Lew Nonnenmocher, RE/MAX on the Coast 
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Real Estate Reports

Buying from a ‘For Sale By Owner’ May Be Hazardous to Your Health


Many circumstances may lead homeowners to try and sell their houses by themselves, without agent representation. Maybe the seller finds himself strapped for cash, and needs to save on the commission.

Perhaps he has a relative or friend who successfully sold his home and who tells the seller, "There’s nothing to it!" Most likely, the seller can’t see turning all that commission money over to an agent who ‘just sticks a sign in the yard’, and ‘puts an ad in the paper’!

For Sale By Owners, more commonly known as "FSBOs," invariably under-estimate the amount of time, work, and skill necessary to successfully negotiate and coordinate a real estate transaction from start to finish. A large number of people who start out as "FSBOs" do eventually end up listing their homes with a real estate agency, but not without first experiencing a good deal of frustration, disappointment, and inconvenience.

Having said all that, the potential rewards awaiting homeowners are high enough to insure that the "FSBO" will be around for a long, long time. However, with the advent of the Accredited Buyer’s Representative, (an agent who solely represents the buyer during the entire real estate transaction), the idea of BUYING a home directly from a FSBO, without an agent, could now be a foolish, and costly, mistake.

Buyers would do well to opt for a Buyer’s Representative relationship when purchasing ANY property, but most especially when dealing with a FSBO. Here’s why:

    Negotiating Power. Because a Buyer’s Representative works ONLY for the buyer, having such an agent by your side during negotiations can save you thousands of dollars. Your agent will be armed with ALL the relevant comparable sales (not just the really favorable ones that the seller may provide for you), as well as any other financial information you may need. For instance, your agent can arrange for you to be pre-qualified by a mortgage company. This, alone, makes you much more desirable to a FSBO and greatly increases your negotiating position. Since FSBOs, by definition, do NOT have agents representing them, the use of a Buyer’s Representative gives you a tremendous advantage at a serious and financially important moment in your life!

    Protection. Even if the seller is the most honest, most forthright person on the face of the earth - he or she may still fail to disclose something important, or inadvertently discriminate -- through ignorance. The old saying goes: If you shoot me, and I’m dead, it doesn’t matter if you meant to do it!" A Buyer’s Representative, as a trained professional who knows the area, protects your interests. For example, would you be happy to discover, one month after settlement, that a purposed highway is to be built in your backyard, and the seller hadn’t received a formal notice, so he hadn’t disclosed it to you? A good Buyer’s Agent could uncover this fact BEFORE you buy.

    Objective, Professional Opinion. Primarily, you come across a FSBO by riding around and seeing a sign on the lawn. The house looks good; you get out of the car and knock on the door. The people are nice, the home is great, and, before you know it, you are mentally placing your furniture in the living room, and you are totally, emotionally involved. While loving your potential ‘new home’ is a good thing, the addition of a more objective, professional opinion is certainly a valuable asset. Your agent can either reinforce your emotional decision, or bring you back to reality, depending upon the facts. Either way, you’re a winner.

    Experience, Expertise, Information. A Buyer’s Representative can fill in all the gaps, and answer all the questions you have. Your agent can provide you with information on the school district, the neighborhood demographics, the cost of living, shopping, transportation, job opportunities, and much more. Through today’s technology and the Internet, as well as your agent’s intimate knowledge of the selling area, you can cross the threshold of your new home for the first time without feeling like "the new kid on the block"!

    Cost you no more to Utilize a Buyer’s Representative. In many instances, FSBOs have already "built in" an agent’s commission when pricing their homes, and will gladly accept a written offer from you that contains provisions for them to pay your Buyer’s Agent’s fee. This is not unlike "new construction". When you walk into a sample home, do you see two different price sheets: one for those who are alone; a higher price sheet for those accompanied by a real estate agent? Of course not. If the builder is "lucky" enough to have you walk in by yourself, then he/she keeps the portion of the commission that was earmarked for the Buyer’s Representative, he does not rebate it to you! The same holds true for the majority of FSBOs. While they are looking for as much money from the sale of their homes as possible, they also realize (or, at least, the rationale ones do) that many buyers will be uncomfortable without representation, and they - like builders - plan accordingly.

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