For Sale By Owner Horror Stories

[MrMon]

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When I moved, I called the number on the sign of the first house I liked- in that case, the seller's agent. I decided I didn't want the house, but the agent kept sending me info on other houses, thereby becoming the buyer's (me) agent.

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WARNING! THAT AGENT WAS NOT A "BUYER'S AGENT". This is a common misperception. That agent, whenever given a choice, would act in the SELLER's interest. The more the house goes for, the bigger the commission, and that commission only gets paid if the deal gets done.

There are "buyer's agents" in this world, but their allegiance is given 100% to the buyer's best interests. A buyer's agent will tell you something like, "This is a bad deal, you should walk away."

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The only way this is true is if you pay the "buyer' agent" a flat fee.

If he/she is getting a cut of the sale, he/she has no reason to negotiate a better sale price, and is still on the side of the seller.

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Very, very wrong. Once you are in a certain price range, the amount of commission an agent (me) will receive varies little. I'm much better off making you happy and getting a referral or your repeat business than in making an extra $100 or so.

BTW, I tell buyers all the time that a house is not worth it. Maybe that's not the way to "sell", but people are not stupid and I can live with myself.

[PanchoVilla]

I was just about to post something similar to MrMon above. I am a newer agent and still have a 9-5 job as well. The answer to should you sell it yourself or use an agent is "it depends". Obviously I am biased but make sure you realize what happens as a result of your decision.

There are lots of agents out there. A good agent is definitely worth talking to and negotiating with. A bad agent is probably worse than FSBO. Good agents make sure you maximize your return. They will advise you on what are smart things to spend money on that will give you a good return when you sell. They will get your property more exposure than you will get yourself. A good agent will pay for staging and possibly some cleaning to get your place in top condition when it goes on the market. A good agent helps keep your from getting sued. The argument above about your agent working against you because he gets more if the price is higher isn't usually correct anyway. A good agent cares far more about you being happy with their service and using them in the future and referring you to their friends/fmaily than they do about making an extra $150 by making you pay an extra 10k for the house. I have told my clients that I don't think a house is worth what they are asking. My last buyer client was looking at a lot of different places and the comission offered varies. Did I tell her that I didn't like a particular place because they only offered 2% instead of 3%? No, she looked and decided based on what house met her needs and that happened to be the one offering 2%. You need to make sure you find a good agent. That really is insterested in building a business thtough serving his clients and getting referral business. The poster that says Realtors are a scam and make too much should look more at the business. The amount of time spent representing a buyer or seller is a lot more than you think. Realize too that the business is structured as independant contractors so while it looks like a lot, they don't get any benefits they pay those. They also pay several thousand a year in training, fees, equipment, etc.

If you are going to go the FSBO. The most important things you need to try to do are.

Get your legal ducks in a row. Good lawyer, title co, etc.
Get your house in the MLS.*
Maximize your exposure.

Offer something comission to a cooperating agent who brings you a buyer. Some agents don't deal with FSBO even if the offered a comission, because in reality they will end up doing far more work. Just because you aren't using an agent doesn't mean they don't have to make sure all the things required still get done. If you don't do it, they have to. Realize to that any buyer who an agent does come in is going to offer you less money since they are likely going to have to pay their agent since you aren't.

*When I hold an open house over 75% of the traffic I get is from the local MLS website. (in reality though open houses don't typically sell the house. It is usually someone brought in by an agent, agent hold open houses to market the house, but there is a much higher chance that they will get a new buyer client than that they will sell your house to someone from the open house)

If all the Realtors went away tomorrow would real estate transactions get cheaper? No way, all the money saved in comissions would be eaten up plus a lot more in lawyer fees. Especially in such a sue happy society that we live in. I figure that working as an agent even if I never did anything negligent in a 10 year stretch there is probably an 80% chance I will get sued at least once. I may not lose, but even winning still sucks up a lot of money.

Here is a specific example. I live what has been a very hot market. Bay Area in California. While the market has cooled in the last 3 months, for the first 8 months it was quite hot. In the time before I got my license I noticed work being done on an empty house a few blocks from mine. After they finished it they put it on the market as a FSBO. It was empty the whole time, so it was likely someone flipping it. They put the house on the market when the average # of days on market was 22-26 days. That house sat there for almost 6 months. I saw the open house signed out almost every weekend. Two factors at work there. The house didn't get the same exposure as if they had used and agent, and if a house sits on the market that long it is almost always overpriced. Now that seller paid an extra ~125 days of interest so depending on his financing it was at least 10k, likely a lot more. The fact that the house increased in value would be negated by the fact that whatever new house you would have bought would have increased in value as well. So selling the place on his own cost them about 130 hours of time for open houses as well as at least 8-10k in interest. If he was a flipper it was even worse because his money was tied up for an extra 4-5 months and he couldn't start his next flip. If he was moving an upgrading he probably lost more because the x% in increase of his current place was less then the x% increase in the price of his new and bigger house.

PanchoVilla