The Ballad of The FSBO – A Cautionary Tale

static1.squarespaceI got permission from a friend of mine to share her story. She said, “Let some good come from it!”. So, hopefully this will save you or someone you know from making a big mistake!

So…what the heck is a “FSBO”? It stands for “For Sale By Owner”, pronounced “Fizzbow”. This means that the owner(s) are selling thier home without engaging the services of a Realtor. Now, I get it, I love to save money too. Especially on big ticket items. I will shop around until I find the best deal! But there are some things in life that you definitely want to spend the money on. And it this case, it cost this couple A LOT more money than choosing a Realtor to sell their home. Anyway, on with the story…

My friend, we’ll call her “Sally”, sent me a desperate text asking for HELP! Her in-laws just sold their house by themselves and didn’t tell anyone, not even their kids. To make matters worse, they sold it for about $50,000 less than what it was worth. What could they do? Naturally, my first question was: “Did they have a Realtor?” “No”, she replied, “They sold it themselves, and they signed a contract. Is there any way to get out of it?”

*Sigh…* the only answer we can give as Realtors is “It depends on the terms of the contract”. Now, a lot of people think that Realtors, just because we deal with legal and binding contracts on a daily basis, are lawyers. But in reality, we are expressly forbidden from giving legal advice! The only person that can interpret the language of the contract and advise a client IS an attorney! More $$. See where I’m going here? Needless to say, they did NOT get out of their contract.

To make matters worse for poor Sally and her in-laws, she told me just this morning that she and her husband were on their way to a different state to help her in-laws find a short-term rental apartment because there was no Post Settlement Occupancy Agreement (or as you may have heard it called, “rent-back”) in the contract, and their closing date was before their new home would be available. You guessed it, more $$$.

So, trying to save on professional expenses for a licensed Realtor cost them tens of thousands of dollars! Of course, this is not ALWAYS the case with FSBO’s, but it DOES happen more than you think! Let’s go through the scenario and see how this could have been avoided with the help of a Realtor:

Price: Sally’s in-laws most likely determined their asking price by looking at an estimate from one of the consumer real estate websites. You know the ones I’m talking about (I won’t name names as I don’t want a team of lawyers at my doorstep!). What most people don’t know is that number can be a computer generated algorithm and can be VASTLY different from the true market value! A Realtor would have run comps in the neighborhood, suggested a fair price for the home and shown all of that data to the clients to support that price. Furthermore, a Realtor would have populated the home in the MLS system, marketed and advertised the listing, and depending on their offered services, staged and professionally photographed the home.

The contract: A Realtor, upon receiving an offer, would have vetted the Buyer’s financing by contacting their Lender, negotiated pricing, explained all terms of the offer to the clients, explained the rights and responsibilities of each party per the terms, helped the clients decide if this was an offer that they wanted, and would have negotiated a “rent-back” for the Sellers.

So, why didn’t Sally’s in-laws hire a Realtor? That’s a good question. I didn’t ask. Usually, it’s to save money by not paying professional expenses. In Virginia, the Seller offers commission to both the Listing and Buying Agent. Yes, we do have to make a living! But, a good Realtor EARNS it. We work very hard for our clients! Another reason is that some people just don’t like Realtors! There is a big misconception out there that we are sleazy money-grubbing snakes that only care about ourselves and try to empty your pockets. And, yes, there are some people out there that are like that! But most of us, like me, truly care about our clients and want the best outcome for them! One of the terms of our license is to put our clients’ needs above our own. That is something that I, and many of my colleagues, take very seriously. I do this because I want to help people through one of the biggest financial and emotional decisions of their life! I run my business honestly and with integrity, and many others do as well.

“But, Scott, how do I tell the good Realtors from the others?”

My Darlings, that’s why you have me! Did you know that I can interview and refer a qualified Realtor for you ANYWHERE in the country? I can! I do it all the time! It’s my absolute pleasure to that for you or anyone you know that’s looking to buy, sell or rent a home!

So, the moral of the story: Don’t end up like Sally’s in-laws, tens of thousands in the hole. If you live in Northern Virginia, call me! If you don’t, CALL ME! I’m here for you!

Scott