When it comes to selling property, Sellers should research and contact a quality full-service REALTOR® who will provide a detailed home evaluation followed by the listing, quality professional advertising, and eventually the sale for the highest amount the market will generate. As an experienced REALTOR® knowing the value of REALTORS® and MLS® I would not sell any property I own without MLS® exposure using a quality full service REALTOR® and neither should you. Below are my top ten reasons why no one should attempt to sell a property without professional representation:
(1). For-Sale-By-Owners (FSBO) usually incur expensive up front advertising costs plus a considerable amount of time and effort wasted with nosy or unqualified buyers whereas when Sellers list with a REALTOR® they do not spend any personal time and effort dealing with the listing or with Buyers (that is the REALTOR'S® job) and will quite often not pay any expenses up front until the home is actually sold and the sale price money received.
(2). FSBOs incur higher legal costs and high exposure to risk of making avoidable mistakes and subsequently being sued by a buyer for innocent, negligent, and / or fraudulent misrepresentation (note: companies offering FSBO services often do not provide full-service representation and in many cases are not licensed with the Real Estate Council of Alberta (RECA) - this along with many other reasons generates a wide range of legal risks for FSBOs who hire these companies. To ensure the company or individual you hire for real estate is properly licensed in Alberta, check www.reca.ca or call RECA for details).
(3). Many FSBO companies do not have instant access to the Multiple Listing System (MLS®) or immediate access to the 1000s of buyers working with REALTORS® - as property exposure and demand increases, the sale price increases. Note that access to the MLS® alone is not sufficient - Buyers activate Buyer service agreements with Buyer REALTORS® and most Buyers will require that the Sellers pay a Buyer Agency Commission to their Buyer REALTOR® as a non-negotiable term of sale (Buyer Agency commission varies and may be negotiable in both directions - usually averaging about 3.5% on the first $100,000 and 1.5% on the balance of sale price, + or -, plus GST). Sellers who choose to hire FSBO companies that do not provide full service representation means that commission agreements with Buyer REALTORS® are usually ommitted and must be activated separately with each REALTOR® and brokerage in advance of each showing. Other documentation includes the Agency Guide; FINTRAC ID (i.e. to verify that the person allowing access or dealing with the offer is actually the owner); and Customer Status Acknowledgement, etc. All of this extra documentation (and time spent activating and registering) adds considerable extra time and effort for Buyers and Buyer REALTORS® just to show and as a result, in addition to the considerable Buyer risk being accepted by Buyers to buy a FSBO property vs. a full-service REALTOR®-listed property, many Buyers will not wait around for each FSBO Seller to activate paperwork with their REALTOR® in advance for the showing. There are so many options on the market that Buyers will often quickly move on to other properties they can view immediately. This is a key advantage for Sellers who hire a full service REALTOR® vs. selling without representation.
(4). MLS® showings are with a REALTOR® and arranged in advance whereas FSBO must always be present with buyers ringing their doorbell or calling (at all hours day or night) with no notice at often very inconvenient times. This means that 'private sales' are usually anything but private as Buyers are forced to meet the Seller and thus do not have privacy when viewing a FSBO home as compared with MLS® REALTOR® showings were entry is accessed via an electronic keybox.
(5). FSBO incur a high risk of personal and property damage from allowing entry to buyers they have not met; do not know their background or intentions; and for which these people are not easily traceable (e.g. people with criminal intentions can more easily gain access to a FSBO home without REALTOR® scrutiny and background checks as opposed to homes listed on MLS® where Buyer scrutinization, escort, and representation by a licensed REALTOR® is required thus discouraging criminal activity). The risk is compounded for condo owners who may be violating their condo bylaws by allowing entry into the condo complex to just anyone off the street, thereby placing themselves and their fellow condo neighbors at risk.
(6). Buyers trust REALTORS® who work with professionalism to find and sell the home that is right for them; by enlarge Buyers do not trust Sellers nearly to nearly the same degree and tend to be suspicious that something is wrong with the home that the FSBO is trying to cover up by not hiring a REALTOR® to professionally advertise and disclose defects (e.g. structural, hazardous, criminal history, etc.) and this unknown risk usually means the FSBO Seller fields fewer offers; no offers; or else much lower offers (i.e. to allow for the unknown risk) than would be obtained hiring a full-service REALTOR®.
(7). FSBO frequently encounter problems such as bouncing cheques and non-serious buyers walking away from deals.
(8). FSBO incur a high risk of making a bad deal - experienced investors, deal seekers, and people who offer subject-to-sale of home (a very weak offer that ties up a listing indefinitely for months or years while the market keeps changing) are attracted to FSBO wanting to take advantage of them since the FSBO may lack experience selling a home; they do not have the good advice of a full service REALTOR®; and conversely, virtually all high-end buyers will only use a full service REALTOR® due to the professional standard set with MLS® REALTOR® listings.
(9). In hot markets, many MLS® listings have multiple offers and are sold close to list price or 1000s of dollars above list price whereas after months of dead-end showings, exhaustion, and expense many FSBO end up giving away their property tens of thousands of dollars below the likely sale price on the current MLS® market (often to a shrewd Buyer that has viewed the home multiple times and has worn out the Seller).
(10). Many FSBO fail to sell at a decent price and after exhaustion and personal embarrassment end up giving their home away at a cheap price or, once the property is already 'shop worn', finally end up listing with a full service REALTOR® to get it SOLD properly.
In summary, selling 'For Sale By Owner', while sounding attractive, is frought with risk and pitfalls. When everything is factored including: the lower sale price due to reduced market exposure and increased Buyer risk; amount of Seller work and anxiety expended; direct up front costs; extra legal risks; and unknown safety risks to family and property; my best advice is for Sellers to do their research: find the best qualified full service REALTOR® to list and sell with confidence!
[Article written and ©2009 by Kelly Grant, M.Eng., ABR, NCSO, P.Eng. - REALTOR® at MaxWell Realty in Edmonton, AB]
Disclaimer: for those readers not currently represented by another licensed REALTOR®, to obtain more information on this topic and / or if you are serious about selling or buying in the Greater Edmonton Area, call Kelly at 780-414-6100 (pager) or send Kelly an email to SOLD@KellyGrant.ca to schedule a confidential appointment.