1. Scams happen
Judy (not her real name) in Raleigh, North Carolina, fell in love with a FSBO home. She agreed not to use an agent and paid the homeowner $3,000 in earnest money.
Then the homeowner changed his mind. With no contract signed and no receipt, Judy lost all her earnest money. She trusted the homeowner when she should have trusted an agent.
FSBO scams happen to both buyers and sellers with little recourse besides hiring an attorney.
Common scams include fraudulent papers (appraisals, loan documentation), foreign buyer deposits (scammer sends too much in a bad check and then requests a refund), purchases through a third-party (a fake attorney, etc.) and asking for personal information.
2. Liability is on the individual
Everyone makes mistakes. A seller (or buyer) who doesn’t have the representation of a licensed agent pays for those mistakes. Attorneys can close a real estate transaction, but they don’t carry errors and omissions insurance.
So if homeowner Sandy lists a lake property “dockable” as a feature and the buyer discovers after the purchase it’s not, chances are Sandy is going to pay for that mistake.
An agent would have either caught the mistake or covered it with E&O insurance. Let’s face it: this is a litigious society, so what homeowner wants to be a target for lawsuits?
3. Paperwork is daunting
The 2015 National Association of Realtors’ Profile of Home Buyers and Sellers showed that understanding paperwork was one of the most difficult tasks for FSBOs.
Depending on the state, there are a variety of legal forms that are needed, including but not limited to a sales contract, property disclosures, occupancy agreements and lead paint records.
Sure, ready-made contracts can be downloaded easily enough. But does an untrained seller or buyer understand what all that means?
4. You can get stuck in a bad deal
Homes in lake communities with HOAs can be a different animal. Maybe you didn’t quite understand the community your buying into and a FSBO seller isn’t truthful about restrictions and guidelines, what would you do then?
FSBOs who sign on the dotted line and then realize an error are stuck. They have to pay the buyer or seller (if they’re willing) to get out of or just take the deal. Our Lake Team can save you from the headache and potential mistakes.
5. FSBOs can be incorrect about home values
Homeowners selling by themselves simply don’t have the time to devote to the process, don’t know the market value, don’t understand market reports and don’t properly market the property.
Not to mention the various factors about a property that decide what it should be priced at.
6. FSBOs spend more time on the market
Unless the seller knows someone who wants to buy the home, FSBOs take longer to sell than homes listed with an agent. For the same reasons, they can’t get the right selling price.
No one is “behind the curtain” running the marketing show. Lakefront Living Realty is a niche of the real estate market that offers sellers nationwide marketing to our qualified lake buyers and our buyer get the insight on unique and off-the-market properties.
7. FSBOs lack representation
There’s no one looking out for the home sellers or buyers who are on their own. They have no one to call if they have a problem or a question.
Dave found this out when he sold his Morrison, Colorado, home himself. Studying for his real estate license, Dave felt confident he could handle the contracts. Then the unexpected happened.
When his house was under contract, a state patrol car pursuing a speeding motorist crashed into a downstairs bedroom. Repairs threatened to push back closing, and suddenly, the buyer was asking for a storage unit, the cost of temporary housing and more.
He was lucky enough to have an agent friend who could step in, but a homeowner with no representation could have been out thousands of dollars unnecessarily.
Our Lake Team prides themselves on having the best local resources and knowledge. We have helped countless buyers and sellers move, find rentals, and find trusted contacts.
8. Inspections are problematic
Sellers and buyers who don’t know the rules can get stuck with unnecessary and costly repairs. When Sue sold her 10-year-old Highlands Ranch, Colorado, home, after the inspection, the inspector said she needed to change the stairs from the garage to the house because the code had changed.
He listed other code changes, and the buyer began to demand these be done. Surprisingly, the inspector didn’t know that because these items were to code when the house was built, the seller wasn’t responsible for these changes.
9. Marketing is limited
FSBOs have limited resources to market their home. The 2015 NAR Profile of Home Buyers and Sellers showed 42 percent rely on a yard sign, 32 percent rely on friends and family, and about 15 percent use social media.
Relying on the neighbors and Uncle Bob’s second cousin has its limitations. Even paying for the MLS listing won’t be enough because there’s no incentive for an agent to bring a buyer to a FSBO.
10. Time costs the seller money
The biggest cost to a homeowner is their time. You might hear the argument that it doesn’t take an agent that much time to sell a house. And honestly, given the technology at our disposal, that’s true — to an extent.
But it will take a homeowner a whole lot longer. They don’t have the expertise or the access to the resources agents have. What is their own time worth to them? How much time will the seller spend researching the market and contracts? Is the seller going to leave work to unlock the house each time there’s a showing and be on call 24/7?
Why wouldn’t you hire a Lakefront Specialist? This is a person who will be representing you in one of the largest purchases you ever make. It is necessary to make sure that you not only choose someone qualified with knowledge about East Tennessee lake areas and communities, but also someone who has your best interests in mind and will help you ever step of the way!
Original article by Inman.com
Reposted by Karen Millikan, Lakefront Living, On The Lake Realty