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Why A For Sale By Owner (Sort Of ) Can Be A Do It Yourself Disaster - Landlord Tries to Sell His Own Home in a Buyer's Market

By
Real Estate Agent with Village Real Estate Services, Inc.

This week I received an inquiry from my website. So I immediately picked up the phone trying to respond quickly and demonstrate professionalism.  When the man on the other end of the line answerd, he seemed pleased with my prompt reply to his web inquiry.  I asked him how I might be of service to him as it appears from his inquiry that he is interested in selling his home and buying another one.

The would-be-client (We'll call him Ted) responds with, "No, I like the home I live in and have no intention of selling it, I just want you to sell my house."  Huh?  Pardon me, Ted, but I don't understand.  Well, the conversation that ensued took about 25 minutes so I won't bore you with it in real time.  Here's the gist:

Ted had used a wayyyyyy out of area broker to place his rental home in MLS.  He paid $99 for this service.  Ted was sending emails to all the agents within a reasonable radius of his rental home to ask them to sell his house.

Ted couldn't figure out why agents were unwilling to show his property and why this property wasn't selling. Since I had recently been working with a buyer who was looking for a home in the same area and in the same price range, I was curious why this listing had not been one of the ones my client chose to see.  So, I took a look at his listing on MLS and here's what I found:

  1. There were only 4 photos in MLS.  Front of the house, a picture of a stairway, a picture of a granite counter in the kitchen and a picture of a small backyard that was landscaped with only grass and no shrubs and a 2 ft. by 1 ft. piece of concrete next to the back door...very sparce to say the least. 
  2. In Ted's email he had sent me a link to a lovely video of the home done on RealEstateShows.com.  Yet this wonderful video was not on the listing.
  3. Since the home was a rental, Sam didn't want anyone disturbing the tenants, so he was restricting showings and prequalifying anyone who wanted to see the property.
  4. In the agent remarks (a portion of the listing that only agents and brokers can see) it read, "Agents to negotiate all terms of sale with the Seller."

 Ted couldn't understand why the local agents weren't flocking to him with fistfuls of offers.  I politely told him that in trying to save the commission he thought he was saving in not being represented by a listing agent he had: 

  1. Originally Overpriced his rental home and although he'd recently had dropped the price by $150,000 he needs to drop it by an additional $150,000 in order to get the property shown.  And, had he used the services of a listing agent, he would have most probably priced it right to begin with six months ago and not been subject to the significant price drop we've experienced in the past 6 months while he's been on the market.  Ted's rental home was originally priced at $1,300,000.  He just dropped the price to $1,150,000.  In my opinion Ted really needs to drop the price to just below $1,000,000 to even get it shown.  It just does not compare with area homes currently listed in the $1,150,000 price range.
  2. In sending emails to real estate agents who are working hard to market the properties they actually have listed and giving the impression he has a sincere desire to work with them, he's only wasting his time and ours.  Most full time, practicing agents have wonderful clients that are willing to pay for our services to assist them in marketing their homes and appreciate utilizing the advantage of our expertise.  I asked Ted if he'd be willing to work for months without receiving a paycheck and possibly never be paid for his work.  The question of course was rhetorical and hopefully helped Ted to reconsider his options.
  3. Hard to Show - There are homes on the market with tenants in the property.  Most agents agree that typically, these listings are not as easy to show, but this is not always the case.  If you are a landlord who is attempting to sell your rental home while it is still rented, make it worth the tenants while by offering them a slight reduction in rent for the inconvenience to them during the marketing period. A couple hundred dollars in rent reduction saves you thousands in price decline during a declining market. I also ascertained from Ted that there was no lockbox  on the property so if the tenants were unavailable, the property was not available to be seen by prospective buyers.  There was no sign on the property  so neighbors who might know someone interested in moving to the area or anyone driving by would have no idea the property is even for sale.
  4. Seller Trying to do the Job of a Professional - Buyer's Agents know that when they will be negotiating directly with the Seller in a transaction that invariably we must work twice as hard at best.  Anyone who is unlicensed and not working in the real estate business daily is unfamiliar with the process and really need someone to help them to correctly furnish the necessary paperwork to complete the transaction.  This is not the job of escrow, it is not the job of the Buyer's Agent, and do you honestly think the broker who placed the listing in MLS for Ted for $99 is going to be of any assistance? Trying  to handle the sale of your own property  is much like trying to do open heart surgery on yourself.  Even if you have the skills, it is very difficult to make unemotional decision.

If you are a seller attempting to sell the property yourself, a word of caution...this is a very tough market.  Seasoned professionals are having a hard time getting properties into escrow, pre-qualifying buyers, and once the properties get into escrow getting them to actually close is not happening with regularity.  If you are seeking to save yourself a few dollars consider that in a declining market the dollar you believe you are saving in not hiring a listing agent to represent you and properly market your property could be costing you thousands in lost equity for every extra month the property lingers on the market.

 

If you need assistance in selling your home or condo in Orange County, California I'd be pleased to give you information without obligation. 

 

Marlene Bridges, REALTOR®

 800 777-1775

Orange County Real Estate Website

Orange County Seniors Lifestyles Blog

 SRES - Seniors Real Estate Specialist®

CRS-Certified Residential Specialist®

President - Laguna Hills/Laguna Woods Chamber of Commerce 2007-2009

Marlene is a highly experienced and respected South Orange County CA REALTOR® specializing in residential Real Estate and the sale of Homes and Condos in South Orange County, California and Saddleback Valley cities of: Laguna Woods, Laguna Hills, Laguna Niguel, Laguna Beach, Rancho Santa Margarita, Lake Forest, Dana Point, San Juan Capistrano, San Clemente, Aliso Viejo, Mission Viejo.

 

 

Omega Omega
Omega - Glendale, CA

Morning Marlene -

Came across your post - Excellent.  Well written and very timely.  I guess this is the other side of the coin as so many people confuse trying to save money and bypass the very reason why you need professional representation.  Can you imagine trying to pull your tooth by yourself????

Cheers

Mar 22, 2009 06:36 AM
William Johnson
Retired - La Jolla, CA
Retired

Hi Marlene, Great new post and well said for sure. This needs to run the eyes of many consumers . To me this is a  post that should be featured so as many consumers as possible see it. And it does one more thing, it prepares agents ( new and seasoned alike) with a great script ( embedded throughout) for conversing with consumers on this subject. It is also too bad that " restraint of trade" always comes up when our MLS are abused with these listings that really don't help the consumer at all. If they want to be a FSBO, they should use the FSBO sites. Oh, what do I know?

Mar 22, 2009 06:45 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Fred - Thanks for stopping by.  I agree, many people think they'll save money while in fact it could cost them hundreds maybe even thousands more than they believe they'll save.

 

Hi William - Thanks for your comment.  I appreciate your wisdom so much.  It was a very peculiar experience.  At first, I was going to do a Members Only post, then my good friend Lynda suggested I make it a post for everyone.  Like you, she thought it would be beneficial for home sellers as well as agents.  Thanks for you wonderful comments that are always so thoughtful and thought-provoking.

Mar 22, 2009 07:10 AM
Khash Saghafi NMLS
Liberty Home Mortgage Corporation - Cleveland, OH
Mortgage Loan Officer, Cleveland OH NMLS 1114762

Hey Marlene!  This is a great post with many great points.  The do-it-yourselfers never understand until it's too late.  You pointed out all of the reasons that For Sale By Owners typically fail so miserably -- they have no idea what the word "market" value means or anything else for that matter.  Of course, there are those who are successful in doing it themselves, but that does not suddenly make one an expert.  Anytime a buyer finds a For Sale By Owner, it almost always turns into a trainwreck due to property condition, purchase price and many other factors.  This is a post which ALL For Sale By Owners should digest as they try to play doctor on themselves!!!

Mar 22, 2009 01:25 PM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Khash - Thanks so much for your comment.  I thought about posting this for a few days.  I was concerned that people might think it was self-serving.  But I decided that if it there are any homeowners out there who may be on the fence about whether to list with a Realtor or try to sell it on their own, this might give them some food for thought.

Have a great week,

Marlene

Mar 22, 2009 05:35 PM
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

Marlene,

Sellers often think it is so easy and they will save big money. It is just too hard for them to know the ins and outs of the process and the market to have any success.

Mar 23, 2009 02:08 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Steven - You're so right.  I can understand why home sellers might think that representing themselves is an option.  But, the fact is it will probably cost them more money than if they hired a professional.

Mar 23, 2009 03:18 AM
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker Associate ,CRS,GRI,SRES, Brea,CA, Orange Co

Hi Marlene,

Looks to me you've really covered things exceptionally well with this owner's situation.

As for "Buyer's Agents know that when they will be negotiating directly with the Seller..not working in the real estate business daily is unfamiliar with the process...Today's r.e. practice is different than I've seen in decades...just holding something together (once in escrow) can be a sleepless experience.

Mar 23, 2009 04:35 PM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Lynda - You are so right!  Getting an offer and getting it into escrow is only the beginning.  Then comes the time for inspections, buyers qualifying for the loan, satisifying existing lenders, satisfying the needs of the prospective lenders...there are so many places where the transaction can fall apart.  It just doesn't make sense that anyone without experience in real estate would try to do this alone.

Thanks for stopping by to comment.

Marlene

Mar 24, 2009 03:55 AM
Christina Ethridge
The North Idaho Dream Team powered by SKE Realty Group - Coeur d'Alene, ID

Who is Sam?  Was he the "agent" Ted used for his MLS entry?  I was slightly confused by that variable - but the overall content was SPOT ON.

People just do not realize the necessity in using a professional. 

Heck, I use a professional in other areas when I'm buying and selling.  Why on earth would I, someone who KNOWS what they are doing, PAY another REALTOR(R)?? Because I know and understand fully WHY I need a professionals help in the market I'm buying/selling in.

Mar 24, 2009 04:44 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Christina - Ooops!  That was a typo.  Thanks for catching it. I corrected the typo so I wouldn't confuse anyone else.  Good catch!

Mar 24, 2009 04:51 AM
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

Gotta love these cheap skates that pick our brains for free advice. I had one of those. Would keep me on the phone for the longest time. After he listed a second property with a discount company I told him I would be billing him for my time. He has not called in a while!

Mar 24, 2009 11:46 AM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Ellie - That's too funny!  Good for you!

Mar 24, 2009 04:13 PM
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263

Sounds like a lot of "Penny-wise, pound foolish going on out there.  Hope you talked him in to letting you help him!

Mar 28, 2009 07:26 PM
Marlene Bridges
Village Real Estate Services, Inc. - Laguna Hills, CA
Laguna Homes|Laguna Condos|Laguna Real Estate

Hi Sky - You nailed it - absolutely penny-wise and pound foolish!  No, I didn't even try to talk to this person about listing their home.  It will take some time before he realizes that he needs help...if he ever realizes it.  There are so many great people who need help, I'd much rather help the ones that are willing to ask for my help and benefit from my experience.

Mar 29, 2009 05:40 AM