With limited inventory, buyers and their agents are scrambling to find homes for sale.
Homes listed for sale by owner are a tempting option to buyers, but are they really a great choice?
BY OWNER – THE WHO AND WHY
To begin, the purpose of this post isn’t to be negative about those who sell by owner. It is their right to do so and we respect that. We do want to educate buyers though on this segment of the market and what is means to them should they entertain buying a home listed by the owner.
Let’s start with the basics: Someone who tries to sell their home without using an agent is termed a “FSBO ( pronounced Fizbo ) – For Sale By Owner”. It is legal for someone to do this and represent themselves in the real estate transaction.
There are a few reasons why someone would want to sell by owner. The main reason is to save money. There are, however, a small percentage of owners who have controlling personalities and prefer to do most things on their own, including selling their home. Based on experience though, saving money is still the number one reason why someone would attempt to sell by owner.
With the popularity of the internet, someone selling by owner now has the ability to advertise on popular sites, like Zillow. Therefore, it is not unusual for a buyer to see these types of homes listed for sale while doing an on line search. Most “by owners” are willing to pay a buyers agent who brings them an offer. These listings are certainly something we consider when searching for a home for one of our buyer clients.
A GOOD OPTION FOR BUYERS?
With low inventories, we agents need to do everything we can to find homes for our buyers. This includes communicating with FSBO’s and bringing these homes to the attention of our buyers.
The problem with this situation is that most “by owners” are not overly motivated. Basically, they will sell if they get their desired price. Otherwise, most don’t need to sell and will simply stay in the home. This dynamic certainly doesn’t favor a buyer as they simply have no leverage here.
If the seller needed to sell or had a decent level of motivation, they would hire an agent, knowing their success rate would then be exponentially higher.
This situation leads to one where a buyer will likely have to overpay for a home, sometimes well above market value. Basically, if they fall in love with a “by owner” home, they will have to pay “retail” instead of “wholesale”.
Also, since most sellers lack experience dealing with the complexities that come with a real estate transaction, the process can be quite trying at times. Buyers need to consider if it’s worth overpaying and jumping through hoops for the right home.
THE FINAL WORD
Whether buying a home listed “by owner” is a good or bad option is up to the consumer to decide. In our personal experience, many of our clients who have purchased directly through the owner have admitted to overpaying. However, they justified the price because they fell in love with the home. Sometimes the heart wants what it wants even if that means paying extra.
In the end, I would advise a buyer to tread cautiously in this situation. There is nothing wrong with looking at a “by owner”provided you have realistic expectations of the possible end result.
The above information is compliments of The Schuman Team, Amy and Dan, of Howard Hanna Real Estate Services. They specialize in Solon luxury homes, relocation, and first-time buyers.
They can be reached at 216-346-3235 or 216-403-9189 or via email, email@example.com or firstname.lastname@example.org.
The Schumans service the following Cleveland area suburbs: Aurora, Bainbridge, Bay Village, Beachwood, Bentleyville, Chagrin Falls, Cleveland Heights, Gates Mills, Highland Heights, Hunting Valley, Lakewood, Lyndhurst, Mayfield Heights, Mayfield Village, Moreland Hills, Oakwood Village, Orange, Pepper Pike, Shaker Heights, Solon, South Euclid, University Heights, Westlake, Woodmere.
Is By Owner Good For Buyers is the property of The Schuman Team and may not be duplicated or used without their written consent.©October, 2013