Agents can save sellers time, money, liability and hassle<\/p>\n
Key Takeaways<\/p>\n
Frank, a smart and tech-savvy Denver homeowner, thought he\u2019d skip the agent commission and sell his house himself.<\/p>\n
He researched his home\u2019s property value, found a buyer and got the house under contract. It seemed like a done deal.<\/p>\n
Until he realized in a panic that he had seriously undervalued the property \u2014 by more than $100,000. Frank had misunderstood the report he\u2019d pulled and incorrectly valued the house.<\/p>\n
The error cost him $30,000 to get out of the contract.<\/p>\n
In your dealings with potential sellers, you\u2019re going to run into people who will question the worth of an agent. Or you\u2019ll come across a smug homeowner who\u2019s got it figured out and listed his or her home for sale by owner (FSBO).<\/p>\n
How do you turn these sellers into a client? Let them know that you\u2019re saving them time, money, liability and downright hassle.<\/p>\n
As we all know, the real estate industry is hyper-competitive. And because there are few better catalysts for innovation than competition, real estate is constantly blazing new ground. Real estate expansion teams — teams that do business in multiple markets — are one of the industry\u2019s latest, and hottest, innovations.<\/p>\n
Judy (not her real name) in Raleigh, North Carolina, fell in love with a FSBO home. She agreed not to use an agent and paid the homeowner $3,000 in earnest money.<\/p>\n
Then the homeowner changed his mind. With no contract signed and no receipt, Judy lost all her earnest money. She trusted the homeowner when she should have trusted an agent.<\/p>\n
FSBO scams happen to both buyers and sellers with little recourse besides hiring an attorney.<\/p>\n
Common scams include fraudulent papers (appraisals, loan documentation), foreign buyer deposits (scammer sends too much in a bad check and then requests a refund), purchases through a third-party (a fake attorney, etc.) and asking for personal information.<\/p>\n
Everyone makes mistakes. A seller (or buyer) who doesn\u2019t have the representation of a licensed agent pays for those mistakes. Attorneys can close a real estate transaction, but they don\u2019t carry errors and omissions (E&O) insurance.<\/p>\n
So if homeowner Sandy lists \u201chardwood floors\u201d as a feature and the buyer discovers it\u2019s just a wood veneer, chances are Sandy is going to pay for that mistake.<\/p>\n
An agent would have either caught the mistake or covered it with E&O insurance. Let\u2019s face it: this is a litigious society, so what homeowner wants to be a target for lawsuits?<\/p>\n
The 2015 National Association of Realtors\u2019 Profile of Home Buyers and Sellers showed that understanding paperwork was one of the most difficult tasks for FSBOs.<\/p>\n
Depending on the state, there are a variety of legal forms that are needed, including but not limited to a sales contract, property disclosures, occupancy agreements and lead paint records.<\/p>\n
Sure, ready-made contracts can be downloaded easily enough. But does an untrained seller understand what all that means? Would the seller know how to customize that one-size-fits-all contract?<\/p>\n
Like Frank, FSBOs who sign on the dotted line and then realize an error are stuck. They have to pay the buyer (if they\u2019re willing) to get out of or just take the deal.<\/p>\n
Let potential clients know you can save them from that headache.<\/p>\n
In 2015, FSBOs lost about 16 percent of the sales price<\/strong> with a median selling price of $210,000 (agent-assisted homes sold for $249,000).<\/p>\n Homeowners selling by themselves simply don\u2019t have the time to devote to the process, don\u2019t know the market value, don\u2019t understand market reports and don\u2019t properly market the property.<\/p>\n If the FSBO seller sold to someone he or she knew, the median dropped to $151,900 (because cousin Sue is doing them a favor and expects a deal).<\/p>\n Unless the seller knows someone who wants to buy the home, FSBOs take longer to sell than homes listed with an agent. For the same reasons, they can\u2019t get the right selling price.<\/p>\n No one is \u201cbehind the curtain\u201d running the marketing show. On average, 18% of FSBOs were unable to sell <\/strong>within their chosen time frame last year.<\/p>\n There\u2019s no one looking out for the homeowners who sell on their own. They have no one to call if they have a problem or a question.<\/p>\n Dave found this out when he sold his Morrison, Colorado, home himself. Studying for his real estate license, Dave felt confident he could handle the contracts. Then the unexpected happened.<\/p>\n When his house was under contract, a state patrol car pursuing a speeding motorist crashed into a downstairs bedroom. Repairs threatened to push back closing, and suddenly, the buyer was asking for a storage unit, the cost of temporary housing and more.<\/p>\n He was lucky enough to have an agent friend who could step in, but a homeowner with no representation could have been out thousands of dollars unnecessarily.<\/p>\n Sellers who don\u2019t know the rules can get stuck with unnecessary and costly repairs. When Sue sold her 10-year-old Highlands Ranch, Colorado, home, after the inspection,\u00a0the inspector said she needed to change the stairs from the garage to the house because the code had changed.<\/p>\n He listed other code changes, and the buyer began to demand these be done. Surprisingly, the inspector didn\u2019t know that because these items were to code when the house was built, the seller wasn\u2019t responsible for these changes.<\/p>\n FSBOs have limited resources to market their home. The 2015 BAR Profile of Home Buyers and Sellers showed 42 percent rely on a yard sign, 32 percent rely on friends and family, and about 15 percent use social media.<\/p>\n Relying on the neighbors and Uncle Bob\u2019s second cousin has its limitations. Even paying for the MLS listing won\u2019t be enough because there\u2019s no incentive for an agent to bring a buyer to a FSBO.<\/p>\n The mindset for most FSBOs is saving money. Chances are, these sellers are being nickeled and dimed into a pretty big chunk of change.<\/p>\n They\u2019re paying for a lot of extras: signage, flyers, photography, MLS listing, attorney (required in multiple states for FSBOs), home warranty (optional but hard to sell without one), home inspection, a wood destroying pest inspection, credit report for buyers (if applicable), contracts and the list goes on.<\/p>\n The biggest cost to a homeowner is their time. You might hear the argument that it doesn\u2019t take an agent that much time to sell a house. And honestly, given the technology at our disposal, that\u2019s true \u2014 to an extent.<\/p>\n But it will take a homeowner a whole lot longer. They don\u2019t have the expertise or the access to the resources agents have. What is their own time worth to them? How much time will the seller spend researching the market and contracts? Is the seller going to leave work to unlock the house each time there\u2019s a showing?<\/p>\n If you\u2019ve been in real estate for a while, you probably have some FSBO nightmare stories of your own. Share them with facts backed with real statistics to help FSBOs make an informed decision to use an agent instead.<\/p>\n\n
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