When is a FSBO not really a FSBO?
This morning, I noticed some handwritten directional signs (signs pointing toward a house for sale) indicating that there was a 4BR/2.5 BA FSBO home for sale on my street. The signs listed a number with an extension. In tiny almost illegible letters, the sign also says "Owner/Agent"
Naturally, because any number that has an extension is usually a business, I Googled it. And lo and behold I came across a website advertising homes for sale. Interestingly enough, one of the homes was the home on my street in West Springfield. I knew this home to be recently owned by the Department of Housing and Urban development (HUD). (A home owned by HUD is a home in which an individual that financed their property with an FHA (Federal Housing Authority) loan has defaulted and was foreclosed upon.) The home has been listed for $460,000 and the new "owners" were listing it for $524,900.
Nevertheless, I sought more information in the MLS and the county tax records. I was surprised to find that the home has not yet been sold, but is under contract with a settlement date of March 31, 2011. The agency is listed as buyer agency, but the agent's name is "not on file". But the company selling the property states on their disclosure page that "a principle owner of the company is a licensed Real Estate Agent." If they are not on file, then it probably means that they are not a member of the MRIS, and more importantly, may not be a member of the Association of REALTORs. Meaning, they are not a REALTOR, and therefore, not bound by the REALTOR Code of Ethics.
If, in fact, this home is owned, or will be owned by an entity whose principle owner is a licensee, does this really qualify as a FSBO? I'm of the opinion that it does not. When the public thinks of FSBOs, they think of a home that is being sold by an individual without an agent. Usually that individual either can't afford to pay an agent for their services, or they don't feel the need to have an agent represent them. Some consumers feel more comfortable working with a FSBO seller because they have the perception that they are getting a better deal.
I'm pretty sure its illegal to advertise a home for sale that you don't own, but I'm not quite sure about homes that you "almost" own...I am certain that the use of a handwritten sign is deceptive to the public since it suggests that an individual made their own blank signs the use of a Sharpie. It suggests an unsophisticated seller trying to sell their house on their own. But the truth is that they are savvy investors who are out to maximize their profit.
Another thing that disturbs me is that the company is advertising the property as "newly renovated". The webpage states: "Welcome home to you (sic) newly renovated beautiful 4 bedrooms, 2.5 bathrooms colonial in the West Springfield HS Area..." The ad goes on to list all of the amazing new features of the home. I know for a fact that this home has not yet been renovated. The photos on site are not of the home itself, but of another home. Its not until you click on the flyer in .pdf form, does the consumer see that the photos are listed as "examples".
I don't know what to think about this. Other than to say that buyers must beware of the FSBO. Ask questions, do your research online. Googling a phone number is the easiest way to find out if the seller is an individual or a company. Again, a phone number that lists an extension is usually a business. Any unrepresented buyer dealing with a company selling a "FSBO" should be aware that the company is not seeking to get the buyer the best deal, and they could quite easily overpay. And finally, not all real estate agents, not all licensees are REALTORs. Only REALTORs are bound by the REALTOR Code of Ethics.
I think this emphasizes why it is critical, more than ever, that buyers engage the services of a REALTOR. A recent survey of 300 homebuyers in the mid-atlantic 95% of respondants said that it was just as important or more important (53%) to work with a real estate agent than it was a few years ago. In addition, a full 80% of them said they would refer their agent to a friend or family member. Almost half of consumers found their agent by consulting a friend or family member.
According to the survey, the top 5 reasons why agents are valued:
1. Knowledge of closing procedures
2. Negotiating the best price
3. Understanding their needs and wants
4. Knowledge of the community
5. Responsive to their emails and calls
In this case, knowledge of the community includes knowledge of the homes that are for sale and by whom.
And remember, the seller pays the commission and the fee owed by the buyer to the buyer broker is almost alway offset by the fee the listing broker gives to the buyer broker. In essence, the buyer almost never pays a commission.
For more information, contact me @ email@example.com
Cathy Valdiviez Baumbusch, REALTOR