The Blog Post below is was authored by the infamous Investment Adviser, Author, former Member of Parliament Garth Turner from http://www.greaterfool.ca/ . Love him or hate him Mr. Turner takes on a question which I deal with on a regular basis. Mr. Turner doesn’t hold anything back, so be forewarned, some of you reading this may take offence. While I am obviously biased towards using a REALTOR® to sell your home Mr. Turner makes some pretty sound arguments. Cheers, Ian.
Here is the text of Garth Turner’s blog post:
“At great personal risk, I write for a final time about do-it-yourself house sellers. Normally I’d ignore the topic as I try to do with people who shop at Costco or buy Kias, but recent comments that I trash FSBOs (for sale by owner) because I love Royal LePage are simply over the top.
Houses cost a lot. Too much. So why would you ever buy one without adequate representation and protection? It sure won’t save you any money, and could well cost you dearly. It’s just a nutty idea embraced by the kind of iconoclastic, anti-establishment, rebel, antisocial, outcast, regulator-snubbing, tight cheapskates who populate this pathetic blog.
So, herewith, ten reasons FSBO sucks:
(1) If you’re a do-it-yourself seller, never expect Chuck the ace local Realtor with a listing down the block to bring a client over. It ain’t gonna happen, since he stands to get nothing from you but a fight and a sneer or, at best, a token payment. So what, you say? So your property isn’t exposed directly to the primary target market – people ready to buy, now, on your street. As a result, you’ll probably end up selling for less, and save yourself nothing.
(2) Most people hate dealing with FSBOs because they are, by their very nature, cheap, smug, misguided and almost always inexperienced vendors. The prime motivation for self-selling is to save money by avoiding a real estate commission. That should mean that FSBO listings are always priced 5% below comparable MLS offerings. But, of course, that never happens. In fact, most FSBOs are marketed above fair value because the flip side of cheap is greed. Buy from such a seller, and get ‘em both.
(3) Buyers hate FSBOs because they utterly lack perspective. Unlike a real estate agent who is in and out of candidate properties all days, the self-lubricating seller knows only his or her house intimately, but will not hesitate to insist it’s far superior than every other one in the hood. Nothing a FSBO tells you is actually credible.
(4) Buyers hate dealing with FSBOs because it’s not easy. There’s no receptionist to take your call, no appointment desk to schedule a showing, and no guarantee you can see it when convenient. Plus there will be no agent to include two or three other comparable listings during your tour, giving perspective and balance.
(5) Experienced buyers shun FSBOs because they understand the importance of market research, which no DIYer is ever going to provide. A buyer dealing with a competent agent will have access to detailed comps not only for the street and the area, but for similar-type homes in the region. You need to understand not just recent selling prices, but days-on-market, price adjustments and overall market value trends. A good agent will also tell you what external factors influence a property’s price, like proximity to shopping, or a parking lot, or transit, a multi-residential building, or a roadway that might not look busy when you first see it. Local knowledge is critical. Expect every FSBO to lie.
(6) Buyers hate FSBOs because the negotiation process can be emotional, difficult and personal. Sitting across the kitchen table arguing about price, closing date, inclusions and conditions is as much fun as a divorce. An agent gives you distance and leverage, and will almost always save the buyer money.
(7) Buyers can expose themselves financially and legally with FSBOs since most of them are first-time sellers with an amazingly thin grasp of real estate law. Agents using pre-lawyered, authorized purchase and sale agreements and trust accounts offer protection against the loss of deposits prior to closing, adequate escape in the event of a failed home inspection and the correct wording of conditional clauses that can let you walk. For example, most FSBOs have no idea of the difference between a vendor’s warranty and a condition. Making a deal subject to lawyering could force you through this distasteful process twice.
(8) Cheap people apparently don’t value their privacy or safety. Sticking a FSBO sign on your front lawn is an invitation to any thief, con artist or pervert who might be looking for someone to loot, identity-steal or assault. Opening your home to some guy you know nothing about, who merely expreses an interest in ‘looking around’ could be the day your life changes. Do you really want your wife conducting a showing while you’re at work? Are you a complete idiot?
(9) Buyers take on more risk dealing with a FSBO. If a deal goes bad after closing there’s no listing agent or brokerage to seek redress from. No mechanism for appeal, since it was a private, unbrokered contract. The seller may be gone in a flash, in which case pray you picked the right lawyer and bought enough of the correct title insurance.
(10) Cheap, unprofessional, self-serving, naïve folks who think they can line their pockets with even more capital gains tax-free profits. Are these the kind of people you want to haggle with, hand over thousands (or tens of thousands) in the form of a deposit, and then hope closing day actually happens after you’ve already sold your home or arranged financing?
If so, you deserve each other.”