WHY FOR SALE BY OWNER HOME BUYERS NEED REPRESENTATION
Arizona home buyers should be leery of buying a For Sale By Owner (FSBO) home unrepresented by a real estate professional Buyer Representative negotiating on their behalf. An inexperienced seller and a buyer who is unaware of their duties, rights and options within a home purchase escrow is a recipe for disaster for one or both parties to the transaction. Can you afford to make a mistake with the most expensive purchase of your lifetime?
The National Association of REALTORS reports 94% of For Sale By Owners (FSBOs) eventually end up working with a real estate agent. There are many reasons for FSBO frustration and failure:
- They don’t know how to price their home correctly - it is tough being objective.
- They don’t know how to market their home to reach the widest number of buyers
- They don’t know how to determine a buyer is able to buy from those who are not.
- They don’t understand contracts, their legal disclosure requirements for buyer protection, home inspections, repair negotiations, appraisal issues and extent of escrow services.
- They are not experienced contract negotiators and don't know how to react to issues during the escrow. For example the buyer may ask for reasonable repairs and the FSBO overreacts and refuses to make repairs. This can lead to a cancelled escrow or a disgruntled buyer. Or the home may not appraise for the sale price, requiring renegotiating the sale price or cancelling the sale. These are very stressful events that require a professional negotiator to find an equitable solution that both parties can live with.
PURCHASE CONTRACT REQUIREMENTS
A properly written purchase contract spells out the duties of each party to the other with time specific actions to be performed. If a party is not complying, the contract should spell out remedies. None of this is included in a handwritten agreement between parties – even if both parties agree to have escrow draw up terms of the sale. Escrow instructions are related to closing escrow, not define the terms of a purchase contract and duties of each party. Contracts don’t close by themselves. They have to be skillfully managed to have all parties to the contract live up to terms of the bargain and close.
BEWARE OF THE AGREEMENT YOU SIGN
Builder contracts favor the builder. For Sale By Owner may have an agreement that serves the seller and not the buyer - or worse - there are no contract terms you can fall back on when the escrow does go wrong. Our Arizona Association of REALTORS contract is the basis for a strong contractual agreement that can be equitably customized to meet the needs of both parties to the transaction.It defines duties of both parties, timeframe to accomplish those duties, remedy when a party is not living up to the contract and contract cancellation as the last option.
FSBO SELLER REPRESENTATION
It has been my experience that FSBOs think they can represent themselves in the sale of their home, but do not object to paying a real estate professional Buyer Representative a commission to represent the buyer in the transaction and handle the paperwork for both parties, with me representing you, the buyer, exclusively and seller self representation.
When you hire me as your Buyer’s Representative, both MLS listed and FSBO properties in your preferred area are evaluated to find the best value for you. Properties listed in the MLS already have a commission sharing agreement in place. It is an additional step, but I will negotiate my buyer representation commission with the FSBO before I show you the FSBO home. Regardless of how we find the property, you are protected by my market knowledge, contract experience and negotiating skills. And in either case the seller will agree to pay the buyer representation commission directly to my broker or I will negotiate a reduction in the FSBO asking price that will be at least as much as the buyer representation commission due at close of escrow.
WHAT SAM OFFERS YOU
My real estate expertise includes locating your ideal home, negotiating best contract terms for you and managing the escrow to close on time with less stress.
Author: Sam Elam,
Arizona Associate Broker, CRS, GRI, e-PRO, SFR
Berkshire Hathaway HomeServices | Arizona Properties
Contact Sam to discuss your Arizona home purchase plans and schedule an appointment to see how he can help make your plans become reality.