When it comes to selling property, regardless of whether it is a hot market; regular market; slow market; or crashing market; Sellers are advised to always research and contact the best available full-service REALTOR® who will provide a detailed property evaluation (usually complimentary) followed by the listing agreement, quality professional advertising, and eventually the sale result for the highest possible amount the market will generate. Below are Kelly Grant's top ten reasons why no one should ever attempt to sell a property without professional full-service REALTOR® representation every step of the way:
(1). HIGH UP-FRONT ADVERTISING COSTS PLUS PERSONAL TIME AND EFFORT EXPENDED: For-Sale-By-Owners (FSBO) incur up front advertising costs (money out of pocket regardless if a sale occurs or not) plus they spend a considerable amount of their personal time and effort along with inadequate photos; advertising; exposure; plus having to arrange and conduct showings for nosy, unqualified, or unsafe buyers. Conversely, when Sellers list with a full service REALTOR®, they avoid spending much of their personal time and effort, as it is their REALTOR®'s job to deal with all aspects of the listing; deal with Buyers; and often (depending on the listing agreement) no financial expenses will be incurred up front until the home is actually sold and the sale price money is received.
(2). MUCH HIGHER LEGAL COSTS AND LEGAL RISK: FSBOs will often incur significantly higher legal costs (with or without legal issues developing on a transaction) plus will incur very high risk exposure of making avoidable mistakes and subsequently later being sued by a buyer for innocent, negligent, and / or fraudulent misrepresentation, or else may be forced to launch a lawsuit against a private Buyer who refuses to close the transaction after removing conditions. This includes risks associated with the Real Property Report and Compliance; legal disclosures required; total area measurements; and other important matters.
(3). LACKING IMMEDIATE ACCESS TO THE ENTIRE MARKET FOR EASY BUYER REALTOR® SHOWINGS: While FSBO companies may or may 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 only one minor piece of the puzzle but by itself is not sufficient - Buyers activate Buyer service agreements with Buyer REALTORS® and most Buyers will require (up front) 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 (wasting time, effort, and expense). 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) deters Buyers from viewing 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 (of which these risks are extensive), 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 rule FSBOs out and move on to other properties they can view immediately with much less effort. This is a key advantage for Sellers who hire a full-service REALTOR® vs. 'trying to sell as a FSBO.'
(4). REMOVAL OF BUYER PRIVACY DURING SHOWINGS: full-service REALTOR® MLS® showings are always conducted with a REALTOR® and are arranged in advance with the Seller(s) whereas on FSBO offerings, the 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' (a misnomer) are usually anything but private as Buyer(s) are forced to meet the Sellers(s) and thus do not have privacy when viewing a FSBO home as compared with MLS® REALTOR® showings were entry is accessed via electronic keybox.
(5). MUCH HIGHER SAFETY RISK OF PERSONAL AND PROPERTY DAMAGE: FSBO incur a high risk of personal and property damage from allowing entry to unsafe buyers they have not met; do not know their background or intentions; and for which these people are not easily traceable by the police (e.g. people with criminal intentions can make a quick phone call; ring the door bell; and within minutes gain immediate access to a FSBO Seller's home without REALTOR® scrutiny and background checks. FSBO 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 from unlawful visitors. In contrast, properties listed with a full-service REALTOR® obtain the advantage of strong Buyer scrutinization (i.e. with FINTRAC ID, the identity and contact information by Buyers becomes known and recorded by the Buyer REALTOR®) along with escort, and representation, this discourages criminal activity since Buyers would be quickly traced by the police).
(6). REMOVAL OF TRUST FROM BUYERS: On the issue of trust, Buyers will trust their Buyer REALTOR® who works with professionalism to find and sell the home that is right for them; by enlarge Buyers do not trust Sellers they have never met before and tend to be suspicious that something may be 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 vs. the results of hiring a full-service REALTOR®, the FSBO Seller can expect to field much fewer showings; fewer offers; oftentimes no offers; and / or much lower offers (i.e. the Buyer(s)' financial allowance being made for the extra Buyer risks incurred).
(7). MUCH HIGHER RISK OF ENCOUNTERING ROUTINE AND SOLVABLE PROBLEMS: FSBO are much more likely to encounter routine problems on their property sale (for example such as bouncing deposit cheques from buyers and non-serious buyers walking away from deals) that are are commonly avoided for clients and customers by experienced full-service REALTORS® who have a program and routine in place to ensure all of the sale details are handled correctly.
(8). MUCH HIGHER RISK OF MAKING BAD DEALS THAT SHOULD HAVE BEEN NEGOTIATED MUCH BETTER: 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 and with few exceptions should always be rejected) are attracted to FSBO wanting to take advantage since the FSBO will often lack the experience of a qualified REALTOR® who has sold 100s of properties; the FSBO does not have the immediate professional advice of a full-service REALTOR®; and conversely, most high-end and first-time buyers will only use a full-service REALTOR® due to the professional standards set with MLS® REALTOR® listings.
(9). REDUCTION OF MULTIPLE OFFER POSSIBILITY: In hot markets, normal markets, and even occasionally in slow markets, many MLS® listings with full-service REALTORS® experience multiple offer situations and are sold close to list price or 1000s of dollars above list price. In contrast, FSBO Sellers often do not have the same level of initial buyer viewings and success rate in generating offers, meaning the 'possibility of a quick sale above list price' is significantly reduced.
(10). MUCH HIGHER RISK OF CAVING AND GIVING PROPERTY AWAY AT A BARGAIN-BASEMENT PRICE: With a full-service REALTOR®, Sellers maintain access to the entire buying market and this means dropping the price in stages until it sells vs. cutting the price $50K and $100K at once. In contrast, In contrast, with FSBOs, after months of dead-end showings, exhaustion, personal embarrassment, and signficant personal expense, many will end up giving away property at tens of thousands of dollars below the likely sale price that the same home would have generated with full-service representation (often to a shrewd investment Buyer that has worn out the FSBO Seller after multiple visits) or else finally end up listing with a full-service REALTOR® to get it SOLD properly.
In summary, selling 'For Sale By Owner', is anything but private, and is frought with risk, peril, and legal pitfalls. When everything is factored including: a lower sale price due to reduced market exposure and increased Buyer risk; amount of Seller work and anxiety expended; up front costs; extra legal risks; and unknown safety risks to family and property; Sellers are strongly advised to do their research: find the best qualified full-service REALTOR® to list and sell with confidence!
[Article written and ©2009, ©2020 by Kelly Grant, M.Eng., ABR, NCSO, P.Eng. - REALTOR® at MaxWell POLARIS 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 will be 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.