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For sale by owner — what to be prepared for

November 6, 2010
By MARIO D'ARTAGNAN, Real Estate in Perspective

Some homeowners take on the task of selling their homes without the assistance of a real estate agent. Many of these "FSBO" signs go up during snowbird season. Some have prior experience; others do not. Statistically, real estate agents sell homes at higher prices than owners typically do, and in a shorter amount of time.

The most common reason an owner attempts to sell himself, is to save the real estate commission. However, when you consider the cost of advertising and marketing, the inconvenience of making yourself available to show the property, and the liability associated with real estate transactions today, how much is the owner really saving? Let's examine some of the risks.

Today's real estate market is tricky, and requires not only a keen knowledge of the market, but knowledge about disclosures and if they are required at the time of entering into a contract for sale. For example, is a Chinese drywall disclosure required? What about a lead based paint disclosure? Who is responsible for pending assessments? How large of a deposit should one ask for? And what happens if the seller fails to disclose a fact that materially affects the value of the property?

One of the biggest issues facing homeowners when selling themselves is that they are emotionally attached to the property. This makes negotiating with a potential buyer very difficult. Moreover, many homeowners lack the skills of pre-qualifying buyers. How would they know if a prospect is ready, willing and able to purchase? What questions would they ask to determine if their house even satisfies the buyer's needs? Prospects that target FSBOs already know the owners are trying to save the real estate commission, and may perceive them as being financially strapped. Consequently, many of these buyers are prepared to make ridiculous offers on the home. And, how would the homeowner really know if a buyer is financially qualified? Are they willing to ask personal financial questions, or ask for some form of pre-approval?

Another important concern for a homeowner to consider is "how safe is it to allow a total stranger into my house?" Unfortunately, we live in a world of uncertainty, and frankly there are plenty of individuals out there with ulterior motives and bad intentions. How would the homeowner know if the prospect is merely scoping out the place as a potential robbery target?

Let's say a buyer writes an offer on even the simplest purchase agreement form. And let's also say the buyer writes some additional terms that favors the buyer. Is the homeowner going to know how to write a counter offer or rewrite the terms as to not create ambiguity through improper syntax or linguistic errors? Assuming the transaction moves forward to the closing table, what happens if it doesn't close for one reason or another? Will the homeowner have knowledge about remedies or recourse under the law?

I write these concerns not to scare FSBOs, but to create awareness. Although "for sale by owners" might think they are saving huge commissions, they may find themselves in litigation and paying an attorney instead. Why not hire a real estate professional to handle the sale of the property?

Mario D'Artagnan is a broker associate with Miloff Aubuchon Realty Group, Inc. Mario is a former investigator for the Florida Real Estate Commission. He is also a former real estate instructor. Mr. D'Artagnan is a published author and has been a keynote speaker on the subject of agency law. Mario is also a veteran of the U.S. Air Force. For questions or comments contact Mr. D'Artagnan at: mariodartagnan@yahoo.com or call 239-565-4445.

 
 

 

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