Home : Blogs : Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission. : Scott Daniels Florida Real Estate 2.0 Views!

Mr. and Mrs. FSBO doesn`t care about you! Buyer learns the hard way, why they need a Realtor!

I hate it when a former client gets into trouble.

It`s never easy to get involved when something happens to them which is out of your control.

Five months ago we were working with a buyer who decided to purchase a FSBO. They believed "They were getting a better deal" by cutting out the Realtors.

Famous last words to any Realtor who`s heard that before!

In fact when they originally told me of their plan, and why they were placing $7500 in escrow with the Sellers Title company I begged them to reconsider.

They explained the Seller doesn`t want any Realtors involved and it`s best to listen to what the Seller wants,rather than listen to the Realtor who represented them! Nice,huh?

We closed the file,wished them the best and moved on.

Apparently, the home never appraised for the purchase price, after several attempts of going back and forth with the Seller to no avail the Buyer wanted out of the contract!

No such luck!

The seller and the attorney holding the escrow were adamant about keeping the $7500. They explained to the buyer "The Loan Commitment" expired and they have to "Buy The Home" regardless of appraisal issues.

Unable to secure a loan the buyer is in a huge bind!

It`s not our policy to get involved in a transaction which doesn`t concern us!

I`ve found during the course of a few years it tends to lead to much more trouble then its worth.

Helping someone retrieve their escrow deposit especially when they made the decision to go against our recommendation is a sure fire headache,one I like to avoid!

I decided to have the buyer send us a copy of the executed contract!

I was aghast at what I read!

The Seller`s really took "Full Advantage" of the buyer by adding an addendum which states" If property located at --------------------------- doesn`t close by Dec. 31st,2008, than buyer forfeit's all rights to the escrow deposit to seller"..

It doesn`t mention appraisal issues or loan commitments.The buyer signed away their deposit money and will have to seek in our opinion legal counsel if they wish to go further.

They buyer explained they wanted the house so badly they didn`t realize the consequences.which is exactly why Mr. FSBo didn`t want any Realtors involved! They Knew!

The moral of this story is quite simple" When dealing with a FSBO it`s always best to hire a Realtor to handle the negotiations with a FSBO.

Entertaining a FSBO~s demands can really cost you! In this case it may wind up costing this person $7500!

visit us @ www.browardbesthomes.com

Posted by Scott Daniels Florida Real Estate 2.0. Agents Earn 100% Commission. on 12/24/2008 11:31 AM

Comments (65)

FSBO~S in the Real Estate Market Channel

how to purchase a home in broward county florida real estate

This post has been included in Florida Information Broward County, FL Information Pembroke Pines, FL Information
Post is included in group: Realtors®
Post is included in group: Online Brokers
Post is included in group: Independent Brokerages
Post is included in group: Early Risers.
Post is included in group: Coaching and Mentoring

65 Comments on Mr. and Mrs. FSBO doesn`t care about you! Buyer learns the hard way, why they need a Realtor!

DEC

Hey Scott,

Trying to save a buck can cost you big in the long run, some never learn Merry Christmas to you!

Sorry...burned at the stake. I wonder if they used the sellers inspector too.

DH,

I often wonder why people decide to listen to a FSBO rather than their agent!

Merry Christmas!

NB,

After reading that addendum I wonder why they agreed to signing that!

It`s not going to be easy collecting their deposit!

Hi Scott, great post. We've had similar situations here. The buyers almost always conveniently forget that we told them about this stuff earlier.

Sounds like the FSBO has been there before and did take advantage of the buyers. The buyers signed away their earnest money deposit when they signed the addendum.

Very scary

Scott,

That same thing would also apply to any buyer who chooses to be unrepresented. A buyer dealing directly with the listing agent could face similar risks. It sounds to me like your former clients learned a pretty expensive lesson. I hope some buyers will see this story. Since there is no cost to the buyer for a buyers agent it makes no sense to go unrepresented ... yet some think they will come out ahead. Go figure.

Merry Christmas

How true and sad. The FSBO by design is looking out for #1 and I hate to say it but shame on the buyer for not realizing the value of representation. In this case the buyer got exactly what he paid for, a BIG lesson. Good luck!

You are so right-on here! In my humble opinion, everyone should try to sell their home as a FSBO once in their lives, and everyone should try to buy a home from a FSBO once in their lives. Once they do, it'll be the last time they ever want to do that again.

Scott,

We prove over and over again why our clients are better off using our services!

DEC

Scott this is the perfect example of why you need professional representation. If you are not going to use a Realtor you sure as heck should have a lawyer. Another live and learn scenario played out!

Sa when people know more than real estate professionals. I feel sorry for them

Scott,

Sad, but they chose their path and now have to live with the consequences.

Rich

I too have seen people stepping over dollars to get a dime.

Saving a buck by dealing directly with FSBO's is usually a bad idea. There can be a reason the seller does not want a Realtor involved. For example in this case, no Realtor would have let a Buyer sign that "Addendum" giving away all their rights. I wish these people lots of luck getting their money back!

Hi Scott, Sorry to hear about your client and the bad experience. You should get a terrific letter from them ! Happy Holidays !

Scott,

I am amazed at buyers who "Don't Need a Realtor" that will come running asking for help when their contract runs into trouble. At this point an attorney is their best option.

Scott, it's so wierd to m e when I hear about a buyer that doesnt need a agent. Thank you for sharing that with us. I hope you have a great day and Happy Holidays!

Scott, that scenario sounds familiar. Some buyers are so excited about a home they found that they lose their common sense. A lot of buyers just don't understand how much we do for them.

Seller does not want Realtor involved = red flag! Well, I hope their learned a valuable lesson!

Scott-

Maybe State legislators need to hear enough of situations like this to do something to protect the consumer. Here the seller will probably get off scott free...if a Realtor would have tried something like this that Realtor would probably end up getting sued.

I LOVE THIS STORY.

I'm going to reblog it and give it some more juice.

You were smart to stay out of it.

Scott~ I realize why people (buyers or sellers) don't use a Realtor, it is to save money by not paying a commission. What they don't realize is that it may end up costing them more in the long run. That is a very sad story and it happens! Too bad these stories don't hit the news!

The few times that I've worked with a FSBO, I have managed to make my buyers understand how my expertise will affect the outcome. I usually get the sellers to sign a commission statement that pays my brokerage 1/2 of the normal commission - and most sellers in this area will be a cooperating commission.

The only time this didn't happen was in 2000 when the market was pretty hot and oftentimes sellers could sell quickly without us.

GREAT post. I love it. Not that your clients are out the money, but that it's such a great illustration of how important real estate professionals are. Thanks so much for sharing!

So sad and so true, I have often found that smae attitude from many FSBO sellers, Often it is not so much that they want to save but rather that they want to make more money even when a Realtor has advised them that a home may not appraise.

Wow Scott,

It's a very informative post that you have about a very unfortunate situation. I wish them the best and hope that they find a way to resolve this situation! Happy Holidays!

I absolutely could not imagine anyone buying a property this way in the current environment. A sad but stupid story.

Scott - Thanks for sharing this. This is one of those posts that would be a great story to tell someone who says "but I want to work with them directly." As an agent, I can't see why anyone wouldn't want an agent to represent them, but as a consumer I still can't see it. Of course I understand why they do it, but I wish they understood what can happen. Unfortunately when it comes from us, it sounds like we're just trying to win them back and "scare" them out of doing it, even when we have nothing but the best of intentions. Maybe someday.

Ouch! It seems that no matter what you tell them, they are going to do it their way, regardless of the potential problems and issues. Too bad the seller was such a s___d! I hope he gets his - you know the old saying, "what comes around goes around"...

Yikes. What a tough lesson for your former client to learn. We have standard language in our contracts, just like most realtors, to avoid this type of problem.

Gotta leave a marker and come back to read this one. Merry Christmas Scott!

Scott, this one is a doozey! People really can do goofy things when they're buying a house.

Oh, I hate hearing stories like this. I always wonder how the seller would know about all disclosures and all the area he needs to cover! I guess this one knew full well AND how to tie up the buyer!

Maybe they can talk to their CPA about issuing a $7,500 education credit on their taxes? Hard nut to swallow for sure. Have a Merry Christmas and a prosperous New Year!!!

Some people above have criticized the seller. Sounds like the seller knew exactly what they were doing. The buyer is the one who acted foolishly and they can't blame anyone but themselves for their loss. So, I wonder how much those buyers think they REALLY saved? At the very least, the buyers should have paid a lawyer to review the contract.

Oh boy -- well you can't help people who won't help themselves. Happy holidays.

Scott - great article. Hard lesson to learn for the buyers. Too bad they did take a closer look at what they were signing. With all the issues in this market it is a little surprising someone would try to buy without representation, although I suppose some people are being successful.

I had a buyer a few months ago who started to buy a home thru a FSBO but things got really ugly. She backed out, without consequences, came back to me and we closed on a great home 3 weeks later.

Jeff

So are they going to buy a home through you now?

Scott: This is a great post. Sorry to hear this happened to your ex-buyers. Not a good situation.

these people were just stupid. You don't need an agent unless you are a dolt. It is helpful however to have someone to keep track of the paperwork, get the keys, etc. Also helpful in Marketing the property if you are the seller.

Hi Scott.

FSBO reality can really hurt. I had a neighbor many years ago who wanted to sell her own house to "save money." When the sign in the yard didn't produce a qualified buyer, she entered into a lease option with a renter. She came to me several months later to ask for my help in ridding her of the renter from hell. I sadly informed her that I could have protected her in the contract, but after the fact, she will need to use the money she "saved" and hire an attorney!

Then last year, a friend went to a FSBO who was also a real estate agent, but was not a Realtor. My friend found mold which the seller/agent blatantly covered up, and she is still struggling to get her $2500 deposit back. She registered her complaint with the board of realtors, who has no juris diction over the seller/agent, and she also registered a complaint with the Florida Department of Professional and Business Regulation. The seller/agent placed the deposit with her own attorney, so the DBPR cannot issue a disbursement order. Ah, we live and learn...

Great war story. Thanks Scott. May 2009 be your best year in real estate ever!

Let us know if they really lose all that much money. You are right about them needing representation.

Few people understand that you have to make contracts and offers contingent on the ability to get a little thing called a MORTGAGE!!! It may seem crazy to us that this happened and that the buyer didn't KNOW BETTER...but most people just assume that if they can't get the loan, they get their money back! I've had all sorts of fruitcake questions come up because people don't understand the steps involved. Not everyone is a business person - nor should the HAVE TO BE.. But- they need to know where their expertise ends and why they need someone working on their behalf....great blog,I will probably reblog this.

This is an awesome post. I printed out a copy to keep in my sales book.

DEC

A few years ago I represented a seller and they chose to represent themselves on their purchase. I have stayed in contact and so when they wanted to sell again, they called me to list the home. They also chose to have a home inspection done prior to marketing the house. They have always had a once-in-a-while back up in their plumbing system. It turns out that the plumbing was put in incorrectly. The repairs cost $3000. If they had representation when they purchased the house, I have to believe this would have been discovered.

Ouch! Hope they have decided to use you as their Realtor with the next transaction.

This happens too often....good advise to purchasers, Scott, always beware when Sellers insist on cutting out a Realtor especially in hard economic times like these when some will find any means to make a buck...Great Post!

Merry Christmas!
Shawn

Scott,

Sorry you had to go through all of this. It's amazing how people feel that anyone can sell homes and that buyers know what they're doing. Whenever I write out a purchase, I always insist on 3 contingencies: 1. successful engineering report, 2. successful mortgage commitment and 3. attorney approval. The third, as far as I am concerned, is the biggie. EVERYONE going into this multi-thousand dollar transaction should NEVER sign anything without attorney approval. If people are convinced they don't need a realtor, they should at least realize they need an attorney, hopefully, a real estate attorney. I'm sorry for you and for your customers. Sometimes in life, the hardest lessons can only be learned the hard way. Stay in touch with them. I'm sure this education they just received will stay with them forever. Have a good 2009..........Margo

Great advice Scott...would you take them back as clients after this?

Hi Scott:

Very sad that buyers would rather trust a seller, than the agent who was trying to help them in the first place!

Toula Rosebrock Logo

Hi Scott,

Great story to share with future buyers. I am going print it out and also re-blog the story. But let me ask you, where is the moral decency gone too? How can anyone in good conscience steal someones money like that. Yes, I was one of those guys that had signs saying "We Buy Houses." I have bought and sold property, and I would never have taken someones money. Obviously that FSBO does not know business is transacted. All I can say is that it will come back to them many times over. I would like to re-post this when people claim Realtors are no good, and do not work for their money.

Scott, thank you for sharing. Happy Holidays.

John Palmisano

Keller Williams Properties

Weston, FL 33326

They just took a very expensive real estate seminar. Too bad for them.

We too have had an out of town buyer go to a FSBO who insisted no realtors be involved. (the seller didn't mention to the buyer that HE was a realtor!). Buyer ended up buying a house that was overpriced for the neighborhood and on a busy street. I pass that house all the time and think what fools they were- thought they knew better than we did.

You may want to check your state laws about putting a clause like that in the body of a contract. Many title companies in Texas require that a separate promulgated form be signed by both parties in a conflict over earnest money. So the contract may appear to be right, but there is still a conflict and a lawsuit is inevitable. It really does not matter who is right or wrong, it is the time involved in having a lawsuit. The bottom line is keep away from any verbiage that may cause a problem.

This is a very good warning to buyers. Good luck and Merry Christmas.

Rich Lecinski

http://rlecinski.longrealty.com

This is a very good warning to buyers. Good luck and Merry Christmas.

Rich Lecinski

http://rlecinski.longrealty.com

"A fool and their money are soon parted" not sure who quoted it but its true. It sad to hear and a hard lesson to learn. I hope the buyer took advantage of their learning experience and applies it to future purchases. Not just buying houses.

Scott -

This happens too often, and has happened to us a couple of times. It does help to pre-frame early, and also get a Exclusive Buyer's Agency Agreement up front, with provisions for the Buyer to pay your fee if the seller won't.

If the seller absolutely refuses to work with the Realtor, we write up the contract to include a Seller Credit at closing, and the Buyer is obligated by agreement to turn this over to our Team - and the Seller is none the wiser. Buyer is happy - he reduced his offer price by the amount of our fee, in addition to the "FSBO Discount" they likely already have taken.

But, of course, there have been a couple of times when they buyer did his own thing anyway, if they refused to sign a Buyer's Agency up-front with us - and always regretted it.

Email me if you'd like to discuss the way we handle this tricky situation.

Happy Holidays!

DEAN & DEAN'S TEAM CHICAGO

Scott:

It's a sad story, but it's not a new one. Cavaet Emptor was coined (in Latin) thousands of years ago. Too bad some consumers (even those who we consider clients) didn't study Latin in school.

As Isaac Assimov once said: "It's not a matter of whether or not computers can be taught to think. It's whether man can."

Sometimes I think clients are like our kids- they think they know everything, & they don't listen to us until it is too late.

DEC

I just had a buyer do this to me....I'm curious to see how it all goes as they are first time homebuyers.

FSBOs are fsbos because THEY want to save money and get the best deal...LOL...not sure how buyers think they will win in that scenario, but some of them seem to want to try. Sorry this ended badly for your former client, but hopefully they learned something and will spread the word.

FEB

Fsbo's think we stick a sign in the yard and that is about it.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?