I know this headline sounds a little crazy. After all us Realtors have been trying to scare the dickens out of you forever! You know all we want to do is steal your hard earned equity by doing nothing but sitting on our butts. I hear you!
Butt I know what I do for my clients so that doesn’t bother me. I know the service I provide and its top notch. And I know you need me. Cocky sounding yes but after seeing what all can go wrong in a transaction I know I am worth the money.
Had an interesting transaction this last month. My buyer found a For Sale by Owner on Zillow. Of course! Where else will a buyer find a For sale by Owner. Lets be real its Zillow or Craigs-List in my North Idaho /Eastern Washington Market.
So they are out of State buyers and ask me to go preview the property for them. We had just lost out on a similar property that had a lot of issues thru the home inspection. So they had to let that property go it was a hidden structural flooding mess. This property was in the same price range. A little more but within 22K and well within there budget.
So I call the owner and go preview the house for them. There is no comparison this house is amazing compared to the one they had an offer in on. So they sight unseen make an offer on the home. I negotiated for the For sale by owner to pay the buyers rep commission and we got this baby going. They are saving half the commission this way yea yea for them!
Home sails thru the Home inspection process. This is a nice home! I ran comps on the home for the buyers. Its a way better home than our first home and I had plenty of comps for it found plenty of comps for this new home. And our first homes appraisal had come in over what they were paying for it. We are happy with the price we are moving right along. Buyer comes and sees it and is in love! This home is great! Clean, structurally sound etc. Great!
Lending is moving along Appraiser calls and schedules to see the home. Appraiser remembers the home from when these sellers bought the home several years ago. Recognizes how much work they have done on the property. They were pretty pleased he seemed like a great guy.
Until the Appraisal came in.
Appraiser had some comments that should scare the dickens out of every For Sale by Owner around.
And I quote ” The appraised opinion of market value is below the sales price. This is not unusual when a property is for sale by owner. When a property is not exposed to the multiple listing service or guided by a listing agent, its listing price does not get measured by the market place.”
“Additionally there is currently the perception, and in some cases the reality that the inventory for homes to purchase is limited at this time. In such an environment, a seller will attempt to maximize on their asset. When a buyer is faced with this environment, they will often accept an offer on a property that is above the current market value.”
Sellers are of course crying at this time. The appraisal wasn’t a little off it was $25k off. Enough to have paid 2 commissions on the property. We aren’t talking an extreme home we are discussing a $250k property. And did I say this was a nice home! This was a Nice House! They were selling it for substantially less than I would have listed it for anyway if I had been representing them. Nice house!
Of course they are begging at this point please fight this for us.
And the fact of the matter. I can’t! They got hosed over bad, there is no doubt in my mind about it. But Agency law in Idaho dictates who you represent. I represented the buyer. I am not there list agent. You unfortunately don’t get to pick and choose when you get representation. Its not only if bad things start to happen.
Even tho they got to use my contracts and they somewhat have someone walking them thru the transaction because we do always end up having to take care of the transaction when we make an offer on a for sale by owner. They had NO Representation!
No access to the MLS to fight that appraisal. No agent that could have submitted other comps to him. ( I have fought low appraisals before and won)! I have found comps for Appraisers that were to busy or didn’t know a certain market good enough to find the comps. Happens a lot with rural properties.
But did I say I represented the buyer? Boy are they excited! Because they know how that home compares. They have been thru them. They know!
And yes the sellers could have backed out of that transaction and tried to find another buyer. I know that is always the knee jerk answer.
But have we ever discussed disclosure? You know a lot of For sale by owners forget that they are obligated to disclose just as if they had an agent. We are in a pretty sue happy environment. A little Cover your Butt never hurt anyone.
How would you like to honestly answer the question to the next buyer when they say “Why did your last transaction fall apart?” Do you want to chance it and lie? Or just hope it doesn’t come up. Roll of the dice if you get the same appraiser again. You could pray for cash. Maybe will happen. A lot of unknowns and a lot of risk there in my opinion.
And I am not writing this to scare you or induce you to always use an agent but its a scenario that I came across this last month that really gave me cause to pause and consider. You are very limited in where your home gets advertised as a For Sale by Owner. Is it really getting shown to the “Market Place”?
If it sells quickly on the MLS there is proof on the back end of how many times it was sent to prospective buyers. There is days on market proof. An appraiser could ask a list agent about exposure, showings, offers in etc. And it becomes a statistic in the future. I would expect that an appraiser would appreciate that especially in a non disclosure state.
I never thought about it from an appraisers perspective. Unless I enter that home as a sold on one of the MLS’s that I belong to its a gone statistic. I suppose that could be a little irritating if I was an appraiser. Might be worth handing out a little spanking. Maybe?
How did the story end? Well my buyers felt a little sorry for them. They knew they were getting a deal. So they did hand them a couple thousand over the appraisal. A bone per sea. And the property got sold.
I still feel very bad for those people. They had an expensive lesson in my opinion. I hate to see that happen to anyone. I am glad my buyers got a deal but they already had a deal a better house than they would have had at probably below fair market value anyway.
So when I think of all of the pitfalls of being a for sale by owner. The lack of contracts, the proper disclosure forms, pricing the home, the questions of navigating a home inspection, qualifying a buyer, the appraisal and then lets add the question did your home receive proper marketing to be considered offered to the public thru the “market”. What else could possible go wrong?
If your stomach for risk is not that high. Consider contacting me to help you sell your home. If your out of my area contact me anyway. I know a lot of great agents across the country that could help you out. I am happy to refer you to one of them.
If your going to leave money sitting on the table anyway as these folks basically did. You may as well be paying an agent and do what you can to minimize the risks of selling your home.
And who knows you may find you have a great agent and a great ally in all of your future real estate transactions.
And just maybe if we save you $20k here and $50k there we may even be worth the money you have to pay for us.
Taking care of my clients best interest is my number One Job!
I want to be your Realtor for life!
Thank You for taking the time to read this and once again Be Careful out there! Its a dangerous world.
May your day be Fabulous!