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5 Common Mistakes the Central Coast FSBO Seller Can Avoid

5 Common Mistakes the Central Coast FSBO Seller Can Avoid

 

As a former FSBO seller turned real estate agent, I feel a certain affinity for FSBO sellers.  I bought my first piece of property from a FSBO seller and two years later, I sold that same condo the same way I bought it:  FSBO.   I then sold my next two properties without listing on the MLS, by offering a broker co-op to buyer's agents.  I learned a lot from those experiences, and also my subsequent experience as a real estate broker.  I am not anti-FSBO, and feel that I can offer some fair and honest criticism of FSBO sellers, as well as point out some common mistakes they make:

1)      Overpricing.   If I could make this numbers 1 through 5, I think I would.  This is the most common criticism of FSBOs, and I must admit I think it to be a valid one.  Buyers and agents routinely remark that FSBOs are overpriced.  Buyers believe that the FSBO seller is trying to save money, so they are often mystified when the FSBO seller is asking MORE than everyone else.  It doesn't paint a pretty picture for them.  One of the best parts of having an agent is having an objective person for an opinion about your list price.  Indeed, it may be difficult for you to see past all the money you've put into a home and realize that the market will not reward it.  FSBO sellers must be vigilant in their efforts to avoid overpricing in order to successfully sell their home. 

2)      Not Offering a Broker Co-op.  I know this is seen as a compromise by some.   However, the last two homes I sold FSBO, I offered and paid a broker co-op for the buyer's agent.  I felt this widened my pool of buyers to more serious buyers.  I believed then, and still believe, that serious buyers more often than not get an agent.  In fact, the plethora of internet information makes having an agent even more important.  There is a ton of inaccurate and outdated information out there on the web.  As a consequence, when buyers get serious and want to buy a house that is actually available, many find the best way to do that is to get an agent.  Later, if they find a FSBO that will work with their agent, it will often raise their comfort level with entering into the transaction.

3)      Being present for showings/talking too much.  There are so many reasons to avoid this, but of course it is difficult when you are a FSBO.  More than likely, you will need to be there for showings and talking can be irresistible.  Even if you sell for a living and know better, it is just so tempting to point out everything that is great about your house.  I still remember how horrible the first FSBO sellers were at selling me their condo.  They pointed out absolutely everything to me that I could care less about and that I disliked.  It was also incredibly boring and I felt obliged to be polite.  They were very nice people, but I didn't give a hoot about anything they told me about the place.  In fact, if I hadn't been absolutely determined to buy that place, I would never have contacted them again.  Basically, they simply got lucky.

4)      Not considering whether it is a FSBO type of market.  I don't believe I could repeat my own FSBO selling successes in the current market.  And, the first property I purchased from a FSBO seller was overpriced.  I knew it.  I also knew the market was going up at the time, so I was willing to take that risk.  However, in a declining or flat market would I have bothered to even look at that property?  Probably not once I heard the price.  And even if priced correctly, I do believe that a FSBO will take longer to sell.  One of the biggest myths in trying to go FSBO is thinking that it won't cost you to try.  As a FSBO in a difficult market, it is very easy to end up riding the market down - so the opportunity cost can be pretty heavy.  You should be prepared for that risk.

5)      Thinking the paperwork is no big deal.  It's not.  California Realtors® have an entire staff of attorneys whose job it is to create forms and disclosures to protect sellers and inform buyers of potential risks.  These disclosures are not available at an office supply store or at an escrow/title company.  I am by no means attempting to scare someone into using a Realtor®.  However, I am saying this because I know, first hand, that the standard disclosures that Realtors® have access to are very extensive compared to what is available in a "sell your home yourself" disclosure packet kit.  Buying and selling a home is a big deal in California and the paperwork is a big part of that.

If you want to sell your home FSBO and are interested in receiving a comparative market analysis of your home, I can provide this to you.  If you are offering a broker co-op, I would also appreciate the opportunity to preview your home.  I will gladly provide a comparative market analysis without you having to endure a listing presentation - just let me know up front that you are a FSBO seller.  I can be reached at my office at (805) 938-9950 or via email at tni@mintprop.com .

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California. 

*Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice and is for information purposes only.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Copyright © 2011 Tni LeBlanc *5 Common Mistakes the Central Coast FSBO Seller Can Avoid*

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

Comment balloon 40 commentsTni LeBlanc, Realtor®, J.D. • March 31 2011 03:54AM

Comments

All good points. And yet, even in this market, there are people that think they know more than we do. I would not dream to do most of THEIR jobs and I would hope they would be sharp enough not to try to do ours.

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES TUCSON ELITE) over 7 years ago

I hit suggest button. These are great tips for FSBOS. If they offer a coop fee they have a better chance of selling.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 7 years ago

Hi Tni - Great points.  There is another one I would offer.  How does the FSBO qualify the buyer?  A pre approval letter means nothing for the most part.  The pre-approval could be subject to selling a home, getting a job, etc.  This sounds like a subject for a blog.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) over 7 years ago

Tni -  a very good summary. Also for a FSBO their time in the selling process may be limited to say, weekends, where buyers have other availability that is not in sync.

Posted by Larry O'Sullivan over 7 years ago

Great information for FSBO sellers, especially the free CMA.  I'm suggesting also.

Posted by Ann Bellamy (Hard money lending for investors in NH and MA) over 7 years ago

Great blog!

I had to laugh a little on your #1 as some agents can make that mistake too. It is most definitely the biggest mistake!

Well said and well done!

Posted by Lydie Ouellet Dickinson, Realtor (Realty Executives Tri County, Bellingham MA) over 7 years ago

These mistakes seem to be common for FSBO and some of them common even if they are listed with an agent.  Nicely done.

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) over 7 years ago

Hi Tni,

I would also add, discounting your price by the commission.  Buyers of FSBO know the deal and try every angle imaginable to make the savings theirs and not the seller's.  A FSBO can get taken advantage of by the buyer and the buyer's agent teaming up against them by the time the deal is all said and done.

Lisa

Posted by The Scott Loper Team Bux-Mont Premier Properties (Keller Williams Real Estate - Montgomeryville) over 7 years ago

Excellent post, Tni.  All points are great to consider, even when one is using an agent.  Suggest!

Posted by Jennifer Prestwich, Your Castle RE Colorado (Henderson, Thornton, Broomfield and Westminster) over 7 years ago

This was a very good, non-FSBO-bashing, informative article. Great Tips! <suggest!>

Posted by Bob Sooy (Realty World Northeast LLC) over 7 years ago

I think the biggest mistake FSBO make is deciding the sell their home themselves... People it's not as easy as it looks.  But if they do decide to sell.. DISCLOSE EVERYTHING!!

Posted by Stacey Smith, Your Orange County Beach Cities Realtor (Keller Williams Realty) over 7 years ago

Jon Quist - I can relate to the feeling.  I spend a lot of time, take a lot of classes to stay up to date, and have a good deal of experience.  So, I think it would be hard for a FSBO to do as good of a job.

Gita - I agree and thanks for the suggest!

Conrad - Excellent point.  That should definitely be included and will be an excellent subject of a post.  Pre-qualifying a buyer is very difficult for FSBO sellers.  What questions do you ask their lender?  What are potential issues with their type of financing?

Larry - Very true, they are missing people who are looking at other times such as when they may be busy working!

Thanks Ann, glad you thought it was useful.

Lydie- LOL.  Agents may make that mistake too but I think it is for very different reasons, such as trying to please a seller.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Hi Tni, Just the paper work alone and all those disclosures required should be enough to convince FSBOs that they need to at least consult with an attorney, or offer co-broker commission to that buyer's agent. I once had a FSBO who offered more than the usual co-broker fee, just to have me take care of all the required paper work and documents, even though they knew I was representing the buyers.  This gets a suggest from me too.

Posted by Jerry Newman, Texas REALTOR, San Antonio Military Relocation (Brown Realty, 210-789-4216,www.JeremiahNewman.com) over 7 years ago

Thanks Judi - It's true selecting the right agent is important as well.

Lisa- Very true it can often come down to that.  You have to be aware that buyers will concentrate on exactly how much they perceive you are saving and sometimes ask for exactly that much back. 

Jennifer - Thanks for the suggest!

Thanks Bob!  I appreciate the suggest!

Stacey - Good advice.  And I agree it is not as easy as it may seem.  In my market though, I don't know if it seems easy anymore, but maybe it does to some.

Jerry - Yes, the paperwork is daunting.  Consulting with an attorney or offering a broker co-op and paying a fee to do the paperwork I think is the minimum.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Tni, great post. I like your soft approach, as opposed to actively going after FSBOs. Sounds like you would be a great Realtor to represent them. I believe they would benefit from your experience. 

Posted by Elizabeth Byrne, Arlington Virginia Real Estate (Keller Williams Realty) over 7 years ago

We don't have many FSBO's left in our market. The few that are are generally selling things that were bought at the peek and they are desperate to preserve capital.  I sympathize but  overpricing the home, refusing to offer the buyers agent a coop and not marketing the property properly are deadly issues in this market.

 

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) over 7 years ago

Very nice post Tni. We are not seeing many FSBO's these days in my market. It is hard enough competing with REO's and short sales let alone selling by yourself.

Posted by Ron Brown (Mountain Sunrise Properties, Scottsdale, AZ) over 7 years ago

David - Yes, I would imagine in SF there would be even more legal concerns.  Agents also have the benefit of experience as in knowing issues that may bother people later on down the road, so we can make sure that those issues are addressed right up front.  Often FSBOs don't see that stuff coming.

Elizabeth- I'm always happy to work with a FSBO who offers a broker co-op.  Sometimes it works.  Rarely would my buyers want to proceed without me and it makes things easier to have at least one agent involved.  As long as the FSBO seller is prepared for the risk in taking that approach.  The last FSBO I helped a buyer purchase had ridden the market down so terribly -- I felt really bad for them.  And their home was still slightly overpriced.  You really have to be honest with yourself about price if you are going the FSBO route.

Ruthmarie - We don't either.  It's been a long time.  But I do see them here and there, and in my experience they have been sellers that really needed short sales, but couldn't quite accept it yet.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Very, very good Tni.  Straight forward, to the point and best of all it comes from the experience of a FSBO.  FSBO is not a market that I actively seek, but it's a viable one for many since more often than not the FSBO will eventually list with an agent.

Posted by Charita Cadenhead, Serving Jefferson and Shelby Counties (Alabama) (Keller Williams Realty) over 7 years ago

Thanks so much for your post. As you can probably tell from our logo, we market FSBO properties and the sales of those in our area have been surprisingly successful. It's so refreshing to read anything positive about FSBO folks. We believe it's a great option for many owners, but also readily recognize it's not for everyone. We also advise our clients to consult an attorney on everything they're not certain about. Thanks for taking a more "fair" approach to FSBO's.

Gretchen

Posted by Mel Ahrens, MBA, Kelly Right Real Estate, Customized Choices for your Real Estate Needs (Kelly Right Real Estate) over 7 years ago

Tni -- All valid points, but I especially agree on overpricing being the biggest reason fsbos fail. I've heard them say...well, we just want to try xx$$ and see what happens.  What will happen is that the house will sit there for a very LONG time.

Posted by Barbara Altieri, REALTOR-Fairfield County CT Homes/Condos For Sale (RealtyQuest/Kinard Realty Group, Fairfield and New Haven County CT Real Estate) over 7 years ago

Very good explanation of all the details.  I especially like the talking too much part....some listing agents should read that too!

Posted by Christine Smith, Exclusive Buyer Agent & Attorney, Canton, MA (Buyers Brokers Only LLC - www.BuyersBrokersOnly.com) over 7 years ago

I have one common mistake for most FSBO's, in my opinion the #1 mistake...Not using a REALTOR!

These certainly are typically the result of that, though.

Posted by Bukka Levy, REALTOR - San Francisco North Bay (Keller Williams Realty) over 7 years ago

I have also sold a home FSBO before becoming a Realtor®. It is definitely easier to sell in an good market. I wouldn't suggest going FSBO now for the very reason you stated.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) over 7 years ago
I appreciate the fact that your were a former FSBO but you are now a Real Estate agent. I wouldn't give any advice to a FSBO except to stop it and get themselves an agent. It is complete insanity to risk what might happen for 5 or 6%. If they want to be that stupid let them do everything on there own why. give them advice and promote staying a FSBO.
Posted by Robert Schmalz, Cal. Lic Broker (West Los Angeles Real Estate Group) over 7 years ago

Ron- Most of the cities I work in are the same way.  After I wrote this I did see a FSBO today though.  It's a tough road for them right now in my area.

Charita - I can see why that happens.  Selling a house is difficult, selling your own house can be even more difficult because you lack objectivity about it.

Hi Gretchen! - Maybe since I'm an independent my perspective may be diffferent.  Right now if someone wanted to go FSBO, it would be very difficult in my market.  I can definitely understand it, but they should be prepared to do a lot of work (so much of our job as real estate agents is dealing with details) and do their best to be objective about price or else they won't get far.

Barbara- I agree there is a fine art to pricing a home.  Unless you've been tracking the market carefully and can be objective it will be very difficult for you.  One of my favorite experiences was selling a home in a particular neighborhood and having every neighbor that came by tell me I priced it too low.  Everyone else was sitting on the market overpriced and not moving.  My sale ended up being the highest re-sale for that model of home before prices took a tumble.  Turns out I priced it exactly right.  Maybe I should have given it some time so I could fail like they did.

Christine - Very true.  A bad agent can make the same mistakes!

Robert - Well Robert we simply disagree.  I don't think FSBOs are stupid.  I have seen them make the same mistakes over and over again (and this article is about that) -- but I've seen agents make mistakes as well.  I do think that an agent will probably do a better job for you -- but not every agent.  I don't see FSBOs as a threat to me or my business. I will gladly sell a FSBO listing where a co-broke is offered and I think you probably would too.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Tni - Can we get this syndicated?  In fact given the body and timbre of your posts ... maybe we should just syndicate you!  Thanks for this great and informative post ... and just in case ... I want you to know that it works in all locations!(LOL)

Posted by Jack Mossman - The Nines Team at Keller Williams in Lodi, The Nines Team in Lodi (The Nines Team at Keller Williams in Lodi) over 7 years ago

A great comprehensive discusstion of the issues for FSBOs and all without being condescending or dismissive

Posted by Maya Swamy, Ph.D. Long Beach, CA - fundsavailable.com (Funds Available) over 7 years ago
I think FSBO's go hand in hand with the overpricing in the marketplace.
Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 7 years ago

Excellent advice, not surprising considering the source. Most of the FSBOs in Westchester are really just open listings who are happy to pay a buyer's agent. I know in some areas they are a bit more rabid, but not here. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) over 7 years ago

Tni, good explanation from your experience and anyone who wants to sell their property FSBO. 

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 7 years ago

Very well written.  For Sale by Owners take on so much more than they realize.  Thanks for such a great contribution.

Posted by Jeanne M. Gavish, Keller Williams Realty Elite Partners - CIPS,GRI,S (Jeanne Gavish, Keller Williams Realty Elite Partners) over 7 years ago

I tend to agree that most FSBO properties are overpriced. But I think the reason for this is not necessarily greed but more the inability of sellers to let go of their emotional attachment to their homes. I recently made a listing presentation to a FSBO who shared with me that his wife was determined to recoup the cost of the extensive improvements they had pumped into their 7 year old home. FSBO's have to work hard at viewing their home as a commodity.

Posted by Anonymous over 7 years ago

Tni- Your post is very informative for FSBO everywhere.  Most sellers think their home is the best on the block and overprice and try to talk up their homes in open houses.  Statistics show they usually stay on the market longer and often get under the going market rate when all is complete.

Posted by Luna Petty (Unyque Financial) over 7 years ago

Thanks Jack!  That's my attempt at SEO -- LOL.

Thank you Dr. Maya!

Cheryl - Often they do.

Thanks Phil!- That's a better way to do it.  Some here want absolutely nothing to do with a Realtor, but the ones that do end up selling FSBO often end up offering a buyer broker compensation.

Thanks Michael!

Keller - They really do.  Although they don't often realize it.  It can very easily swamp them.

?- I agree emotional attachment does interfere.  And it is tough for people to understand that not everything you do to your house raises the price of the home.  Including the fact that you put on a new roof.  People are already going to expect a roof on the home.  An also modification that you made for your own enjoyment.

Luna - I do believe FSBOs take longer to sell.  FSBOs don't factor in that a FSBO can be a turn off for a buyer.  Many times they are so focused on thinking that Realtors don't like them -- but they miss that buyers also have a reaction to FSBOs because they perceive that the seller is saving money at their expense -- so they then want to share in that savings.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Good post for sure todday.  Thank you for posting.

I've bookmarked it forfurture reference.

 

Patricia/SEacoast NH & ME

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 7 years ago

Great post. Last November, I had a client who INSISTED on buying this FSBO she found on her own. Despite the fact that it was 20 years older than anything she had asked me to search for, and that it had 3 acres and she only wanted a half acre lot, she fell in love with this house, and it even had an attached guest apartment.

Then when the appraisal report came, the appraiser treated the property as if it were two separate houses on one property, and there were no true comps. The lender went nuts and demanded two more exact comps. They just weren't there. And the appraiser refused to write an addendum explaining that there were similar houses sold in the county, however the distance was an issue. I shopped this deal to 7, yes, SEVEN different lenders and all but one said no way. They all told me that there was no way they could get a VA loan on that house, and probably not even FHA. One lender was going to be able to do it, but when he did the final pull, their score dropped below that lender's minimum! (And somehow that was my fault.) My client felt that it was a conspiracy against her that I and the lender  were cooking up! All along, of course she and the seller had been communicating without my knowledge, and the seller convinced her that it was some elaborate plot, to prevent her from buying a house. They even contacted my broker! It was ludicrous.

In the end, the seller got an agent and the house sold to an FHA buyer, (which of course further fueled the conspiracy theory) and when I called the buyer's agent to ask how they got the appraisal through, she was surprised to hear that the guest apartment had separate systems! It was not disclosed to the new buyer!

Posted by Cathy Baumbusch, cathybREALtor (RE/MAX Executives) over 7 years ago

Thanks for stopping by Patricia!

Cathy - Wow what a nightmare.  Sounds like the typical lender obstacles that are in place now only to the extreme.  That's an interesting disclosure issue.  I wonder if the seller told THAT buyer about it though really.  In FSBO deals the parties are always chatting. 

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) over 7 years ago

Tni - You've hit some great points here.  The overpricing and the being present for showing we see all the time, but your points about the paperwork isn't something I've seen often in articles and posts and is so true.  Using our CAR forms protects not only us as Realtors but the buyers and sellers as well by making sure things are disclosed that have caused problems in the past. There's more to what we do as an agent than sellers know.  I have a new neighbor down the street who bought an overpriced FSBO.  He probably thought he was getting a good deal by going straight to the seller but had he had a Realtor representing him on the buying end....  Oh well!!!

Posted by DeeDee Riley, Realtor - El Dorado Hills & the Surrounding Areas (Lyon Real Estate - El Dorado Hills CA) over 7 years ago

This is a great post.  Worthy of a Suggest and a Reblog.  I like bullet points and numbers it keeps things focused.  Oops guess you are not set up for Reblogs.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 7 years ago

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