Real people (Glen and Carol) offer some advice to real estate agents re: FSBO

By
Education & Training with Cannon Publishing Group

What follows is a complete and un-edited e-mail from a consumer to me regarding the way that we approach the unrepresented seller (aka FSBO) - I thought this might be helpful in some way, and Glen allowed me to share it.  Try not to get defensive, instead, use this as a learning and growing opportunity!

 

Dear Joe,

I just read your article over at RIS [Staging a Successful FSBO Campaign.] I'll offer a few comments from a sellers viewpoint that hopefully might find their way into the hands of the people who might be best positioned to affect some change in this challenging marketplace of today.

Two years ago my wife and I were in a category you don't really have a slot for in your article. It's a place between Category II and Category III. The seller that's aware of FSBO and all it may offer and entail, but sellers maybe willing to go a traditional route because yes it's the way things have been done for eons and it works to a degree.

So we listed with an agent who came recommended to us by another we felt had been helpful in the past when we were buyers. In reflection we're now aware that this agent listed our home in MLS and just sat back and waited for the calls. Didn't even take pictures, had us supply them, and when we sent updated ones didn't even replace the original older ones. We let her contract with us expire. All she brought us were buyers that tried to low ball us. And her recommendation was always to take the offer. She became known as the soccer mom agent. You must know the type, has a real estate license in order to be able to bring the kids to school and be there when they get out. I imagine she manages to sell the odd home every once in awhile. And you are 100% correct in your article, as a seller, even while listed with this agent we were flooded with offers to list with someone else. All promising they were better than all the others but how am I to believe that when here I see them trying to prey on their own colleague?

That's when we became Category II sellers. With an entry only listing in MLS we did the showings ourselves. Because we both work and can be away from the home for 10 hours in a day we made it clear that 48 hours notice was required to set up an appointment. I lost count of how many calls we received from agents on the message machine after we had left for work wanting to bring someone by at 3:00pm that day. We learned to call back after showings to find out how things went. I began to see another pattern. Time and again we would hear, "oh I'm sorry my clients couldn't possibly meet your asking price".  And I would think to myself why in hell did you schedule an appointment with us then? You cost me an entire day getting ready for this showing and brought me a buyer with a prequal $30K below my asking price?

So we thought we had wised up. We began to require a prequal letter before we would even schedule an appointment. That language was added to the listing. And still we got calls on the message machine from agents wanting to show the house the same day. We would call back and tell them we can't schedule an appointment until we see the prequal letter. We heard "I'll get that for you asap" and never heard from most again. We had quite a few try to BS their way around with fantastic stories, but again never heard from most again. One hung up on me after stating haughtily "I can't do THAT!".  Several times after spending substantial effort on our part getting the house ready to show we had agents never even show up.

In that time period we got two offers from potential buyers who came to us without representation. Private sales. The first we refer to as the buyers from hell, who after taking over a month negotiating an offer to purchase wasted a total of 3 months of our time trying every possible way to knock the price down further. 10 days prior to closing when their approval letter from the bank was due they could not produce it.

The second buyer signed an offer and a purchase and sale, supplied a prequal letter early on and even an approval letter from the bank. The house passed a home inspection, now it's second in a year, and the second appraisal also went through no problem. This buyer then extended the closing 4 times over a month, by which time we were moved out of the home completely in order to be ready to close, and the buyer walked away leaving us hanging with a $500 deposit. Because the bank in the end would not give them the loan.

We moved back home and relisted with an agent we watched do a very good job selling a friends home. A small one man office that made us feel we would get his undivided attention. He only takes a few listings and works hard to move the ones he has. He brought us a buyer with the first open house. Although we weren't comfortable with them because it was another offer that didn't have much of a deposit, and we are understandably a bit nervous towards that, it was an offer for the same amount as the previous sale. The house passed a home inspection last week. At this point home inspectors and appraisers are making more money off the sale of our house than real estate agents.

Our agent contacted us this morning saying the deal has collapsed because the buyer won't be able to come up with the deposit money they will need at the P&S they were to sign this coming Thursday.

3 deals in the span of a year each one failing with financing issues. As a seller I look at all this and say something has got to change in the Real Estate Industry. The decision to go with an agent this time was in large part to draw upon expertise that we hoped would protect us from yet another buyer that couldn't perform. And it's now apparent that even our agent isn't safe from having this happen.

I hope it's clear that as a seller I have seen quite a few ways the industry as a whole could clean up its act and present itself more professionally. But the major point I want to bring up here is this. You write about the need for agents to find a way to deal with the FSBO phenomenon. I say go after the banking industry and the fast and loose way they are playing the mortgage game. It's time to tighten up on a lot of practices. My agent says he can have a prequal letter inside of an hour for any amount he needs to get a buyer in the door. That needs to stop. It's time to demand that the prequal letter really means something. Both Agent and Seller lose a lot of time and effort and possibly a significant amount of money when a buyer just up and walks near the end of a deal. In this day and age it's costing too much money to be playing games with this sort of thing. The industry as a whole should look into changes that will provide a means of protection and better filters for unqualified buyers.   

You want to combat the FSBO phenomenon? Work together as an industry and demand changes from the banking community. You want to be able to portray the image that a licensed Real Estate Agent is the person who can bring a bullet proof buyer/seller to the table.     

Posted by

Joe Cooke

www.cannoncooke.com

Comments (4)

Jason Inoue
Bellevue, WA

I can't speak for others, but from my experience it has always been customary to review a clients financials, income, and credit report before creating a pre-approval letter.  Just as with real estate agents, I feel that the mortgage industry also had an influx of make money quick attitudes that were never properly trained.  This makes it imperative that real estate agents and mortgage professionals work together to ensure their client is qualifed for a purchase and stick to their purchase plan.  I think the more detailed a pre-approval letter is the more weight it carries and shows that someone actually took the time to work with the client.

Jun 05, 2008 10:14 AM
Alison Scott
eXp Realty, LLC - Suwanee, GA
Residential real estate sales

Firstly most agents know that a pre-qual letter is not worth the paper it's written on. You need a loan commitment letter from the buyer. Also I remember taking a post license course many years ago when the advice from our "Instructor" was in order to get FSBO listings, call the home owner and say you stopped by their house today and low and behold nobody was home to show the listing!! A deceptive and unethical approach to say the least, no wonder there are people out there that mistrust agents, and how on earth are you supposed to earn consumer confidence when all that is doing is tricking the client from the very start.

Jun 05, 2008 10:22 AM
Diane Aurit
LKN Realty, LLC - Mooresville, NC
Lake Norman Real Estate

Joe, regarding the financial side, I was going to write the same thing as above.  Pre-approval letters are a must.  In this current mortgage market the challenges are great.  The key is to work with a lender with whom we trust and know can perform.

Regarding the real estate agents comments.  It truly is a shame that their first agent represents a signigicant portion of our industry although in this market a lot of them are leaving.  It is important for the seller to interview 3 listing agents and ask serious questions about how they are going to market etc.  Both times this seller just chose one agent without doing their homework.

Finally,  I would highly recommend that sellers NOT make it difficult to sell by imposing 48 hours notice.  They probably lost some great buyers that way.  It is certainly fair to ask for a pre-approval letter before showing but again, in order to avoid loosing showings, they might consider that a pre-approval letter be a part of the offer process.

All the way around, this poor seller had more than the usual number of problems.  The key is hiring an agent who will properly market and manage their listing and make sure that the buyer is qualified.  Beyond that it is up to the lender.

Sep 01, 2008 12:05 AM
Karen Ann Martin Realtor Safe Harbor Realty
Safe Harbor Realty - Westport, MA
Realtor Fall River & Westport MA Real Estate Agent

Joe,  thank you for the insight.  There is no such thing as a bullet proof buyer,  I have a buyer, closing in 10 days that just got laid off,  she didn't see it coming either.  Another buyer got denied we were to close in 6 days he lied to the loan officer, ( I'm the listing agent )  I try to do my best for seller or buyer, however There are many things we just cannot control.

Sep 01, 2008 09:50 AM