- Guest column by Dan Polimino
- Avoid temptation to sell your home by yourself.
- Failure to disclose could cost you far more than a commission.
By Dan Polimino
Special to InsideRealEstateNews
In a buyer’s market, sellers feel like they will need the help of real estate agents to sell their home.
They’ll need more and better marketing as well as more showings in order to have their home stand out from the crowd.
In a seller’s market, consumers feel like they don’t need a real estate agent.
All they think they need is a sign in the front yard and they can sell it themselves.
As an owner of multiple brokerage firms, let me tell you a few ways I see For Sale By Owners, or FSBOs, get themselves in trouble.
I know this firsthand because I see the legal bills that our firms pay attorneys and most of the legal problems center around one type of transaction: “For Sale By Owner.”
You see, things usually go amiss. Lawyers get involved, and lawsuits are threatened, mostly when one party is not represented in the transaction – the classic For Sale By Owner.
Here are some of the pitfalls of selling a home without a broker:
- The number one way a For Sale By Owners get in trouble is lack of proper disclosure or no disclosure at all. You’ll see a homeowner defend him or herself by saying something like, “I did not know I needed to disclose that since I fixed the problem.” Wrong answer. If you had a leaky roof while you lived in the home, you need to disclose that plus when and how you fixed it. When in doubt disclose, disclose, disclose.
- The number two way a For Sale By Owners get in trouble is when they mishandle the inspection objection. If a deal is going to fall, chances are it will fall on inspection objection. Even seasoned professionals sometimes have a hard time negotiating between the two parties to agree on an inspection objection. We see homeowners killing their own deals all the time because they mishandled the inspection objection for no other reason than not having enough experience on what could be done and should be done.
- The number three way a For Sale By Owners get themselves in trouble is their inability to understand the appraisal process and how to properly deal with the lender’s appraiser. When you are asking for a premium price for your home in today’s market and someone agrees to pay it, you better be sure you will be able to get it to appraise. There are clearly some strategies and nuances to getting a property to appraise. If you don’t know what they are and how the system works, you may be saying goodbye to that deal.
- The fourth way a For Sale By Owners get themselves in trouble is a lack of understanding of the legal documents they are signing. Oh, I hear people say all the time, “I’ll just hire an attorney to review the documents and the contract.” Yes, that’s an option but my experience tells me that while attorneys are good at reviewing legal documents, they don’t handle appraisers, they don’t negotiate inspection objections, they don’t handle HOA problems, they don’t work on survey issues, nor do they deal with lenders who are having problems finalizing the buyer’s loan. There are about 100 to 150 pages of legal documents in a standard transaction all with significant legal ramifications. Saying “I wasn’t sure what I was signing” will not be an adequate defense.
There are many more ways a For Sale By Owners get themselves in trouble from issues of title to marketing problems, but I have highlighted the top four.
If you think you want to save a few thousand dollars by selling your own property, go ahead.
If you get sued or even if it’s settled out of court, chances are you will pay a lot more than the commission you paid a real estate agent to represent you.
FYI – the market is moving away from a seller’s market to a more balanced market. That’s a scenario where a seller will need great marketing to get top dollar for their home.
Could a real estate agent help? You bet.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.