|June 03, 2004
For Sale By Owner -
You Get What You Pay For
"For Sale By Owner," "Help or Assist the Seller" discount broker programs, "Fee for placement" in Multiple Listing Service (MLS), in my opinion do more harm than good. I'll share my direct experiences with you. Seller's eager to save a buck by cutting out the real estate agent's commission are more often than not hurting themselves. Selling real estate is a function of EXPOSURE and PRICE. If a seller has a great price, but poor exposure, it decreases the likelihood of getting the price. The MLS gives you the majority of market exposure since most qualified buyers are working with professionals (agents), For Sale By Owner (FSBO's) usually are not getting full market value unless they have at least 3 days exposure in the MLS.
Getting top dollar doesn't end with MLS exposure. There are companies that charge a fee for MLS placement, then the Seller is left virtually on their own or with minimal assistance. My experience and observations are as follows:
1. Properties listed this way have longer market times. If you're on a tight time frame and you do not accomplish a successful transaction, you are damaged. Time is money.
2. More of these listings fall out of escrow. For a variety of reasons including unqualified buyers, low appraisals and inadequate contractual protection for the seller, the transaction fails.
3. Poor knowledge of Market trends; Bad advice in handling multiple offer situations. Market value is defined as "A willing buyer and a willing seller." A good agent realizes that agents do not control the market. The market controls the market. The buyer with the highest offer is not always the one capable of performing. An agentís experience in selecting the right offer can be extremely valuable.
Here are some of my most recent experiences:
1. A FSBO failed to price his property to reflect two legal parcels. They sold it as one at about $100,000 less than they could have gotten.
2. A FSBO listed in the MLS was put in the wrong map code showing the property in a less desirable neighborhood than where it actually existed. Sold for less than they could have gotten.
3. The counter offer from an MLS listed FSBO after falling out of escrow once already, failed again to protect themselves from another possible poor performer. They inadvertently reduced the earnest money when in fact they intended to have it released.
The problems go on and on. The solution? Interview three good agents. Go with the one you like and trust.