Why Would Any Buyer Purchase a Private For Sale Home?

By
Real Estate Agent with Royal Lepage Grand Valley Realty

It happened again this week.  It seems to happen in our brokerage several times a year, and it's the same story over and over again.  It's just different people and different houses, but the same story.

When buyers are looking for a house, the human nature is to look at everything. Most have a real estate agent, but they look on their own, too.  The internet, weekly and monthly print publications, for sale signs, and even private for sales.

When they see a house they like, and in this particular scenario, the house is usually staged to its optimum, and decorated beautifully.  The buyer finds this property on their own as a private for sale.  They fall in love with the house, and make a quick emotional decision to buy the house, without consulting with an agent.  The asking price is too high but that's OK because they really love the house.  I truly think that, in some cases, they don't even think about the price.  They just want the house.  (We're all guilty of that, but in most cases, it would be on much smaller ticket items.)

So, as the story goes, two or three years pass and family circumstances change and they need to sell the house.  They call over an agent and, it becomes apparent that the house is not worth what they think it is worth.  Often it doesn't show as well as when they bought it because they don't quite have the flair for decorating as the previous owner.  They now have two choices, list it at market value and take a hit or list it proportionately high to the mistake they made when they bought it.

More often than not, they take the higher route, because it is less painful.  But, of course, the house never sells.  So later they reduce and take the hit.  When the market was good, it sometimes seemed less dramatic because prices were going up and the property caught up to the market.  It seemed that way, but the mistake was really made when they made the purchase, not later.

This brings me to my point.  Why would any buyer go out and make the biggest investment of their life without a professional to guide them?  Especially, when their fee is being paid by the seller!  It makes absolutely no sense!  There are so many things to consider when looking at a house and drafting an agreement of sale.  Most buyers don't even know what to look out for.  Pricing , of course, is one of the biggest issues.  A salesperson can show a buyer what comparable houses in the neighbourhood have sold for recently.  Do you think the seller is going to show a buyer comparable sales that show his property is $ 25,000. higher than the last comparable sale?

Comments (4)

Kathy Kooyman
Home Realty - Pella, IA

Buyers think, and that is the key word think they are getting a better price when they purchase a FSBO because the seller does not have to pay the Realtor.  The sad truth as we know it is that they often pay too much or purchase a home without a home inspection.  I have had a couple people who purchased that way tell me they would never do it again.

Dec 19, 2008 01:38 AM
Diane Daley
Caron's Gateway Real Estate - Northumberland, NH

This is a very realistic story that I believe most of us in the business have experienced over the past few years.  I usually tell all of my buyers that I can assist them with any home on the market even if it is a FSBO or unrepresented seller home.  I'm lucky enough to have good success with this.  Best wishes. 

Dec 19, 2008 01:42 AM
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

We live in a society of drive thrus, busy busy people and when someone has a baby on the way, needs a home and the nesting beacon is rotating and sirens sounding, they are in a hurry. I agree you should never do things in a hurry..like shopping when you are hungry and bring home way more of the goodies than normal. But its 3 oclock on a Sunday, they are driving by, see a sign, the owner in the yard raking. They are adults, they decide turn in and just see what this is all about.  We live in America and that is there right.  They are worried about represenation less and curb appeal more and don't want to loose out.  The fun part of financing, working out possession and dealing with the heart break when the place appraises $40,000 low and the deal falls apart is the other side of the equation. But as much as broker stratch their head, there are saleable homes moved locally on an owner's intiative and maybe the owner's wife is a legal secretary or works at a bank and a little more savvy than the average owner..coupled with a buyer who has done this a few times.  I see many FSBO's that are way under priced too..not all pie in the sky.  What would you do?

Dec 19, 2008 01:45 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Purchasing a FSBO can be a minefield for the average buyer. As a former home builder/investor I used the services of a Realtor in almost every purchase even though I was educated in the process. I've never felt that their services cost more than they were worth; to the contrary, I was paying for services that I either felt unqualified to do or didn't have time to do. Certainly there are exceptions, but I always recommend using a professional.

Dec 19, 2008 01:57 AM