Clients that we had out this weekend brought us several properties that they had found that were FSBO (For-Sale-By-Owner). They were surprised to hear that the properties were overpriced for their neighborhood and condition. I was not. Agents are often hesitant to work with FSBO’s even when there is a cooperating commission offered.
In my experience FSBO’s usually fit into one of three categories. (And sometimes more than one)
1) Greedy– FSBO’s have the reputation for being cheaper because they lack the cost of a broker’s commission. As you can imagine, the idea of not paying a broker doesn’t appeal to a seller because they want to provide buyers with a lower price and greater value, it appeals to them because they hope to pocket more from the sale. There’s nothing wrong with wanting the maximum profit from your investment but because of their desire or need for more money out of the deal they often set their price higher than market value.
2) Make Me Move– Similar to Zillow’s pre-market sales device, these buyers aren’t strongly motivated or committed to selling. Some are interested to see what they can get for their property, others are only interested in selling for a price far above their house’s value. In either case, without any urgency, prices are high, negotiations stall and buyers get frustrated and disapointed.
3) Unscrupulous– A small portion of FSOB’s have declined to list with an agent because the agent told them things they didn’t want to hear. Most commonly this is market value but it can also be requiring disclosures of latent defects, refusing to abide by social or racial profiles in screening buyers or hiding financial details of the property that are relevant for buyers. Employing an agent means having someone invested in the full integrity of a deal because problems damage not just this sale but their livelihood as a realtor.
I don’t mean to suggest that ALL FSBO’s fit into these three categories, only that, more often than not, the problems buyers end up experiencing with FSBOs generally fall into these categories.
If you are interested in a FSBO that doesn’t offer to pay a cooperating commission, you can offer to pay your agent a flat fee or a proportional one for their work on the process.
What do you think? Anything else to watch out for in FSBOs?