FSBO potential problems -many people still regard all FSBO listings as scams.
Member since 2021 · 35 posts · 3 votes
FSBO potential problems -many people still regard all FSBO listings as scams.
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Put this under the same category at the similar post about the seller being liable for everything. Either scare click bait or a scummy way to promote the use of realtors.
8 Replies
- Realtor · Philadelphia · Member since 2018 · 23 posts · 11 votes3y
Alex, your quote is a very real concern in some markets. Philly City Hall for example has created a department to combat 'property theft' and similar scams which were rampant and unchecked at one point in our city.
Going FSBO has many pros and cons and many individuals can argue the point either way. However, I liken a FSBO selling their property on their own to a legal client stepping into a court room acting as their own counsel without proper representation. What are the chances of your rights and entitlements outlined in an agreement of sale being fully exercised by you compared to someone representing you that's seasoned, especially when the potential buyer fails to uphold their end of the transaction?
More importantly, agents are protected by E&O insurance in case of a law suit, what do FSBOs have in such cases? An expensive attorney and whopping legal fees when everything is said and done.
- 3yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Quote from @Alex Goncharov:
Hey everyone
I am thinking about selling without an agent approach. What do you think, is it a real problem for FSBO?
From the article (CA Realty Training, Aug. 22, 2022)
"Although there are quite a number of legitimate sellers out there, many people still regard all FSBO listings as scams. This is a problem that hinders the success of most FSBO sales. Without an agent, there are huge chances that someone may try to sell a property they don't own. Buyers don't want to go through the stress of having to fix issues like this, so they'd rather just avoid them."
Please, share your experience on such cases. I would be interested to talk about it.
Thanks in advance for sharing. It will help us understand how to improve the FSBO experience.
If you're inexperienced in real estate transactions and wish to sell, or purchase a home without utilizing the services of a real estate broker as to MLS you have a few choices
1 - Go it alone finding needed information on line
2 - Hire a real estate attorney paid by the hour
3- Hire a real estate broker for a la carte services or compensated by the hour
From a sellers prospective there is the very real issue of extremely reduced buyer universe when going FSBO because most buyers won't consider FSBO houses
In sellers markets with more demand than available properties this might not be much of a problem. In stabilized or buyers markets it will (can) be.
There is a middle ground. Instead of listing with a typical Realtor who charges 5-6% and splits with buyer broker list it on MLS with flat fee no service brokerage. In most major metro areas you can get the property on MLS for under $750. Another $250 or so will get you a lockbox use. If you end up selling the property to a buyer who called you direct and is not represented by areal estate broker it cost you nothing additional. If a broker brings the buyer you pay 2-3%.The buyer of a FSBO won't be scammed if he puts any earnest money only with a major title company and only closes with title insurance. The FSBO seller on the other hand will find his FSBO a magnet for every wholesaler, investor, and flipper some of who will be honest and upfront and some of who will try to disguise themselves as end buyers and not financial intermediaries looking to tie up the property for little or no option money and sell for a higher price.
Good luck - Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Alex Goncharov:
Hey everyone
I am thinking about selling without an agent approach. What do you think, is it a real problem for FSBO?
From the article (CA Realty Training, Aug. 22, 2022)
"Although there are quite a number of legitimate sellers out there, many people still regard all FSBO listings as scams. This is a problem that hinders the success of most FSBO sales. Without an agent, there are huge chances that someone may try to sell a property they don't own. Buyers don't want to go through the stress of having to fix issues like this, so they'd rather just avoid them."
Please, share your experience on such cases. I would be interested to talk about it.
Thanks in advance for sharing. It will help us understand how to improve the FSBO experience.
An example, I talked to an agent about a property I wanted to sell in Phoenix AZ. He said he would list the property for $350,000 and 5% commission fee of $17,500. I said I'd call him if I couldn't get it sold FSBO. Within 2 months, I sold the property for $395,000 with no agent going FSBO and I didn't have to do the "improvements" he insisted I needed. So, I sold for $45,000 more and I saved about $17,500 in commissions for a total difference of $62,500. Did I have to do a few "opens"? Yes, and I picked up some names of people who ended up buying the next house I had for sale. (I flip houses) and of course, I'm experienced.
Would I suggest that is right for everybody? Not at all. Most people need an agent to sell, it's just that not everybody needs an agent and FSBO works for them.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
I've never sold property through a real estate agent. I do however pay 1/2 the normal commission for the area, to an agent's broker who brings me a buyer who closes on the purchase.
- Real Estate Broker · San Diego, CA · Member since 2015 · 725 posts · 129 votes3y
Also note that the cost to list on the MLS through a flat fee broker has become trivial (e.g. $150 or less).
- Realtor · Lubbock, TX · Member since 2016 · 165 posts · 155 votes3y
Quote from @Alex Goncharov:
Hey everyone
I am thinking about selling without an agent approach. What do you think, is it a real problem for FSBO?
From the article (CA Realty Training, Aug. 22, 2022)
"Although there are quite a number of legitimate sellers out there, many people still regard all FSBO listings as scams. This is a problem that hinders the success of most FSBO sales. Without an agent, there are huge chances that someone may try to sell a property they don't own. Buyers don't want to go through the stress of having to fix issues like this, so they'd rather just avoid them."
Please, share your experience on such cases. I would be interested to talk about it.
Thanks in advance for sharing. It will help us understand how to improve the FSBO experience.
Alex, I think it really depends on the market. In our specific market we see a lot of FSBOs that we'll try and tour with our clients only to find out you have to send a refundable deposit to a Paypal account before they'll give you the keys and other silly nonsense like that. Pretty obviously scams.
I have had several of my listings' media harvested for use by scammers and it is unfortunate. They almost always pop up as FSBOs or FRBOs listed far below actual market value, and they simply seek to get whatever money they can out of consumers before the listing gets taken down. Most FSBO/FRBO listings that have been up for a long time are real (which is a whole other discussion: many don't remove the listing when it's no longer available, and many overprice to the point that it will not move bc they are not objective about their property's value).
That being said, there are plenty of legitimate FSBO sellers who are successful in their pursuits of selling their homes. There's nothing wrong with selling a property yourself, it ultimately comes down to what level of risk is acceptable to you and what the value of that risk is. As has been mentioned above, Realtors have E&O insurance and also take on some liability when they handle the transaction for you -- that, and they are (or, should be) trained professionals who do this so frequently that they don't overlook the small items that many FSBO sellers do.
Again, if you decide to go the FSBO route I would simply suggest finding ways to differentiate yourself from the other FSBO listings. Offer commission to buyer's agents in the listing description -- being willing to work with a buyer's agent will make your FSBO experience night and day compared to the many hostile sellers out there. More often than not, a conversation over phone to try and schedule a showing for my buyers on a FSBO is ended with profanity when they hear "for my client", or simply unanswered over text. This of course is reversed 6 months later when the property hasn't sold, but by that point the interested buyers have been living in another home they bought for 5 months.
Be open and agreeable to work well with others -- cover your bases and use an attorney to review docs -- there are countless resources online and if you have the time, energy, and capacity to sell your own property then you can absolutely do it.
Best of luck,
Matt - Investor · Charleston, SC · Member since 2011 · 606 posts · 413 votes3y
I think selling a house fsbo only without listing the house even with a flat fee agent is a mistake since 90%+ homes sell using agent. So you can get it sold it just takes alot longer.
Best combination I found is to list property with flat fee agent (make sure the agent is local to market or at least resides in that state...I stay away from the nationwide flat fee companies) and offer 3% to buyers agent. This will get you on Realtor and Zillow etc. Then you can also list on Craigslist since if you find the buyer then you don't have to pay the 3%. Now Craigslist is not the best anymore but I still end up selling some of my properties using it especially the ones I sell with owner financing.
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