Traditionally, a lot of people begin their home search by scanning the paper and driving around looking at yard signs. (Of course, today, statistics show that most people start their home search on the Internet.) But nonetheless, yard signs have their place in real estate sales. There's a good chance those yard signs and newspaper ads are For Sale By Owners (FSBO) and as a homebuyer, you have every right to consider all homes, including those. The #1 Rule of dealing with a FSBO: Just because the Seller decides to go it alone doesn't mean you should too. | Keep in mind that buying a home isn't all about finding a home. Finding a home, while it can be a challenge in itself, is relatively simple in the scheme of things. It's what happens AFTER you find the home that can try your patience, have your head spinning and completely freak you out. Recently, a friend of mine, (let's call him Fred*), found a FSBO condo. He thought it was a good price and asked my opinion, to which I concurred but since I was not representing him, I was hesitant to get too involved. Once Fred made the decision to make an offer... the phone calls began... with questions about contracts, procedures, referrals for lenders and home inspectors... and in the end, I did sit down with him in my dining room, reviewed the generic contract that had been drawn up by a local attorney, suggested items to list under special stipulations to protect himself etc. I even fed him dinner! Once he submitted the offer, the phone calls continued - "the Seller counter-offered - what do I do now?" Sometimes, he was just looking for reassurance he was doing the right thing...so I said to him nicely, do you NOW see why working with a real estate professional is so important? The funny thing here is that he had taken the real estate licensing course many years back... and he was still at a complete loss. He's considering taking the course again and actually getting licensed now that he has a better understanding of the role we serve. *This is a true story. The name of this person has been changed to protect his identity (and me...) so he won't kill me if he finds out I told his story on my website! |
The same rule applies to FSBO's that applies to working with a Listing Agent representing a Seller. Your Agent can ask the right questions and help steer the transaction in the proper direction to ensure everything is done within legal guidelines and in your best interest. Your Agent, as in any other purchase, can advise you on the viability of this home, offer comparable information to help you make an informed purchasing decision, assist you negotiating with the FSBO Seller for the best terms for you as well as insist on using standardized contracts which are designed to protect both parties. In most cases, if you and your Agent decide to view a FSBO, your Agent will contact the FSBO Homeowner. She will then identify herself as your representative and normally ask if the Homeowner would be willing to pay a fee if her Buyer were interested in the property. Most reasonable Homeowners will agree, thus releasing you from having to pay the Agent if that is in your contract! Your Agent will then have the FSBO sign an "Authorization to Show Unlisted Property" which clearly states that she is authorized to show the property to you and also defines the commission the Seller will pay to the Agent should you, the Buyer, purchase the home. Sometimes you'll see a FSBO sign with the phrase "Agents Protected." This means that the owner is willing to "protect" Agents by offering them a fee if they can help them find a Buyer for their home. With the on-going changes in the Purchase & Sale Agreement - new complexities are being added into the purchasing process. Make sure you have the guidance and advice of a REALTOR®! # 1 FSBO Myth "I can get a better deal buying a FSBO because they're cheaper than homes listed with a Real Estate Company." Not necessarily...and in many cases, they are overpriced! Remember, when a Real Estate Agent works with a homeowner, the Agent has an arsenal of comparative information, knowledge about homes in the area and a feel for market conditions to help the Seller price it right. Many homeowners don't understand that ONLY market conditions can realistically set the value of any home. That, and what an able buyer is willing to pay. Market Price = What a reasonable Buyer is willing to pay and what a reasonable Seller is willing to accept. Instead, they often price their home on what they THINK it's worth to them or what they must 'get out' of their home in order to fund their next venture, be it retirement or an upgrade into a larger home. A REALTOR® can help them understand how realistic pricing is calculated. Without one, they often make arbitrary decisions on why their home is worth so much more than everything else in their neighborhood. Sure, we all would like to think that our home is the nicest in the neighborhood... A true FSBO bargain is very rare.  Be especially careful of signs that attempt to look like a FSBO but really aren't. There are Real Estate companies out there who market themselves as people who "help" homeowners sell their property and their signs look suspiciously like a FSBO sign. Their signs may say something like "For Sale with the Owner". They're becoming quite popular with Sellers who are looking to save a few bucks. You may have heard of some of the cute names and catchy pun phrases they come up with. Technically, we all help owners sell their homes. Remember that these companies are also real estate brokerage firms. They, however, play on the negative reputation of real estate fees and resort to offering cut-rate prices and services to attract homeowners to list with them. Then, they use signs that look like FSBOs to attract unsuspecting Buyers into thinking they are working directly with the Seller, when in reality, they are working with another real estate company. The Buyers think they are getting that mythical good FSBO deal and become convinced they don't need to involve a Buyer's Agent...but what did we learn in "Buyer's Representation"? The bottom line is that these real estate companies are representing the Sellers and looking out for their own and their Sellers' best interests. Who is looking out for yours - especially in a situation where you were misled from the get-go by suspiciously ambiguous signage...? Think about it...and arm yourself the best way possible - with representation. |
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