I received some comments about my recent three-part series Selling By Yourself. In those articles, I highlighted the process and the questions a For Sale By Owner must be able to answer to increase his chances for success.  Because of the interest shown in the series, I thought some of the points made by readers deserved clarification.

Pricing

One reader opined I had contradicted myself by stating that most properties are overpriced as “these prices are presumably determined by experienced agents,” and that I “go on to assume that a seller is going to do a worse job pricing their (sic) own home than these same agents.” She also questioned my statement that if a home has been on the market more than two weeks without a sale, the price needs to be reduced.

Let’s be clear. Agents give information and interpret the market. Sellers make decisions. It is always the seller who has the final say on pricing. I am totally confident if I did a survey today of all agents who had listings actively marketed for more than two weeks, I would get overwhelming agreement that reducing the price to three percent of market value would quickly increase activity and the likelihood of at least one offer.

The sad truth is, whether represented by an agent or themselves, most sellers tend to initially overprice their property out of fear of “leaving something on the table.” As I have said before, overpricing ultimately results in lower net dollars for the seller. Regardless of the state of the market or the season, well priced, fully exposed homes can be expected to sell within two to three weeks.
It is not unusual, nonetheless, for an agent, including myself, to say “That listing is so well priced, I can’t believe it hasn’t sold yet.” Obviously, what we sometimes think is accurate pricing is not. The market tells us this by not delivering offers. In these cases, a quick price reduction is in order.

Marketing and advertising

A point was made to me that marketing is an area where sellers need help, but where agents do not necessarily do a professional job, particularly with advertisements. I totally agree that many of the ads and flyers I see from agents are poorly thought out.  Despite propaganda to the contrary, however,  ads are not what generally sells the advertised property.

Marketing brings buyers to agents. It is agents who bring buyers to a specific house. This is one big reason why selling by owner is so difficult — the vast majority of buyers work with agents and are eliminated by sellers who do not “cooperate.” Besides, not to become too repetitive, no amount of marketing can overcome mistakes in pricing.

Watch what you say

A reader stated, “if the sellers are knowledgeable and honest, they should have no trouble describing their own property” and “sellers have had much more experience with any faults [in the home] and could speak to [buyers] openly and in greater detail [than agents].“ It has been my experience that sellers often do not have a full understanding of all that needs to be disclosed. My series referred to this particularly in connection with permits and nonconforming usage.

One of the most common mistakes sellers make is when asked about their property line. I have been shown around properties where sellers have specified the boundaries with complete assurance. Not once were the survey stakes still in the ground. Without proper surveyor’s markings, however, there is no absolute way of knowing where their property line begins and ends. Misrepresenting this information, no matter how innocently, can result in major problems and/or lawsuits.

This is why I always strongly caution sellers to choose their language carefully. I suggest, for example, that they might say, “Although we have never had a survey, nor am I exactly sure where the property lines are, to the best of my knowledge, they are located…..,” followed by a general description. It is not that Realtors know a seller’s property better than he or she does — quite the contrary. Nevertheless, a skilled professional will know what to say and do in the seller’s best interests.

Negotiating

A reader asked me what the risks were in negotiating an offer with a buyer who was not represented by an agent and having her attorney write up the contract. The first problem is that each principal can have selective memory of what was agreed. The seller will have the lawyer write up her understanding of the points of the offer. By the time this document gets to the buyer, however, he may either have a different version of the agreement in mind or some new ideas he wants included. Any oral understanding must be reduced to writing and signed by all parties in order to have a ratified contract.

Why not just have the attorney involved in the negotiations right from the beginning? This could be a productive approach if the negotiations go smoothly and quickly. If they drag on, the legal bill could get out of hand. It is also possible to have negotiations with a number of  buyers before reaching a meeting of the minds with one of them. The attorney will, of course, bill for all the hours, whether the negotiations were successful or not.

Another consideration is that many buyers will be intimidated and uncomfortable about being unrepresented while the seller has her own attorney. Bear in mind that negotiating is part of the entire process, from listing to close; it is not simply limited to the purchase contract. The best agents more than earn their commissions through savvy negotiating on behalf of their sellers.

Agents and FSBO’s

Contrary to popular belief, most professional Realtors do not resent or dislike FSBO’s. There is a different issue here. The problem is that few FSBO’s truly understand the dynamics of the process and they, therefore, make things more complicated than necessary when dealing with a buyer’s agent. The buyer’s agent’s liability is definitely greater with a FSBO than when the seller also has an agent. With a FSBO, the buyer’s agent is vulnerable if something goes wrong on either side of the transaction. The agent is not normally compensated for the significantly increased risk. This is why many agents hesitate working with FSBO’s.

If you think you want to sell on your own, remember the adage: “We have freedom of choice; we do not have freedom from consequences.”

Related Articles:Selling By Yourself, Part 1  Part 2 and Part 3