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Francesca Patrizio's Blog

By Francesca Patrizio | Agent in Monmouth County, NJ

BUYING A FSBO without a Real Estate Agent

When I first started in this business, I thought “hey, if they go FSBO, it’s a buyer’s prerogative and it’s all a part of this business.” However, my perspective has changed over the years due to many negative experiences from buyers.

 

95% of those I’ve encountered who went FSBO now regret their decision. They proceeded without Realtor representation and found themselves either inheriting a sellers’ problems (that seller failed to disclose) or backed out of the deal after expending their own cash for items such as home inspections and appraisals.

 

Here are some examples.

 

(1) Found FSBO in my “price range.”

    RESULT:   Priced higher than market value. A property might be in your 
“price 
range”, but that doesn’t guarantee that its market value. 
 A Realtor will 
ensure that you are not paying more than you 
   should.

 

    Ordered home inspection ($400) and appraisal $400) at the same
 time 
(never advisable).  Home inspection netted so many issues 
with the property that the seller was unwilling to pay or 
Negotiate. Deal died.

 

    $800 later and after much disappointment and heartache, It was back to using a Real Estate agent for this buyer!

 

(2)  Found FSBO on Realtor.com through a FSBO listing company.

    RESULT:    Turns out the seller was dangerously close to a short sale, but was uncomfortable coming forward with that information. When asked “came you come to the closing table with the cash difference” the answer was hummina, hummina, hummina – who r u to ask? RED FLAG.

    Imagine signing a contract, then waiting months for this seller to fill out the initial short sale paperwork, then the bank process which could take anywhere from 1 to 6 months more to complete . . . you could be homeless during that time (additional unforeseen expense)

 

    When asked for a seller’s disclosure on the property, the seller didn’t even know about that document. While in NJ owners are not required to fill out a seller’s disclosure (information about the history of the property), Realtors encourage sellers to fill it out for liability reasons. No seller’s disclosure is suspect in my view.

 

    FSBO listing companies are what is known as “Transaction Brokers”  providing limited services as follows: Per the Real Estate Commission, a TB primarily serves acts as manager of the transaction, communicating information b/t the parties to assist them in arriving at a mutually acceptable agreement and in closing the transaction, but cannot advise or counsel either part to how to gain advantage at the expense of the other party.

 

    -They don’t represent either buyer or seller

    -They are not required to keep any 
information confidential

    -Are not required to provide a CMA to ensure market 
value

 

(3)     Found a FSBO I’m in luv with!

    RESULT:   No issues, deal went smoothly

 

    Later, learned of high dollar assessments to the condo owners not shared by seller.

 

    Realized they paid above market value in this declining market.

 

    No recourse for the shortcomings.

 

There are more stories, I can share, but I’ll stop here. The key here is for a couple of thousand dollars, you can potentially save yourself from tens of thousands of dollars of shortcomings. Would you go to a surgeon who doesn't have his degree displayed on the wall and say OK, cut me open, I trust you?

 

If you are working with an agent, find a FSBO, keep the Real Estate agent working for
you . . will
be in your best interests .  Some FSBO’s are on the up and up.

 

In my view, many of these FSBO’s have consulted with Real Estate agents, refuse to accept the reality of their situation and figure the best way around it is to go FSBO to avoid legal liability. Realtors due diligence protects both the buyer and seller.

 

If you have your own FSBO nightmare story, please feel free to add a “comment” to this blog whether you are an agent, buyer or seller who was burned by a buyer.

 

Sincerely,

Francesca Patrizio, Broker Sales Associate, ePro, SRES

Francesca@PatrizioRE.com

732.606.2931 (DIRECT/24-7)

 

Comments

By Allan Erps,  Sun May 15 2011, 05:02
Lot of pitfalls for FSBO sellers. Great information here and thanks for the post!
By Melinda,  Tue Apr 10 2012, 15:02
Are there no positive stories about buying an FSBO without an agent???
By Irina Karan,  Tue Apr 10 2012, 15:44
I have seen FSBO homes sitting on the market for over a year...as other houses sell within just a few months (signs changing from For Sale to Sold) all around FSBO houses. It's not easy for FSBO to compete against other properties on the market - too expensive to advertise for a significant amount of time...not knowing how to showcase the house, not knowing how to see if the buyer is pre-approved, showing to strangers (dangerous in some areas)...Hard to understand, being in business, why some homeowners want to go this hard way...knowing that the odds are against them.

Irina Karan
CDPE
IrinaKaran@gmail.com
Beachfront Realty, Inc.
By Irina Karan,  Tue Apr 10 2012, 15:46
In theory, maybe there were some successes for FSBO owners, but maybe they would have been still better off financially if they have done it with more exposure...

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