Yesterday I presented a scenario of a FISBO (For Sale By Owner) who wants to sell only to the principal buyer, with no agent or commission involvement. They are first time sellers who want to keep all of their equity in order to have enough to buy a new house. There’s nothing wrong with someone wanting as much leverage as possible so I presented a seller who has no idea what the pitfalls might be in doing everything their own way. Let’s take off the rose colored glasses and take a look at the pitfalls.
Sellers are generally at least six months behind on market trends. They saw their neighbors selling their homes for more money than they could have ever imagined and still think they can get in on some of that same profit. Problem is, the buyer has figured out the market trends way before the seller and if they see a FISBO they expect to be able to really save some money on the purchase. Additionally, any seller who thinks they’re immune to the roller coaster of a market today has his head in the sand. Strike One.
Not having disclosures in writing for a prospective buyer to read through or inspections completed in advance of listing the property. The seller thinks that they’re fine by telling the buyer everything that they want to tell them, but not necessarily everything that has happened to the property during their ownership. This is with-holding of material fact and this could be a law suit. If the seller doesn’t want to pay for those inspections before listing their home, they’ve opened themselves up for a big renegotiation on the agreed upon price. Strike Two.
FISBO’s can’t vacate the property while showing it. So, they’re there yakkedy yakking all the while people are wandering through the property. I have yet to meet a seller who knows when not to talk when prospective buyers are around. The seller, who is positive that they have the very best house on the block, don’t hesitate to tell that to everyone. Truthfully, most of them can’t see the forest for the trees. The buyer knows this, too. Strike Three.
Three Strikes generally means you’re out, but that’s in baseball. In real estate it means you could lose money. In California we require disclosures for everything. And I do mean everything. Did someone die on the property within the last 3 years? Was there a Meth lab on the property? What about a CLUE report? Sewer Lateral report? Airport noise? Earthquake fault zone? Flood zone? If the sellers’ don’t know what disclosures are required today they can’t protect themselves from future litigation. The law says that the clock starts for a law suit once the discovery of the non-disclosed information is found out. That could be five years from now, or five months. The seller will lose in court and the excuse that they didn’t know it was required won’t be accepted.
So you be the judge. FISBO or with an agent. The agent could be full service or a deep discounter. At least an agent/brokerage had knowledge and forms for the seller to use. The law suit that could follow is up to you Mr & Mrs Seller if you don’t disclose everything you know about the property. Besides, your neighbors will be sure to tell the new owners everything you forgot to mention, so why hide it? Finally, if you decide to sell on your own but allow the buyer to use a Realtor, don’t expect the Realtor to help you. If you do, you have just hired them and will own them a commission on both sides of the deal.