FSBO: Is it wise?

By
Real Estate Agent with FALCON PROPERTY SOLUTIONS
https://activerain.com/droplet/8PB

FSBO: Is it wise?
When someone decides to sell their home without the services of a Realtor, they are commonly called a FSBO (For Sale by Owner), but I prefer to call them Unrepresented Sellers.  When I first started in real estate in the early 90s, I had a mentor who told me that 97% of FSBOs would end up listing with an Agent, making them a "warm" prospecting market.  So I designed a packet for Unrepresented Sellers, and when I'm driving down the street and see a FSBO sign, I will often stop, ask them questions about their home, find out price, etc., see if I can make an appointment to view their property.  Without fail they will invite me in right then because they are generally excited for someone to come in and see their home.  I NEVER try to sell them, just ask them questions, offer them suggestions here and there, and then when I'm leaving, I give them my very nicely bound packet to give them a few ideas of things they can do to help market their home, and some of the problems they might encounter that they may not have considered. 

The packet starts out by giving them several pages of suggestions for preparing their home for sale.  Then part of the packet is a list of some of the 'headaches' they may encounter . . . a two page list with cute pictures of FSBO Headaches, and then more detail in subsequent pages.  Here is the list with some of the explanations:

  • First and foremost: SAFETY – letting strangers into your home (prospective Buyer or criminal?)
  • Mis-pricing your home; figuring out the best price (Sellers are
    often emotionally prejudiced; Buyers ultimately will determine the value)
  • Supplying reasonable comparables to a prospective Buyer
  • Is the prospective Buyer qualified with a Lender (90% are NOT)
  • If they ARE qualified, for how much?
  • 65% of FSBO’s end up in court or arbitration (attorney’s fees can be astronomical)
  • Inability to determine ‘lookers’ from Buyers
  • Difficulty in selling a home when the owner is present during a showing, or
  • Are you going to let strangers wander through your home unaccompanied?
  • Following up on all showings so they don’t think you’re anxious (“But they said they LOVED my house, why haven’t they called?”)
  • Legal liabilities for paperwork errors
  • IF Buyer is part of the 90% of Buyers using a Realtor, you will be negotiating against a professional
  • Knowing everything that needs to be done prior to marketing
  • Staging your home so that it shows its best
  • Frequent time away from work (or home or social schedules) on short notice
  • FSBOPeople want to see it when THEY want to see it
  • Writing a binding Contract
  • Writing a Seller’s Property Disclosure
  • Preparing a Counterproposal
  • Depositing and documenting Earnest Money
  • Writing a legal Lead-Based Paint Disclosure
  • Tracking all dates and deadlines
  • Ordering exact mortgage payoff
  • Ordering Title Search
  • Missed opportunities when away from home
  • Finding potential Buyer$
  • When you’re not home, you’re off the market
  • Negotiating directly with the Buyer
  • ‘Lookers’ stopping by at all hours
  • Buyers want a lower price (a ‘steal deal’) because there’s no commission
  • FSBO often means “desperate seller” and attracts bargain-hunter buyers
  • Most Buyers don’t like to deal directly with the Seller
  • Selling your home in YOUR time frame
  • Figuring out the new (17 page) real estate contracts
  • Writing real estate ads
  • 99% of prospective Buyers go to the internet first; are you advertising everywhere you need to be?
  • The longer your house sits on the market, the more people think there is something wrong with it
  • Holding an Open House
  • Understanding and performing all necessary paperwork
  • Making appointments to show your home
  • Negotiating for the highest price
  • Answering objections and criticism about your home without showing irritation
  • Helping Buyers obtain financing
  • Arranging for Appraisers
  • Taking hours off to be there with an Inspector
  • Negotiating inspection issues
  • Finding a Title Company (they charge more for closings of Unrepresented Sellers)
  • Most FSBOs take longer to sell than if they had been listed by a professional
  • Homes sell, on average, for over 20% more when a professional Realtor is used


It takes a long time for Realtors to not only get their license, but they also must take continuing education courses each year and keep up with current market trends and laws.  Not only is the time commitment going to be daunting that an Unrepresented Seller has to invest to learn about all they need to know to sell their home just this one time, it is also, quite likely, going to end up costing them a lot more than what they hoped to save by not having to pay a commission.

 

FSBO Advice was written by Mimi Foster

 

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If you would like to search for Homes for Sale in Colorado Springs,

please contact your Colorado Springs Realtor

 Colorado Springs Realtor Mimi Foster 

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Selling homes throughout Colorado Springs, Old Colorado City,
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Re-Blogged 10 times:

Re-Blogged By Re-Blogged At
  1. Chris Smith 04/26/2011 02:37 AM
  2. D B 04/25/2011 12:57 PM
  3. Joan Cox 04/25/2011 01:37 PM
  4. Anita Clark 04/25/2011 02:34 PM
  5. Laura Higginbotham 04/25/2011 02:47 PM
  6. Jon Quist 04/25/2011 02:54 PM
  7. Myers Jackson 04/25/2011 03:02 PM
  8. Praful Thakkar 04/25/2011 04:14 PM
  9. Cheryl Ritchie 04/26/2011 09:56 AM
  10. Gabe Sanders 05/01/2011 11:59 PM
Topic:
ActiveRain Community
Groups:
FOR SALE BY OWNER - MARKETING(FSBO)
For Sale By Owner
"Whacked"!!!
Diary of a Realtor
Addicted to Active Rain
Tags:
for sale by owner
fsbo
fsbo headaches
fsbo problems

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Rainer
32,089
Dan Schwieder
R.I.M. Realty - Farmington, AR
Dan Schwieder - Broker

Superb, Mimi! I focused in on FSBO prospects for my first two years in RE and made my own brochure showing the hazards, but it was not nearly as comprehensive. Your list is well thought out, and I think easily accomplishes your purpose "to overwhelm the Seller." Thanks for the post!

Apr 25, 2011 10:19 PM #48
Rainmaker
4,796,076
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Many of the FSBO's in my area are the listings that Realtor's wouldn't take because of the pricing.  

Apr 26, 2011 12:53 AM #49
Ambassador
773,468
Mimi Foster
FALCON PROPERTY SOLUTIONS - Colorado Springs, CO
Voted Colorado Springs Best Realtor

Rosalie - We tend to think Sellers don't want anything to do with us, which is most often not the case.  They just think they can save some money . . . I mean, after all, what do we do that they couldn't do? ;)  So it is always fun for me, in my non-threatening way, to have them spill their deepest secrets as they show me from room to room in their house.

Mark - I see that you are from VT (AND that you are VERY close to 100,000 points! woo hoo!)  One of the things that I worked on when FSBOs were everywhere was a similar packet to this one where we offered to do certain things for them for free (list it in the MLS, give them 100 color brochures, that kind of thing).  I don't remember the particulars (I'll find the packet and write a post about those ideas), but the point was to do a few of the things that they thought were the things that would get their houses sold, but were just a part of our service.  That is distressing to see that your Unrepresented Sellers are empowered :)

Christian - thank you very much.  That's what the 'bookmark' is for at the end of the post :))) . . . I would LOVE to hear if you have any success with it!

Emily - well, thank you, ma'am!  I sure appreciate you saying so . . .

Cheryl - I took a class at a Keller William's office one time, and they were using the statistic of 50% for litigation or arbitration.  I was SHOCKED at the high number, and thought it couldn't possibly be right.  In further checking, I found that that number was considered low.  NAR had a figure that year of something like 62%.  Yesterday when I Googled it, I took an average of the figures that I was finding on the internet. (I'm going to recreate my search and let you know)

Thanks, Dan.  I still get excited when I am driving Downtown (my niche market) and see a FSBO.  Whether they list with me or not (I find that those are often way overpriced), at least I meet and greet 'warm' Sellers who have seen my signs Downtown for years.

Gabe - and that's a whole 'nother topic, isn't it, the inability of Sellers to wrap their brains around the deflated market, especially as it pertains to THEIR house? http://activerain.com/blogsview/2248841/but-my-home-hasn-t-lost-value

 

Apr 26, 2011 01:31 AM #50
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1,240,901
Joni Bailey
101 Main St. Realty - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTOR®

Wow! Talk about earning the gold star! This one is worth TWO gold stars! Congratulations!

Apr 26, 2011 01:51 AM #51
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773,468
Mimi Foster
FALCON PROPERTY SOLUTIONS - Colorado Springs, CO
Voted Colorado Springs Best Realtor

THANKS, Joni!  I'm gonna shorten the URL on it :))))

Apr 26, 2011 02:07 AM #52
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758,637
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Mimi that is the most thorough list that I've seen.  I like "unrepresented seller" much better than FSBO.  I wouldn't want to be called a FSBO.

Apr 26, 2011 02:31 AM #53
Rainmaker
2,404,364
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Well if you have lots of time on your hands and are into self-inflicted pain...FSBO...away! FSBO's can turn into a FSBOO... (for sale by owner oops) in this economy easily

Apr 26, 2011 02:50 AM #54
Ambassador
773,468
Mimi Foster
FALCON PROPERTY SOLUTIONS - Colorado Springs, CO
Voted Colorado Springs Best Realtor

Charita - Thank you.  Personally, I wouldn't want to be called either one ;)

Richie - that comes back to "Know when to hold 'em, know when to fold 'em" . . . it's all about working smart.  If the Sellers aren't reasonable, you walk away . . .

Apr 26, 2011 02:58 AM #55
Rainmaker
571,618
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Hi Mimi, Your well written post should be of great help to buyers/sellers. that said, your comment " 65% of FSBO’s end up in court or arbitration..." really caught my eye. Do you have a source for that statistic ? Amazing !
Apr 26, 2011 03:49 AM #56
Rainer
48,391
Gordon W. Miller
Green Mountain Real Estate - Burlington, VT

Ditto Bill's question about the 65% of "Un-Represented Sellers transactions ending up in litigation. Although the attorney teaching a recent CE class I attended stated that one would have to be crazy to purchase from an Un-Represented Seller without at least a couple of property inspections. I expect that that is the principal issue for buyer discontent and legal action, but 65%?

Thanks for the great post and information on this segment of the market.

Apr 26, 2011 04:18 AM #57
Rainer
97,025
Mark R. Hardy
Short Sales, REO, New Builds, First Time Buyer - Mesa, AZ
Short Sale Specialist Realtor - Mesa AZ

I had to chuckle to myself, because I tried calling a FSBO near my home the other week to schedule a showing, and I still have not heard back. It has been almost two months. It is obvious that FSBOs do not have a plan of attack either in most cases.

Apr 26, 2011 06:01 AM #58
Rainer
29,746
Monica Carosi
New York, NY

Hello Mimi,

great post and helpful tips. I realized that pretty much always behind an unrepresented sellers there 's someone who not only does want to save commision, but also someone who had bad experiences with realtors who just worked to see their listing increased, more than having their clients satisfaction.

 

Apr 26, 2011 06:05 AM #59
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773,468
Mimi Foster
FALCON PROPERTY SOLUTIONS - Colorado Springs, CO
Voted Colorado Springs Best Realtor

Bill and Gordon -- For years, one of the 'big name' real estate companies always used the figure 'more than 50%.'  I always thought that was outrageous and always wanted to verify that because I figured it couldn't possibly be true.  When I was writing my article yesterday, I had my assistant get online and check, and we found quite a few articles that gave figures anywhere from 52% to 76%, all from different years, all purportedly NAR statistics.  I went middle of the road and took the several that I found that said 65%.  In re-checking this morning, I found quite a few of them, but none of them 'officially' from NAR.  I will try to find out directly from the source.

Apr 26, 2011 07:48 AM #60
Rainer
24,880
Orlando Masis
Appraisal IQ (Real Estate Appraisal) in Austin Texas - Austin, TX
Austin Appraiser, for Real Estate

Excellent post! Most unrepresented sellers probably have NO IDEA how much critical knowledge they are missing and how much that can jeopardize their chances to sell their home without major hurdles.

Apr 26, 2011 09:09 PM #61
Rainer
16,395
Stacey Clark
Century 21 Judge Fite Company - Weatherford, TX

Thanks for sharing this information.  I am so glad I found this website!!

Apr 28, 2011 09:33 AM #62
Rainmaker
217,182
Sally Dunbar
Lyon Real Estate, Fair Oaks CA (Sacramento Area) - Fair Oaks, CA
Fair Oaks Realtor - Fair Oaks Homes for Sale

Wow - an amazing list.  And your point #1 is HUGE - security.  Very few nutjobs are going to hook up with a realtor if they intend to come back and vandalize a house - it happens, but rarely.  But when you are a FSBO, you are letting any Tom Dick or Harry in, knowing NOTHING about them. At least with Realtors, someone has done some level of pre-qualifying them.

Apr 30, 2011 05:40 AM #63
Rainer
217,273
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Los Angeles, CA
Helping 1st time buyers and home sellers in LA!

Mimi I don't know how I missed this post now that it's several months later!  Excellent!  Thank you for the use of tweaking the list to suit our market as well (I would still add the author name).  I too was curious about the 65%.  I was hoping to find an unbias source but I couldn't come up with any.  I think it would be great category to add to my pending site. I also love your laid back approach.  I would love to help "unrepresented sellers"  but never would I force help on anyone who doesn't want it.  But as you have also found, most want it.  Thanks again.    

Jul 13, 2011 01:12 PM #64
Rainmaker
123,035
Marie Westerman
Blanchard and Calhoun Real Estate/ Wilson Parker Homes - Evans, GA
New Homes Sales Specialist Evans GA REALTOR

What a great way to keep the FSBO informed of what to expect and let them know if they do decide to list you are the one.

Jul 15, 2011 05:44 AM #65
Rainmaker
2,394,600
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Mimi, with each post I read I am more impressed.  You did an fantastic job writing the content and creating your packet. Congrats!

Aug 02, 2011 03:52 PM #66
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773,468
Mimi Foster
FALCON PROPERTY SOLUTIONS - Colorado Springs, CO
Voted Colorado Springs Best Realtor

Thanks, Evelyn!  Hope you can use it!

Aug 02, 2011 03:55 PM #67
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