Sometimes you hear stories about fortunate for-sale-by-owner (FSBO) sellers. It’s always about a friend of a friend that put a “for sale” sign in their front yard one day and sold it for full price before they went to bed that night. This is not a typical scenario for most FSBO sellers.
FSBO might sound like an attractive path, but it does have its disadvantages and pitfalls. If you’re thinking of a FSBO listing, consider the following first:
- Many FSBO sellers try to save some money by de-emphasizing advertising. This is a poor strategy, as it is imperative that you make as many buyers as possible aware of your home. It’s a simple concept: the better the advertising, the greater the number of potential buyers. And the greater the number of potential buyers, the greater the likelihood that you will be able to obtain a price that is satisfactory to you. As experienced professionals that do this every day, we know that to get the most out of advertising, it needs to be run repeatedly in multiple mediums for an extended length of time. We know how to do this. We will also put your home on the Multiple Listing Service (MLS). This service is not available to those that are not a licensed broker or realtor.
- Don’t overestimate the price of your home. You can view the prices of similar homes in the area and take a guess at the price of your home, but in the end, your estimate will not be nearly as precise or accurate as it would be if done by a professional. If you’re asking too much, which is the mistake that most sellers make, many buyers will be turned off and probably won’t even take the time to investigate your home. If you have to make adjustments to the price, you’re going to have to spend more money to re-advertise this change. The National Association of Realtors performed a study that showed the effects on ultimate sales price of relative levels of overpricing. A bad decision at the inception of your attempt to sell your home could end up costing you a lot more than if you had properly priced your home from the beginning. This is where the experience of a real estate professional is invaluable.
- A quality real estate agent is objective. This is especially true when it comes to any flaws in your home to which you’ve grown accustomed. Over the years, people become desensitized to the variety of minor imperfections that exist in virtually every home, regardless of price range. You don’t even notice them anymore. Your realtor can look at your home objectively and critically, as every potential buyer of your home will. They can help you identify these problems quickly and easily. Take care of the little things now. Buyers will notice them and penalize you financially for most things that you do not take care of up front.
- FSBO sellers have to constantly adjust their schedules and their personal lives to accommodate potential buyers. It can be extremely frustrating if you have to leave work early to show your home, and then the buyer cancels the appointment, or just doesn’t show up at all. A realtor can do a much better job of screening the “lookers” from the serious buyers before showing them your home. You can save a lot of valuable time by letting a real estate professional show your home to prospective buyers.
- FSBO homes don’t always attract a lot of buyers. As the process of buying a home becomes more complex and a fraught with potential legal implications, more and more buyers are seeking to be represented by “Buyer’s Agents,” who are real estate professionals that advocate the interests of the buyer. And, let’s be realistic, most real estate professionals are not favorably disposed toward FSBO properties. The typical Realtor spends countless hours with each and every buyer looking for the perfect home. You may view it as selfish, but simple human nature dictates that people will protect their own interests when it comes to getting paid for their efforts. Beyond that point, there are legal issues associated with a home purchase that make many buyers uncomfortable (e.g., sellers not fully disclosing everything about the property, deciding which contract to use, determining who selects the title company, etc.). Many buyers also have reservations about not having a realtor involved in the process. A knowledgeable, experienced realtor can put potential buyers more at ease in the home.
Sadly, in the end many FSBO sellers end up listing with a real estate professional because they haven’t received the kind of buyer response they were expecting. In such cases, the time and money spent before reaching this conclusion are effectively wasted. Unless you have a guaranteed buyer talk to a real estate professional and see what options they can offer you.
OK, you’ve read all that and we still haven’t convinced you to enlist the services of a real estate professional? Alright, let’s move on the real brass tacks. Read the following list of questions. If you know the answers to these questions, then quite possibly you may not need a realtor and you might be equipped to handle this very important matter alone. If, however, after reading this you do not know the answers to these questions, you might better understand the value a competent agent can bring into a successful real estate transaction. Here we go:
- What is a “Seller’s Disclosure Statement”?
- What are the implications of not providing a Seller’s Disclosure Statement to a prospective purchaser prior to an offer?
- What is a “Lead Based Paint Disclosure Statement”?
- Who is required to complete a Lead Based Paint Disclosure Statement?
- What is “Title Insurance”?
- Who pays for title insurance?
- What is the cost of title insurance?
- What is a “Title Commitment”?
- What is a “Title Policy Without Standard Exceptions”?
- What is the alternative to a Title Policy Without Standard Exceptions?
- How does a Title Policy Without Standard Exceptions differ from its alternative?
- What is a Property Transfer Affidavit?
- Where is a Property Transfer Affidavit filed, by whom, and within what time period?
- What is a “Bill of Sale”?
- What is radon?
- What does it mean if a radon test “fails”?
- What does radon have to do with selling or buying a home?
- Should I advise the person buying my house to have a radon test?
- What do I do if my home fails a radon test?
- What does it cost to cure a radon failure?
- Without your knowledge, someone has filed a lien against your property. What are the potential implications of this?
- What is a “cloud on title”?
- How do you resolve a cloud on title?
- What is the “State of Michigan Real Estate Transfer Tax”?
- Who pays for the State of Michigan Real Estate Transfer Tax?
- What is the amount of the State of Michigan Real Estate Transfer Tax?
- A friend of yours works at the City Hall in the town in which you live. She tells you that she heard that an unexpected $5,000 (per household) special assessment for sidewalk repairs was going to be assessed to your neighborhood at the next City Council meeting, scheduled to occur in two weeks. You are scheduled to close on the sale of your home in three weeks. Whose responsibility is it to pay for this special assessment?
- Continuing the prior question, are you required to disclose this situation to the purchaser of your home?
- A realtor shows your home to a prospective client, Bill Smith. The next day, Mr. Smith shows up at your door without his agent and states that he would like to purchase your home. Assuming you sell your home to Mr. Smith, do you have a potential liability with regard the realtor that accompanied Mr. Smith into your home originally?
- Someone offers you full price for your home. Are you obligated to sell it to that party?
- What is a “contingent offer”?
- What is the difference between an offer that is “contingent upon the sale of a home” and an offer that is “contingent upon the closing of the sale of a home”?
- What are the implications of accepting a contingent offer?
- What is a “Pre-qualification Letter”?
- What is a “Pre-approval Letter”?
- What is the difference between a pre-qualification letter and a pre-approval letter?
- Does it matter which lender a prospective purchaser of your home intends to use?
- Should you contact the lender of a prospective purchaser before accepting an offer, and, if so, what questions should you ask?
- You sign a contract to sell your home to a prospective purchaser. The contract stipulates that they must obtain mortgage approval within 30 days. You find out on the 30th day that they are not approved for their loan. What are your options, and what do you do?
- What is “Occupancy”?
- What is “Possession”?
- What is an “Occupancy Escrow”?
- You have an antique mirror in your master bathroom that is attached to the wall. Will this mirror stay with the house after it is sold, or can you take it with you?
- After you sign a contract to sell your home, but before you close on the sale, your basement floods. What are your responsibilities with respect to disclosing this to the prospective purchaser?
- What is a “Walk through”?
- During their walk through, the prospective purchasers of your home not some nail holes in the walls where your pictures once hung and some minor scrapes and scratches on the wall that resulted from your moving out of the home. They claim that your home is “damaged” and they tell you they are backing out of the deal. Can they do this legally?
- The prospective purchasers of your home do not show up for your closing. Do you automatically get their earnest money deposit?
- What are the different types of real estate contract that are typically used?
- What are the main expenses that a seller typically pays in a real estate transaction?
- What are the main expenses that a purchaser typically pays in a real estate transaction?
- A prospective purchaser asks you about the racial demographics of your neighborhood; what is your answer?
- Last winter, you had a minor leak in your roof caused by ice damming. You cleared the ice off your roof, and that seemed to fix the problem. It has rained several times this spring and you have seen no indication that the roof is still leaking. Should you disclose this to the prospective purchaser of your home?
- At the very last minute, the prospective purchaser of your home calls you to tell you they are having a problem obtaining their final loan approval, but it’s not a big deal and they will be able to close in about a week. In the meantime, you have signed a contract to purchase a new home, and that contract stipulates that you have to close in a couple of days. Are you in danger of losing your earnest money deposit on the home you are to purchase?
- On June 14, 2001, the prospective purchaser of your home, Mr. White, calls you to tell you he is having a problem obtaining their final loan approval, but it’s not a big deal and he will be able to close in about a week. You contract stipulated that you were to close on the sale of your home on or before June 15, 2001. Subsequent to your agreeing to sell to Mr. White, Mr. Green contacted you and indicated that he would purchase your home for cash for an amount $10,000 higher than the price Mr. White agreed to pay you. Since Mr. White appears to have violated the terms of your agreement, are you now free to sell your home to Mr. Green?
- You put your home up for sale, and your prayers appear to have been answered: You have multiple purchasers that want to buy your home! Can you negotiate with more than one of these parties at a time? What are the potential legal implications of doing this?
- You verbally accept an offer on your home and make arrangements to sign contracts the next day with the prospective purchaser. Later in the day, another party comes along and indicates that they will pay you more for your home than the first purchaser. Can you proceed with the second purchaser, or did you oral acceptance bind you to the first?
- Let’s assume that you decide to sell your home to a prospective purchaser, Mr. Brown, who is represented by a realtor, Ms. Johnson (you agree to pay Ms. Johnson a commission because Mr. Brown is adamant that he won’t buy the house without her involvement). Ms. Johnson has you sign a document that discloses that she is working as a “buyer’s agent;” what does this mean, and what are the legal implications of Ms. Johnson functioning in this capacity?
- Continuing the prior question, assume the same facts, except now Ms. Johnson is functioning as a “seller’s agent;” what does this mean, and how does this situation differ from the one in the prior question?
- You are about to close on the sale of your home. You hear from a neighbor that there is a rumor that a convicted sexual offender has moved into a house on your block. That same night, the prospective purchaser of your home calls you and says, “I heard that a convicted sexual offender lives on your block; is this true?” What is your answer?