Purchasing Home from FSBO

[Marcus Bostick]

What should I consider when moving forward with a property being sold without a agent (FSBO) ? Should I still use one ?

Thanks in Advance for any insight!

[Ken M.]

Quote from @Steve K.:

Quote from @Ken M.:

Quote from @Marcus Bostick:

What should I consider when moving forward with a property being sold without a agent (FSBO) ? Should I still use one ?

Thanks in Advance for any insight!

No, not really. Look it up on Redfin, Zillow and Realtor to get a price to negotiate with. I go a bit further and I look on Redfin for "Solds" of the same general type, sq footage, year built and condition within half a mile of the property that has sold in the last 90 days. You can do that, it isn't rocket science. Or, have your lender help you. 

Once you have a "meeting of the minds" ( a contract) you open escrow and let them do the rest.

 
This might work fine for someone with your level of experience Ken, but I’ve also seen multiple people make 6 figure mistakes following this advice. The vast majority of buyers will be better off with a competent buyers agent than going it alone. People often leave the transaction thinking that they did well by not using an agent, but they’ve goofed up majorly and don’t even realize it. For example the doctor I know who overpaid by $500k in order to “save” $30k by not using a buyers agent. He probably still brags about that at parties, he still doesn’t even know he gave up $470k. I see situations like that all the time. Not to mention everything that can go wrong between going under contract and closing, or after closing if things aren’t handled properly. They often call me after closing and ask about suing the other party for something that they themselves goofed up on. It’s too late, you didn’t do your due diligence and made a rookie mistake, now you’re out more than you “saved” not paying commissions.

A high percentage of agent-less deals end up with one party benefitting much more than the other, or falling apart, or in court suing each other over something that could have easily been avoided. Sure it can be done, but if you haven’t done dozens of transactions then you’ll be operating at amateur level and making beginners mistakes that can cost you many thousands more than an agent’s commission.

I almost made this mistake myself before I got my license, when buying a property off of a friend that I thought was a great deal. I had done like 6 transactions in that same area and knew it well. I ran the numbers by my agent just as a gut-check and she said I was overpaying by about $70k. I ended up having her step in to help me show the seller what the real value of the property was, and she saved me a lot more than her commission plus made the transaction go really smoothly and the seller and I stayed friends after.

Almost every FSBO I see is overpriced. People are what we call "house proud" and want their property to be worth more than what the market will likely bear. That's why you see FSBO's listed forever and they end up selling for way less after like a year of the seller trying to sell it. A big part of what listing agents do is convince sellers to list at a reasonable price that will have a chance. Then what a buyers agent does is negotiate more and get the price lower. If you can do both the listing and the buyer's agent's job of convincing the seller to come down to earth, then go for it. Most people can't and end up wasting their time or have to overpay when dealing with a greedy FSBO seller. That's not even getting into the mechanics of the transaction after you are under contract, which is way more than you can learn in this format because every deal is different and only years of experience can prepare you for what might come up.

Your comment: "Most people can't and end up wasting their time or have to overpay when dealing with a greedy FSBO seller"

That's not a true statement of course. Most buyer's require a lender and the lender requires an appraisal. The appraiser requires a license which he can lose if he accepts the seller's asking price as accurate rather than performing an appraisal based on comps.

A house is worth what a willing buyer will pay a willing seller. That's established in law.

Lending is based on the appraisal, something the agent has no control over.

As an agent, your role is to advise, not to be a nanny. The person you represent still has free will, Yes? Or will you take your ball and go home if that person decides to do something other than what you suggest?

If it is a cash transaction, buyer beware. Have an appraisal done, Get title insurance, close through escrow. Those are all things you would do anyway, with or without an agent, right? Nothing changes.

And finally, according to NAR (National Association Realtors) your professional group, they say 71% of agents aren't professional, they sold 1 or fewer houses last year. That is miserable statistics, "hokie pokie hurray, I sold my grandmother's house".

"According to a recent report, 71% of active real estate agents did not close any home sales in 2024 while 52% of buyers found the home they bought online."

I could go on, but thinking an agent is worth what you pay them is a crap shoot. Some are, many are not. Nice people perhaps, but incompetent. By the way, getting a real estate license is not about buying and selling houses, it's about regulations and the law.

It does not teach you marketing and it’s definitely Not Sales.