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Yippie Skippy!! A $25,000 gift to the buyer of this house!

FSBO faux pas I recently wrote a post titled "Honey, Let's Not Use a Realtor!" and was inspired by a comment left by Karen Feltman to write one more post about FSBO's. No, I don't want to beat a dead horse but I think this is really an AH HA moment. Thank you Karen, your comment spoke volumes to me about a FSBO giving a gift of $25,000 to a buyer. Now that is generous beyond belief! Karen has a different take on it than I do, but she has a very personal reason to feel so. Her house was instantly devalued by $25,000 while the buyer got a gift of $25,000

This is what Karen said:

"FSBOs do quite well here, but then again, they are not truly FSBO.  There are several brokerages that assist the seller for a fee with marketing including professional photos and staging services, all at an a-la-carte price.  In a seller's market, they are successful, but the cost is the bad taste left in the neighborhood.  Because of "saving the fee", a home just like mine sold for $25,000 less than the market and immediately depreciated my home and all the homes around it for the next 6 months."

As a real estate agent I can't speak to exact commissions, but if you think about it, the dollar amount the seller would have had to pay in commissions for a market value full price offer would not have been the full $25,000. So, in my head, they gave the money away to the buyer. 

What a gift!!!! No so much to the existing home owners who lost property value, but hey, the seller moved away and won't be dealing with an angry neighborhood, toilet papered trees, drive by eggings. 

No sour grapes here, the buyer got the deal of the century, the seller must have been pleased with what they got or they would have listed higher in the first place. Or did they even realize what they had done to themselves? I wonder. Was it a faux pas or a genius marketing tool by a very wealthy seller who wanted to make someones day? 

To FSBO or not to FSBO, that is the question. 

My advice to anyone who wants to sell their own home is simple. Pay the money and have your home appraised by a LOCAL, PROFESSIONAL appraiser. Study your local real estate market so that you don't either over price or under price. Believe me, if I represent a buyer and KNOW the home is underpriced for local market values (and I will know) I will advice my buyers to snatch it up and NOT ever say a word to the seller. 

And why would I do that? Why would I be so cruel and heartless to the FSBO seller? Because I don't work for them, because my responsibility to my buyer is easy, help them to get the home they want at the best price possible. And $25,000 under market value is, in my opinion, doing my job! 

Of course if I represent a seller, it is my job to get them the best price possible for their home, in the shortest amount of time possible. I do have other words of advice such as hiring a professional photographer, making sure your home is available to show at all times, make sure you are using all the forms required to be used in your area.

There are far more things that I do for my listings, if you want to know more just give me a call at 203.460.1775. 

 

 

Andrea Swiedler, Realtor, Southern Litchfield County Real Estate

2017 President, Greater New Milford Board of Realtors

2017 Connecticut Magazine 5 Star Realtor

 

 Search homes for sale in Litchfield County, CT.

 

Coldwell Banker Residential Brokerage

Litchfield County Regional Office,375 Danbury Rd, New Milford, CT 06776

 

© Andrea Swiedler 2009 - 2017

 Always do right. This will gratify some people and astonish the rest. - Mark Twain

Comment balloon 41 commentsAndrea Swiedler • August 16 2016 11:18AM

Comments

And that's what happens.  They save the commission, but lose out on a higher sales price...which is usually a net loss from where they would have been hiring an agent and getting that higher price.

Posted by Chris Ann Cleland, Associate Broker, Northern VA (Long and Foster REALTORS®, Gainesville, VA) over 1 year ago

I am happy to have inspired you!  I will be happy when the most recent sold comparable drops off.  There is a neighbor around the corner that is trying to sell with an agent and they are frustrated beyond belief.  Most sellers don't think about what they are doing to their neighbor's property value, in their mind, they are "saving" money when the reality is, the buyer is!  Thank you!

Posted by Karen Feltman, Relocation Specialist (Cedar Rapids/Iowa City, IA Lepic-Kroeger REALTORS) over 1 year ago

Oh for the days when sellers trusted and respected Realtors - many FS
BO's are successful now, but markets change and we may be valued again.  Enjoyed your post!

Posted by Sharon Kolb, Broker - Atlanta Decatur Homes (Atlanta Decatur Homes) over 1 year ago

Andrea

We hear about scenarios like this about the pricing on FSBOs often, or they don't sell at all. Pricing can be a tough challenge even for those who deal with this stuff daily...FSBOs are not so fortunate. They only have friends, neighbors and Zillow to rely on.

Jeff

Posted by Jeff Dowler, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) over 1 year ago

Andrea "yippie skippy" is that one of those terms up there in New Millford? ...... LOL

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 1 year ago

We don't have many FSBOs in Sacramento.  And, my experience has shown that the buyer tries to save the same commission the seller is hoping to save by not using an agent.  In the end, the seller doesn't save, and they forego proper representation by a real estate professional.

Posted by Myrl Jeffcoat, Greater Sacramento Real Estate Agent (GreatWest Realty) over 1 year ago

You're absolutely right, Andrea!  Neither party benefits in a FSBO scenario - ESPECIALLY the buyer!  So, your home is now worth less AND you're finding all of those 'hidden' issues that the sellers left as a nice gift for you!  I just don't understand that mentality - never will!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) over 1 year ago

That price is amazing and I love that it even exists! This is so wonderful for someone.

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 1 year ago

This is quite the party, Debe! Love and light and all the best to whoever is the luckiest person and probably the world

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 1 year ago

I meant to put an exclamation in there but somehow didn't because of the way my phone is typing

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 1 year ago

We are from the..."if it requires a license..don't do it yourself" school !

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce - Short Sale (Keller Williams 414-525-0563) over 1 year ago

This is why sellers are unqualified to sell their own homes - they just don't understand the consequences!

Posted by Jessie Cochran, Panama City Realty Group (Keller Williams Success Realty) over 1 year ago

Good morning Andrea Swiedler ,

You are not beating a dead horse you are highlighting why hiring a professional to market and sell your home is so important! Congrats on a well deserved featured post!

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) over 1 year ago

Makes all the sense!!!

If you think about it, the dollar amount the seller would have had to pay in commissions for a market value full price offer would not have been the full $25,000. So, in my head, they gave the money away to the buyer. 

Posted by Sham Reddy, CRS (H E R Realty, Dayton, OH) over 1 year ago

Good morning Andrea, trying to save money by not using a real estate professional is never a good idea, unfortunately, it happens too often. These sellers don't even look out for their own benefit, I doubt they're much concerned with their neighbor's. 

Posted by Beth Atalay, Cam Realty of Clermont FL (Cam Realty and Property Management) over 1 year ago

In our area a dicounted broker has no choice by letting go and that 25 grand or whatever is part of the negotiation package.

Posted by Sam Shueh, mba, cdpe, reopro, pe ( (408) 425-1601) over 1 year ago

Spending dollars to save dimes.

Posted by Jeanne Gregory, The most important home I sell is YOURS! (RE/MAX Southwest) over 1 year ago

You would think they would learn their lessons from all these horror stories - chances are FSBO sellers don't do any research :( Thanks for sharing Andrea Swiedler 

Posted by Jennifer Mackay, Your Bay County Florida Realtor 850.774.6582 (Keller Williams Success Realty) over 1 year ago

Great post thank you for sharing spot on with your thoughts. Have a blessed day. 

Posted by Laura Filip RE/MAX UTOPIA | 903-271-4978, Your locally owned RE/MAX OFFICE (RE/MAX UTOPIA , Serving all of Texoma ) over 1 year ago

Wow, $25,000 is a heck of a gift. I have trouble understanding why someone would gift that much, especially to someone, I am guessing they don't know. My guess is they have no idea they gifted them so much. Yikes! I am with the Sally K. & David L. Hanson: "if it requires a license..don't do it yourself" 

Posted by Marney Kirk, Towson, Maryland Real Estate (Cummings & Co. Realtors) over 1 year ago

Great  posts, thank you for sharing.  I did not realize the affects of a FSBO.  

Posted by Lisa Perry, Northern VA-80/15/5 100% Loans - Grant Money (FHA, VA, Jumbo, Downpayment Assistance, Conv.) over 1 year ago

Andrea:

you argument that the buyer was given a $25,000 gift is right on.  But I had not considered the effect on the neighborhood.  

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) over 1 year ago

After I've been at my clients' Closings, I often come away shaking my head, Andrea Swiedler .  I see clients on both sides of the table having taken what they deem "cost saving measures".  Sometimes it's a FSBO sale.  Other times it an inspection wasn't done.  Or they've bypassed the advice of an Attorney, etc.etc. etc.   I have to bite my tongue.  Because their "cost saving measures" came back and bit them in the tush and actually ended-up costing them money or have ramifications felt by others.   Yippie Skippy ... it really is heartbreaking to see sometimes ... and frustrating at others ...

Gene

   

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) over 1 year ago

I don't come across much FSBOs in my Marketplace often.  Before the Credit Crash, I'd see a lot more FSBOs or those whom used the FSBO Service (I forget their names, but don't see them around any more).  I think a lot of consumers have realized the various aspects, from legal to Market fluctuations, to understanding neighborhoods and Marketing the propery, etc... is much more work and cost than they realize, so it's better to enlist the Real Estate Agents' services.  Those whom do the FSBO path seem to be Real Estate Investors whom have some experience the field, but even many Real Estate Investors will work with Agents, as they don't want tie up their time, when they can be looking out for the next deal.

Posted by Mike Bjork (American Pacific Mortgage) over 1 year ago

I am a firm believer in Agents, no bias right?  But articles such as yours really do fuel the reasons why NOT to go it FSBO.  Unless you really know what your doing, and can get full value, and not increase your liability.

 

Posted by David Alan Baker Laveen Realtor & South Phoenix Realtor, Your local Expert (HomeSmart) over 1 year ago

Very rarely are they ever under priced. I see over priced in the FSBO areana...they trust what the "internet" says its worth...

Posted by Kathy Dowd, Consider it SOLD (RE/MAX Realty Team, 239 220 4133) over 1 year ago

I recall when a local business person started a new subdivision and priced the first house to move quickly. An appraiser friend commented to me about how stupid that was, because he "set the price" for his whole subdivision. 

Posted by Marte Cliff, your real estate writer (Marte Cliff Copywriting) over 1 year ago

Why do FSBO's think it's a good idea to "market themselves" on the MLS and Zillow for a discounted price (thinking they are saving commission fees), but then they end up hiring a Realtor to actually get their home sold, and then wonder why Zillow and MLS show the big arrow pointing up and increased Days on Market (DOM) and the words "Price Increase", and then realize they have shot themselves in the foot/feet!  The history follows them like a shadow on a hot sunny day! 

Posted by Shanna Day Team Leader AZ & UT - Call 480-415-7616, Top 1.09% Of 147,000 KW Agents Worldwide! (Keller Williams Realty EV (AZ) & Keller Williams SLC (UT)) over 1 year ago

"Why would I be so cruel and heartless to the FSBO seller? Because I don't work for them." I assume you didn't work for free. The FSBO seller probably offered a commission to the buyer's agent (aka you). Ergo, you do legally work for the seller. Just one more example of the conflicts of interest in an industry in desperate need of an overhaul...which is coming.

Posted by Carl Weisman over 1 year ago

Andrea,

I have not found a "FSBO" that wanted $25K less than market value yet. All the ones I see want at least market value or higher. In Texas I doubt it would have an impact on the neighborhood even if it sold for less than AVM since we are a non dislosure state.

All the best!

Morris "Bill" Austin ~ REALTOR® ~ Austin Board of REALTORS®                   Team Price Real Estate ~ Austin Texas Metro

Serving Sellers and Buyers in the Austin Texas Metro since 2007

Direct ~ 512-709-6343 ~ Email ~ bill@teamprice.com

 

Website ~ bill.buyinginaustin.com ~ @AustinTxHome ~ LinkedIn

Posted by Morris "Bill" Austin, Exceptional service is my standard expectation. (Team Price Real Estate) over 1 year ago

To paraphrase: "A FSBO representing himself has a fool for a client".

Posted by Michael O'Donnell, GRI, ePRO, Accessible Homes (Berkshire Hathaway Home Services Arizona Properties) over 1 year ago

Dear Andrea,

The sellers had a choice to make & did so. Possibly not with all the intelligence more savvy sellers would like, but if they are fine with it: happy trails ....

Posted by Dörte Engel, ABC - Annapolis, Bowie, Crofton & rest of Maryland (RE/MAX Leading Edge) over 1 year ago

Just let the FSBO's get sued a few times for non-disclosure, material fraud, intentional fraud . . . etc. 

Posted by Carla Muss-Jacobs, Principal Broker (503) 810-7192, Buyer Focused ~ Buyer Results (BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time) over 1 year ago

I agree with you in that the $25,000 went to the buyer who got the home for $25,000 less than what the market was doing with homes listed by full service brokerages ... and paying commission. 

Posted by Kathleen Daniels, San Jose Homes for Sale - Probate Broker (KD Realty - 408.972.1822) over 1 year ago

Andrea Swiedler - exactly. It is not our duty - or diligence to the seller. When we see a bargain for our buyer, why not jump at it?

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (eXp Realty) over 1 year ago

I love selling FSBOs due to the prices, but I hate having to do the work of both agents.......At least I know what is being done daily!

Posted by Woody Edwards, A Realtor® Who Answers His Phone! (First Choice Realty, Inc) over 1 year ago

In my experience, most buyers think of a gift or rebate as a price reduction in disguise, and act accordingly. They often just offer, in your case, $25,000 less and forgo the rebate or gift.

In any case the appraiser will see the purchase contract and take the gift into consideration when doing the appraisal, and will know about it when using that deal as a comp for other area deals. 

Posted by Thomas McCombs (Century 21 HomeStar) over 1 year ago

Good advice about having the FSBO seller get an appraisal. However, sometimes even that amount can be 'off' somewhat--the home is usually worth what the buyer is willing to pay!

Posted by Mary Hutchison, SRES, ABR, Specializing in Brookside, Waldo, Prairie Village (Better Homes and Gardens Real Estate-Kansas City Homes) over 1 year ago

Super catchy title, worthy read, and great comments ensued - thanks Andrea Swiedler for a great start to my morning!    

One of my buyers recently decided to FSBO...after I'd worked so hard to get them in to rent the house (a short sale) prior to closing - due to her becoming pregnant right after making the offer.   She wouldn't have been able to move during her last trimester.   I left no stone unturned for them!   It was dissapointing, to say the least.    They lived in a homogenous neighborhood, so not very hard to price or sell.  

However, as we all know, the devil is in the details of those disclosures...

Honestly I wish them the best because they are good people, but why they chose to take on that liability without professional advice is beyond me.

Posted by M.C. Dwyer, Santa Cruz Mountains Property Specialist (Century 21 Showcase REALTORs) over 1 year ago

This is yet another example of trying to skirt paying a fee and earning less in the process.  Great post and example of how Agency works as well!

Posted by Jan Green, HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN (Value Added Service, 602-620-2699) over 1 year ago

Great post. I love the idea of the FSBO seller providing a "gift" to the buyer. Look how much the seller saved..but at what expense?

Not many FSBO in our area, but many MLS entry only flat fee type listings. I love those, just like Andrea Swiedler said, I work for the buyer. If the seller opts to represent himself, so be it. 

 

Posted by Liane Thomas - Corona & Riverside Real Estate, Bringing you Home! (BROKER Allison James Estates & Homes BRE 01885684) over 1 year ago

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