can not afford to sell and pay a Realtor. The FSBO's may have listed the home for their bottom price. A mistake but...

to not even counter is just foolish. they dont want to sell.

It's good that she just walked away. There's no use in fighting someone that is unwilling to negotiate at the start.

I applaud this post! So many of these FSBO's are out in left field!

They do make good blog materials, don't they :) I think people fundmentally don't get how hard realtors work. If they know what realtors can do for them, no one will ever sell their own house! Realtors will!

Margaret I'm not saying that you are hating on FSBO sellers. Maybe "hating" was not the right word. My generation does tend to use the word a little to easily. I'm refering to the comments section of this blog, where the opinions are obviously biased against the FSBO population. Understandingly so... this is a real estate agent web site. However, I feel that FSBO gets a bad rap. If I were to blog about every agent that I "tried" to contact during "normal business hours" and got the infamous voicemail I'd spend all day blogging. I guess I've just heard one too many FSBO comments (again not refering to your blog). I think agents sometimes just fear what they don't understand. Have a good day!

I think it is very hard to negotiate on one's own behalf. I have seen agent's who list their own home make the same mistakes.

There are reasons for FSBOs in both buyers market (less $$ room) and sellers market (homes sell themselves). The stats are still pretty high on those that convert to using agents.

I've seen some good FSBOs. Even they have a hard time. One agent told me that you can tell how serious/good a FSBO is by the quality of their sign. I love it when you can't read the phone number - you basically have to stop the car, get out and walk to the sign...

I do think that some people have the proper perspective and objectivity that allows them to be very effective at selling their own home and more power to them. I will agree with Matt on this one, just like some people and some real estate agents actually can properly prepare a home for the market.

Sounds like your daughter is a saavy buyer, some aren't.

MAY

2008

It reminds me of that saying for attorneys. A lawyer who represents himself has a fool for a client. if that applies for a professional, where does that leave an amateur?

"Susan made a good and fair offer - full price" Did Susan offer what the seller was asking or made an offer based on what opinion? Did the seller have a recent appraisal?

It appears Susan really did not want to buy the house. Susan did not ask the seller what will it take to sell their home to her.

When I want to buy something and I get a no answer. My first question is....."What will it take for us to close the deal?"

I feel Realtors for the most part do a great job but I have had a few Realtors blow deals for me. So it works both ways sometimes.

A full price offer and the seller walks away?? In this market? This seller did not want to sell their home it sounds like.

STUPID STUPID STUPID. That seller.

I am surprised you didn't send them a note to expain why they should grab the offer.

(Only because your daughter wanted it)

All the best!

I'm surprised she could afford the home after filling up at the gas station (just kidding, of course.) Glad everything worked out for your daughter, though.

I don't think being a FISBO is a travesty. Yes agents ca do it better but that is a poor thing to say. Give them some credit for trying. With the internet and other services today they may have a very good chance at it. Agents need to adapt to the new technology that will allow the FISBO a higher chance at success. I agree they should have taken the offer but we don't know the sellers market so we can't assume it is a bad decision. After all it is her most important investment.

You never know maybe she has circumstances that will not allow her to pay an agent so she or he is forced to do it themselves.

Be nice to the poor FISBO.

Good luck to yur daughter but why was she not using an agent. FISBOS will normally work with an agent.

Love the way I spleed FSBO. I need coffee and by the way I am not being harsh but just being human. You never know why this person has their motivation. I have made many FSBo deals work and they are human to.

MAY

2008

Interesting post & comments. I am surprised how the person didn't jump on the offer or at least discuss it.

MAY

2008

Many thanks to everyone for your input! Sorry, I was away and haven't yet had a chance to acknowledge or reciprocate, but will over time in the coming days and weeks...

MAY

2008

Wise sellers and buyers realize the immense value of a real estate agent's Negotiation Skills.

Hmmm - mineral rights. I haven't heard this, Margaret, since we moved out of Tennessee. That was a big issue there.

MAY

2008

Donna, I deleted your comment because it is irrelevant to this topic, which is one seller, one buyer, and one property -your rant contributes nothing to the dialogue.

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