What Pitfalls Might a FSBO Encounter? - Part 4   
by John Occhi, Hemet CA REALTOR®     
Hemet CA Real Estate     

The For Sale by Owner Seller in Hemet, CA - like any other community in the country - is likely to run into at least one pitfall that they were not ready for. On the surface, it seems like such an easy thing to do, put a sign in the yard and a classified in the paper, hold an Open House and sell the home on your own without the expense of a REALTOR® - simple, isn't it?

We have examined the pitfalls of pricing your home so it will sell, without leaving money on the table; I believe I offered some very sound advice how to overcome this potentially unpleasant experience.

In the next segment we talked about marketing and explained why a REALTOR really does have an advantage through the power of his affiliation with NAR as well as local REALTORS in the local market.

The last section talked about dealing with the legalities of a real estate transaction and we briefly discussed some of what can go wrong - often long after the sale has been consummated.

Here we will take a look at the many different variables or contingencies to every real estate transaction.  Believe me when I tell you people do not come to your open house with a case full of cash wanting to buy your house - it just does not happen that way.  So lets take a look at what may hold up a deal, once everyone has shaken hands on it...

DID THE BUYER SAY ‘CONTINGENCY'?

As a For Sale By Owner seller, you are obviously looking for as smooth and simple transaction as possible.  Perhaps,  in the back of your mind, you are fantasizing that you will have a buyer show up with a brief case full of cash and offer you your full asking price and hope you can be out in a week - two tops.

Hopefully, you know that is just a fantasy.  If it is any comfort, every REALTOR and home seller share it with you. Now lets take a reality pill.

When an offer does come in for an acceptable price, there is so much more that has to be considered.  Nearly every purchase has at least three contingencies, if not more.  Let's look at the most common contingencies to a purchase first.

Since most purchases involve some sort of financing, the lender will always require an appraisal.  So, the first and almost automatic contingency is that the property has to appraise at the accepted asking price.

In today's market, it is almost unheard of to offer more than the appraised value.  In a hot sellers market, it was not uncommon for very popular neighborhoods to demand a premium which anxious buyers coughed up with no problem.

In other cases, a particular home may have had some very unique features that were near impossible to put a dollar value on, so if the buyer wanted a particular unique home, hen hey would pay in cash the amount above the appraised value, to satisfy he sellers demands.

In today's ‘buyers' market it is virtually unheard of for Hemet CA Real Estate to sell for more that the appraised value.  So, with this contingency in place, the seller must determine what they will do if the appraisal does not come in high enough to support the agreed upon purchase price.  Will you lower the price?  Will you take your home off the market and stay put until the market reaches your price (which it will do, eventually)?  Or, do you believe the buyer will be obligated and willing to give you more money than what your home is worth?

The next issue you will have to address is what may be an entire series of professional inspections. Undoubtedly, the buyer will have a professional 3^rd party inspector check out the overall condition of the home.  It seems like even the very best maintained homes will generate the identity of some sort of maintenance issue - somewhere on he property for sale.  It may be electrical, it may b plumbing, it may even be something as simple as a door know that turns the wrong way, but rest assured, there will be something.

So, how will you handle this situation?  The contingency is for the protection of the buyer - it allows hem the opportunity to back out of the negotiation if the report does not meet their approval.  So, to satisfy the buyer, are you willing to make additional repairs?  What happens if the buyer wants to renegotiate the price?

Then there are the other inspections?  Do you have a pool?  The buyer will want it inspected.  Do you have a septic system?  Again, the buyer will want it inspected.  What will you do if the buyer wants a professional inspection of the roof and HVAC system and they want you to pay for it?

Working with a professional REALTOR® you may be advised to have these matters looked at early on.  Yes, you may end up paying for inspections that the buyer typically pays for, but having a clean bill of health early on in h negotiating process may make the difference in an offer and no offer or it may make the difference in a full price offer and a low-ball offer.

The other contingency that is automatic when there is a lender involved has to do with termites and other pests.  It is something that will have to be done, so as a REALTOR® I always advise my listing clients to have it performed when a home is first offered for sale so there is no question about the condition.  This way, if there are any repairs that need to be completed, they can be done before the buyer ever steps foot on your property, which will enhance the value and not allow there to be a reason to renegotiate of cancel the purchase agreement.

There are of course any number of issues that a buyer may present that will become part of the deal.  Without a REALTOR® to help you, as the FSBO seller, you will be on your own to weigh the consequences of these contingencies and negotiate them on your own with the buyer.

When we return with the next segment to this series, we will look at how a Hemet  REALTOR® can help your buyer obtain the best financing for your Hemet CA real estate and examine the pitfalls that can be avoided.

Until next time, Have a Blessed Day,

John Occhi, Hemet CA REALTOR%$
www.JohnOcchi.Com