They’re usually white. Sometimes red. Most often plastic, but for the old school crowd, metal. At present, they dot the yards of tens of thousands of Americans, just as they presumably have for hundreds of years. They’re For Sale By Owner signs, and they have a new significance in this new real estate market. A significance that I’m going to let you in on to save you from the trauma of the FSBO.
Just a few short years ago, just about anyone felt that they could buy a $9 sign from Home Depot, scratch a price and a phone number on it, and sell their home to the first sucker who drove by. Not only did FSBO work fairly successfully, it gave consumers who pulled off the solo sale a tremendous dose of pride. Their pride sometimes turned into Realtor Hate, as, in their own minds, they proved that Realtors weren’t necessary. They also inspired the “thanks Buy Owner!” commercials, that still haunt me on what feels like a daily basis.
Over the weekend, I saw an FSBO sign pop up in a lake access association. It was white I think. While the phone was ringing, I contemplated what the asking price might be. I knew what they had paid for the home just a few years ago, knew they had done some work to it, kn ew what I had sold in the association just this year, and knew the homes that weren’t selling in the neighborhood. I guessed the price should be around $389k. At the high end. I braced myself for him to tell me $459k, thinking he’s probably wanting to be rewarded handsomely for his paint job. When a woman answered, I simply asked for the price. She calmly said $550k- “without a Realtor”.
The little FSBO story above demonstrates a new, but increasingly common theme in the FSBO world. Times were, a seller ‘listed’ FSBO and buyers showed up in droves under the assumption that the seller, perhaps a little old lady, wouldn’t realize what the true value was and price the home too low. FSBO buyers, like all buyers, were looking for a deal, and they figured that in the absence of a Realtor, they were more likely to find that deal. What was a fairly common occurance just three or four years ago has now completely reversed itself. Now the FSBO’s tend to be wildly overpriced, as many times FSBO’s will consult with a broker who will give them an accurate depiction of value, and the sellers will reject the new, lower number. Incensed with the Realtor who dared insult their property with a low, albeit accurate valuation, they head straight to Home Depot. Clutching $9, heading straight for the sign section. It’s usually by the door hardware. An hour later, and to quote Chad Rogers, “they’re officially listed”. With themselves.
No matter what market you’re in, the For Sale By Owner process has become increasingly difficult, even if the seller doesn’t still have his head planted firmly in the 2006 clouds. The complexity of real estate 2009 style doesn’t just lie in finding a buyer capable and willing to purchase, it lies in the transaction itself. When times were good, I always said that anyone can put a yard in their sign to find a sucker, but they can’t always see that buyer all the way through to a successful closing. That might have been true then, but it’s more accurate now than ever. Appraisal concerns stemming from the HVCC regulations, mortgage qualification troubles, buyer jitters and inspection issues are at an all time high, and the Realtor is there to (hopefully, if your agent is any good) smooth over these trouble spots and keep the deal together. When there’s a punching bag in between two fighters, the fighters usually come out of it ok, with dignity and teeth intact. It’s the punching bag with the gold suit jacket and silver name tag who takes the beating.
For Sale By Owner. It’s so 2005, and it makes less sense than ever before if you’re a seller, and probably means you’re looking at overpriced real estate if you’re the buyer. Best find a Realtor to help point out true value, preferrably one like me, and I don’t even own a gold jacket or a silver name tag. See you at the lake.