Also, By Owner Companies are not licensed to trade in Real Estate (they are really advertising companies) and can’t give advice on the value of homes on their system. So some By Owner Companies have suggested customers call a number of Realtors for a Price, (See the (green & red type) right side panel this page) before putting their Private Sign on the lawn. This should tell you something about the integrity of people who would make such a suggestion and those who go would along with it. Most fair-minded folks pass on the idea of Selling Privately if they have to learn to be deceitful to do it. Realtors respond by trying to convert FSBOs by phoning to bother or wear them down. This could be said to be about equal, were it not for the fact that the first transgressor is usually a FSBO misleading Realtors, in hopes of picking free expertise out of their pocket. That’s the not so good part.
But Private Sellers do have a Positive Effect on the Real Estate Market.
For one thing, Professionals do better work than do-it-yourselfers. I recall an upgraded Bungalow we sold on a Large Lot with Double Garage. We looked at 6 (MLS) Offers and the property sold over list price at $460,000. There was a FSBO Half Duplex in an inferior location with no garage down the way, which was offered for $429,900. Clearly far too much for that property at that time. This is why FSBOs are good for Realtors; they make Our Listings and Our Efforts Look Good.
But was that 1/2 Duplex really on the Market? Not really—not if any reasonable (or even great) offer would be rejected. It was on a sort pre-market, market; one that signals a property may be selling in the future, just not yet. In other words the FSBO Market. Sellers who are not quite ready for the realities of the market and would like to try to find one of those folks P.T. Barnum said are born every minute. Some of these houses do sell eventually but many of the ones that do, are sold by Realtors.
The benefit of (FSBOs) to Good Realtors, who actually spend Time, Money and Effort on Listings and don’t want Over Priced Listings, is FSBOs book their own showings, sit at home on evenings and weekends for showings, wait for no-shows and show their home and valuables to a multitude of anonymous inquiries, most of whom are not really buyers. Many of these Sellers give up and become a workable Listing for a Realtor. So it is good that there’s a place folks can go, pay $400.00-$600.00 for a lawn sign and website placement and hope for a windfall. It’s their Time, Money and Effort they waste if they are unreasonable, and the result is a net benefit to the Professionals working the same market. When these Sellers get tired of trying to sell on their own, they call a Real Estate Professional, usually with renewed respect for the job we do. Another Reason Private Sellers are great is the comparative Quality of Experience People have when they buy. Anyone who has dealt with (FSBOs) knows this. We showed a (FSBOs) House and spoke of making an offer Subject To a Home Inspection. The Sellers’ response was, “We don’t want that, what if it doesn’t turn out good for us?” These people blundered along for 5 months and listed with a Realtor and sold. From the Buyers this Seller mishandled, we sold three houses, all to people who had wanted to buy the (FSBOs) house but gave up trying to make them a little bit reasonable. Another situation was when a (FSBO) Sold their house and allowed the buyers to assume the existing mortgage. When the Seller bought a replacement (Listed) house they were denied a new mortgage because the Buyer of their home did not qualify to assume. Since they had allowed the Buyer to assume their Mortgage, they would need to Qualify for 2 Mortgages and they did not. They were now renters. We realize there are stories of incompetence involving Realtors too, but they are not nearly as common. Conversely, we understand there are a handful of very competent FSBO sellers too, but they are also very rare.
To Answer the above question: they have a net positive effect on our business and we (Rob and June that is) like the winnowing effect they have on the marketplace.
(May 24, 2007)