Let’s start out by agreeing that a “For Sale by Owner” sign on a Midlothian fence does have a certain appeal. It summons up mental images of a simple, direct relationship: no middle men, just straight talk and fair dealing with the One in Charge! And in fact, in many walks of life, dealing directly with the owner can be a plus. When you’re recommending a retail outlet to friends, telling them that you know the owner strengthens your endorsement.
So when you cruise by a sign announcing a Midlothian For Sale by Owner property—a “FSBO”—you wouldn’t be alone if you were tempted to walk up and knock on the door. Buying a home directly from its owner should be a way to purchase a house at the lowest possible price, what with no real estate professionals getting involved!
That’s the fantasy, and although those assumptions are theoretically possible, in reality, homes being put up for sale by their owners represent a temptation that many experienced home buyers avoid. They have more than one reason.
1. Owners Often Ask for Too Much Money
The principal reason that For Sale by Owner sign went up in the first place is probably because the landowner wants to avoid paying real estate sales fees. They usually run about 6%, with half going to the seller’s broker, half to the buyer’s broker. Unfortunately, For Sale by Owner homes quite often carry higher prices because the owners don’t know how to determine fair market value—or are convinced any property of theirs is a special exception. In fact, some Midlothian For Sale by Owner signs go up precisely because the owner didn’t like what a professional broker’s comparable market analysis revealed.
2. Pertinent Information May Go Missing
Disclosure laws are not getting any less cumbersome, but owners who aren’t familiar with their strict requirements can innocently (or less innocently) fail to toe the line. When significant unseen damage or relevant history is not disclosed, the buyer can wind up footing the bill long afterward. Buyers have some legal recourse, but that results in an expensive, drawn out process.
3. It’s Just Not Convenient to You!
Sellers who eschew the services of the real estate professionals have accepted a lot of responsibilities that come with trying to sell a Midlothian property. Of course, they have to keep on top of their regular responsibilities at the same time. That can make things inconvenient for prospective buyers. When both parties use real estate agents, visits are scheduled in a professional (i.e., predictable) manner. When owners become sellers, though, visiting hours tend to reflect the owner’s lifestyle needs. When buyers can’t visit during business hours or when the owner has a family obligation, it can add extra strain. Likewise, when the scheduling of inspections is difficult or any of the strict paperwork deadlines aren’t met…it’s one reason that explains the NAR’s finding that the percentage of For Sale by Owner offerings have collapsed from 19% to 9% since 1991.
With so many disadvantages, it makes sense for buyers to focus on homes sold by agents instead of owners. With transparently justifiable prices, better information and procedural clarity all helping you land the best buy, it should be easy to cruise by those FSBO signs…and give me a call instead!