I really enjoyed my cousin's wedding last Friday night. The bride was beautiful, the groom couldn't be happier, there was fabulous food and great music. There was also a lot of new people to meet.
While taking a break from the festivities on the outdoor patio, I overheard the following conversation take place...
New Home Owner turns to his buddy and says, "Yeah, we just got a heck of a deal on our new house. I looked around with an agent for awhile, but then I got this great idea. We passed a house with a For Sale By Owner sign in the yard and it dawned on me... they aren't paying a commission!"
New Home Owner's buddy, "That's a great idea. Dude, I bet you got a good deal."
New Home Owner replies, "Did I ever. Get this... since I knew they weren't paying an agent I figured that was at least $25,000 of the asking price right there. When I called, the chick gave me waaay too much information. Turns out that her husband was in the middle of a job transfer. He was already all the way out in Oregon and she couldn't wait to get out there to be with him. She told me they had already bought a house out there and they were making two house payments. She acted like the fact that they were the original owners was a selling point, but that told me they had wiggle room. They were asking $365,000 and most houses in that neighborhood listed with agents were closer to $385,000."
New Home Owner's Buddy, "No way. She didn't keep her mouth shut?"
New Home Owner, "Nope. I bet her husband was ticked. Now I knew I had a live one on the other end. We went to look at the house, and even though it was a ranch and we wanted a two-story we bought it anyway. They had no idea how to negotiate, so I got them down to $318,500. Can you believe that? I told them I knew they weren't paying a commission, so they should have lots of wiggle room."
New Home Owner's Buddy, "You got them down like $45,000??"
New Home Owner laughs and says, "Then I asked for the sun moon and stars when the inspection had issues. They gave me more money off the price of the house instead of making repairs. All in all I bought it for $315,500!"
I stopped listening at this point. It was almost too painful. To hear someone sit there and brag to his friend about ripping someone off made my stomach churn. The thing that really made me sick was that this whole thing could have been avoided. I'd like to take a second to point out some things that sellers with a For Sale By Owner sign in their yard need to remember...
1. NEVER, and I mean NEVER tell ANYONE your motivation for selling. You are guaranteed to lose your shirt on the deal.
2. NEVER let someone come look at your house if you are there alone. Don't tell anyone that your husband is thousands of miles away. These buyers are not working with agents, and it could be a ruse to come in and commit a crime.
3. Buyers are very savvy in today's market. Educate yourself on how to become a good negotiator. You have to emotionally detach, and that's very hard to do with your own home.
The moral of the story is this:
You're going to pay the commission one way or the other, so why not hire a professional? Between the listing price being too low, revealing their motivation and not being an expert negotiator this buyer just walked off with $69,500 of this owner's money. That's almost three times more than any agent I've ever known charges in commission.
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