By Barbara Correa Posted Feb 18th 2011 3:32PM
Do you really need a real estate agent to sell your house? Fans of the For Sale by Owner (FSBO) approach say no. But here is a cautionary tale about the potential pitfalls of going the For Sale by Owner route.
Matthew Peters and his wife, Fiona, had two FSBO home sales under their belt, so they naturally opted for the do-it-yourself strategy the third time around as well.
The average seller looking to unload a home automatically assumes the first stop is securing a trustworthy real estate agent to market and sell the property. But for an adventurous few, the idea of saving that 5 to 6 percent broker commission is just too tempting.
The Peterses were in that small percentage. The couple had been renting out their two-bedroom ranch in Madison, Wisc., for about three years when they finally found a buyer last year willing to pay the $191,000 asking price.
Then the trouble began.
The couple planning to buy the Peterses' home was anxious to move -- the lease was ending on their rental -- so they asked if they could come in three days prior to closing. With a loan commitment letter in hand, the Peterses opened their house to the new family. That's when the trouble started.
According to Matthew Peters, their would-be buyers promptly charged roomfuls of new furniture, even two flat-screen TVs, to the point that they compromised their credit score and the bank canceled their loan. The worst was yet to come.
Soon, Peters learned that the ideal family he thought he'd been dealing with were actually his See photos of homes for sale in your area and across the country on AOL Real Estateworst nightmare, and now they were living in his house. "The house that we kept so tidy and spent thousands getting ready for a sale was now a disaster area,'' says Peters. "They ruined some of the floors, kids drew on the walls, they punched holes in the walls. They had a troubled teen that kicked in a door, the lawn was ruined from the above-ground pool they put in. We started getting complaints from neighbors.''
The family was now renting, and in addition to trashing of the house, they were constantly late with the rent. Peters continued to show the house to prospective buyers, but in its junked condition, it was a hard sell. Finally, after six months, Peters evicted his tenants for nonpayment. He spent two full days cleaning and hired some contractors to fix a series of broken items.
Then he ran into a little luck. One day, a man called about the house, saying his 70-something mother was looking for a single story place in the neighborhood and could pay cash. The house closed 10 days later. The two parties ended up splitting the fee to the buyers' broker, each paying around $5,000.
Peters, who is now renting, says if he had it to do all over again, he would definitely hire a sales agent. "We thought we were going to cash in not having to pay the broker commission,'' he says. "One thing people don't factor in is the time. I probably spent dozens of hours on showings.''
Still interested in trying it yourself? Check out these factoids:
• FSBO sellers declined in 2010, from 14 percent of overall home sales in 2003 and 2004 to just 9 percent in 2010.
• Another 32 percent of FSBO sellers sold to a relative, friend or neighbor.
• Before listing your own home, you need access to good current data about sales prices, market times, and activity. Be familiar with the process and know the requirements for your state. Some sellers believe that because they are not licensed, laws and regulations do not apply to them. Know the law, or hire someone who does.
• You will need to invest time to market the property and be available to show your home and respond to any inquiries.
• If the property is priced to reflect true market value and it is placed in the multiple listing service, nothing will stop it from selling.
• Most FSBOs often wind up paying at least half of the brokerage fee to the broker who produces a buyer.
Source: RISMedia
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