For Sale By Owner
This tale might be fictional, but it’s based on several real, local people and events.
On things that actually, really happen around here.
Bill had been turned away from every brokerage in town. No one was willing to sell his house for him.
No agent, whether moral or shady, would touch it.
And it wasn’t because of the property; the home and yard were in great shape.
The problem wasn’t the location. Actually, it was a highly desirable place.
Buyers were searching for a property like his.
Still, no one would list it.
Why? Because Bill insisted on selling it for double its value.
What was worth $300,000 in the local market, he decided he would get $600,000. And he was completely dead serious.
So he left office after office, unable to find the agent who would invest their marketing dollars in such. No one was willing to torpedo their own reputation by listing such an impossibility.
Bill returned to his home and promptly stuck a sign in the yard. If no one would help him, he would do it himself.
Two things can happen at this point, and neither is a good thing.
- Bill could sell the house to an unsuspecting private buyer who doesn’t realize it’s a horrible deal. Because ‘hey, it’s a private sale, so it must be cheaper’. Umm, no. Either the buyers come up with cash for the inflated price and buy something without any promise of equity for years and years and years or, more likely, the bank looks at the deal, and refuses to fund the mortgage. Because paying double is insane.
- Or, most likely, and what happens most of the time, the property sits. And sits. And sits.
Because people aren’t stupid. No one will pay double. Or even 30% more than it’s worth.
Look, if this forewarns you about anything, let it be this.
- Beware: private sales aren’t always on the up and up.
- Buying without an agent to protect you is risky
- And, if you’re selling, for Pete’s sake, remember people aren’t idiots – not buyers, not agents – and be reasonable. People (and banks) will only pay what things are actually, legitimately worth. Anything more is flat out greed.
Have you ever purchased an over-priced home? Why?
Tina Plett, Sutton Group-Kilkenny Real Estate
The process of selling your home is fraught with pitfalls.
It is made up of endless legal loopholes, multiple financial hoops, and continuous face-to-face confrontation and negotiation with both buyers and their skilled agents.
I think when people imagine selling their home they picture meeting with a nice couple in their dining room, who is able to buy their home, agrees with the price, and makes a clean offer that goes through that very week. This kind of mental picture leads many to try selling privately. I’ve talked already about how going it alone has cost people a lot of money, or even caused them to lose their house.
Every agent dreams of the smooth easy transaction too. It is far from reality though. There are hundreds of stories of people losing thousands of dollars, being tricked, or even losing their house – all because of the complicated nature of real estate transactions.
There are serious dangers to going it alone.
So just what kind of protection you get from an agent then?
An agent guards your personal safety and privacy.
Every time you allow a showing, you open your house up to strangers. What they see in your home and how they use that information are not something you or your agent can know. But your agent is on your side, and will help you protect your privacy while people are looking through your home.
We can tell you what kinds of things to put away that might tell potential buyers too much about you, your motivation for selling, your schedule, your finances, and even your home and bank security information.
An agent negotiates in ways that you can’t.
You can tell a lot about a person just from their body language, facial expressions. The words they say – and don’t say – are big clues too. Do you think that you will be able to hide your motivation from the potential buyer?
Selling your home is a highly emotional thing. We become attached to our homes, and lose the ability to look at it impartially. To you, it is your home – the place where you’ve made memories. It is the place where you put in a lot of work, made loans, and worked hard to pay them off. Buyers however, will never view your home with the same sentimentality. This sets up an immediate communication barrier between you and any potential buyer. You’ll both value the place differently, and that alone can kill negotiations.
Also, homeowners are not usually able to hide their emotions while simultaneously being friendly, fishing for necessary information, and skillfully sharing just the right number of details with the buyer.
Now imagine if this homeowner is not negotiating with a pleasant couple, but rather the buyer’s agent. The owner is now up against a skilled professional who knows all the loopholes, is not emotionally involved, and can read the seller like a menu. The homeowner is now in a losing situation.
If the seller has an agent working on their behalf though, that agent brings not only the impartiality of an outside perspective, but also the highly developed skill of negotiation with even the toughest negotiating professional.
An agent is more available than you.
In our instant access, texting, fast food society, home buyers expect a high level of availability from sellers. Buyers expect sellers to accommodate their schedules. If sellers don’t respond quickly to showing requests, potential buyers move on to the next house. Can you leave work to go show your house at any moment?
Agents can. We leave in the middle of a wedding if we have to, because we’re dedicated to this. We’re full time, all in, and always there so you don’t have to be.
Real estate is tricky, and messing up can cost big time. That’s why real estate agents exist. The whole industry was set up to protect you from yourself and from others who know more about the ins and outs than you do.
… Are you protected?
You’ve advertised your house For Sale By Owner.
Soon after, a real estate agent lands on your doorstep saying they have a buyer for you.
All you have to do is lock yourself into a listing contract, and the buyer will appear.
If you’ve ever agreed to sign based on that promise, you’ve also probably noticed that the elusive buyer never shows. Perhaps they conveniently changed their mind. Maybe they never existed. Either way, you’re left empty handed, wondering if signing was the right thing to do.
Ever been there?
You’re not alone.
It’s an age-old tactic agents use to acquire listings. People easily fall for it, so the method continues to be used.
“But what if they really have a buyer? I don’t want to miss out!”
It’s true, they may have a buyer for you. I let my buyers choose if they want to include private sales in their search. There are a lot of good agents who go to such lengths to seek out a property for their buyers. And they should be compensated for their effort. (No one likes working for free)
But here’s the thing – YOU certainly don’t need to fork over the entire listing with full commission!
Two Ways to Protect Yourself
You Can Offer the Agent a Fee Agreement for Bringing a Buyer.
You want to sell, they want to be paid for working.
Both are great and make sense. Neither requires giving them the whole listing though.
Offering a set fee for bringing a buyer assures them you won’t swipe their contact (and paycheck) away from them if they do bring a buyer.
It also allows you to keep your private seller status, and saves you the cost of a full commission.
Sign for Only That Particular Client, or for a Specific Time
If the agent really has a buyer, they’ll be glad to be paid a commission for bringing their buyer. They did the work, and should be paid. They will gladly agree to a fee agreement.
If they balk, you can have a pretty good idea that they’re after the listing, not trying to bring a current, existing buyer.
*Please note that if you sell your house with the buyer’s agent that the buyer’s agent is representing the buyer and not representing you as a seller. You will still be legally responsible for your representation and documentation.
Tina’s personal thought. “If your goal is to sell and someone wants to buy it, then sell it. It does not make sense to turn away a sale in this market.” Negotiate a fee and start packing.
And, as always, if you know someone who is selling privately right now, share this with them!
Help them protect themselves, and save them a load of cash!
Recently I spoke with a woman who wanted to list her home with me. But there was a problem. She explained that they had attempted selling privately. “We have a dilemma – we already have someone interested in our house.”
I said, “That’s not a dilemma, that’s an opportunity!”
Then I did what many other agents don’t.
I told her to name those people as an exclusion in the listing contract.
That means if those people end up buying the house after all, my sellers don’t have to pay me. (Of course, if they want to hire me to write the offer instead of paying the lawyer to do the paperwork we could agree to a fee. Not a full commission. That would help me recover costs for investing time and money on their behalf.)
If you want to list, but have buyers possibly interested already, use this technique with your agent! List those interested buyers as exclusions. You worked hard to get them!
Many agents will not mention this to their clients.
Some agents will be angry that I even told you about this technique.
But you need to know. There is already provision for this in the contract.
If you, or your friends or family members have tried private selling, and are now thinking of listing with an agent, please share this with them! They need to know too! It could help them potentially save tens of thousands of dollars!