Homes that are for sale by owner, but not for sale


I write about this periodically. Every home that is for sale is being sold by the owner but some home owners choose to sell without the help of a Realtor. I don’t have a problem with that at all but I have buyers who ask about these properties. When I do a little research I sometimes find out that the for sale by owner home was sold six months ago, or the owner was just kind of testing the water or the owner will sell if someone will pay an outrageous amount of money for the place.

Some are advertised with a sign and a phone number that is never answered. Calls go to a voice mail that is full or one that is apparently never checked. There is no way to know how much the seller is asking either.

I looked up the property that my clients were interested in that is being sold by the owner and it has a value of around $375,000 but the owner as it listed for 900K and has had it listed for a long time.  The property was being advertised on some obscure for sale by owner web sites that most people wouldn’t know to look at. I doubt the seller is serious about selling but would sell if someone wants to pay 900K.

One for sale by owner let me show his condo and then told me that he really wasn’t that interested in selling but that he was kind of trying it out to see if people would be interested in buying. I can almost relate to that as I live on and own a home that is very unique. I see hundreds of homes each year but have never seen one like my own. I often wonder how a home buyer would react to it.

Sometimes when I show homes that are for sale by owner I end up listing the home. I think sometimes putting a for sale sign up is a strategy for meeting and interviewing Realtors.

Occasionally I find a home that is being listed by the owner that is a perfect match for my clients. I call the owner and they let me show the property and if my clients like it we make an offer and if all goes well the owner says yes and I get paid too.

Most homes that are listed by real estate agents are really for sale although I have to say I have run into some sellers who don’t seem like they really want to sell. I can tell when the home is on the market for much longer than any other in the area and has been at the same price for months or years and they have switched agents a few times.

I encourage my clients to let me know if they are interested in a home that is being sold by the owner. I’ll work with anyone and I am not afraid to knock on a door or two if a buyer likes a home that isn’t on the market.

Real estate commissions

I read an article on a national news site suggesting that home owners can avoid “paying a hefty 6% commission” by selling their home without the help of a real estate agent.

There is a much simpler way to avoid paying 6% and that is to negotiate with the agent for a lower commission. There are agents who will not negotiate and they will suggest that if an agent will lower her commission that means she doesn’t know how to negotiate and that she won’t be able to negotiate a decent offer on your home.

I will argue that the negotiating process is give and take and that the agent who refuses to negotiate her own commission probably won’t be easy to work with on other issues and it is hard to gauge a persons ability to negotiate if they won’t negotiate.

According to the Minnesota Attorney General commissions are negotiable. The one negotiating tip I would like to give homeowners is that they should be negotiating the commission before the contract with the listing agent is signed not after they get an offer on the house.

How much do I charge? That depends. I can not think of a situation where I would not accept 6% or more but I have also accepted less. I am paid on a 100% commission basis and do not get paid until after a successful closing of a sale, which means I work for free until it closes. I tend to look at the value of the home, the amount of effort and cost of marketing and the amount of risk.

Sometimes I will discount my commission because  home is listed in an area where my for sale sign will be noticed and will help advertise my business. Boardman Realty is my company and I have a great deal of flexibility.

For sale by owner

Technically all home for sale are being sold by the owner but in this article here on my blog I am referring to homes that are being sold without the help if a real estate agent.

Buyers need to understand that the sellers of these homes are not always motivated and sometimes they are just kind of trying things out to see if their home will get some inquiries. Sometimes the homes are not really for sale at all and occasionally I call a seller who doesn’t know that his home is for sale.

Sometimes the seller is a delightful individual who has the home priced just right and the flexibility to allow buyers to see the property with their real estate agent. Motivated seller usually won’t ban real estate agents from the property they just don’t want to pay a listing agent but will often pay a buyers agent.

I can tell how serious a home seller is by the questions they ask. They may ask me if the buyer I am working with is pre-approved and ready to buy. They may ask me if I have ever sold a home in the neighborhood or in the building. Some will ask me what I think of the price or for some tips on what should be done to get it ready to sell.

If you are a buyer and are working with a real estate agent they should be able to help you buy homes that are not on the market or that are being sold directly by the owner.




Confessions of a FSBO, Part 3

1599junoBy Erik Hare

In earlier entries, I outlined why my beloved Cristy decided to try to sell her townhome as a FSBO, or more accurately with a limited-service REALTOR, and how it went for her. The short answer was that it didn’t sell, and now has tenants renting it out. But it still is better to sell it, and with spring approaching it’s time for another round.

This time, she elected to go with the most creative and hard working REALTOR in the city.  I’m talking about Teresa here.  No, this isn’t a test for her, and I don’t want to report all the details of how Teresa sells a place.  Besides, this is an unusual unit – one bedroom side-by-side townhome that is a bit small, but with a lot of great features and a great neighborhood. If we learned one thing from before it was how tricky this was going to be. As is true with so many FSBOs, eventually it was time to go with the pros.

The reasons were many.  Not only did the last attempt not work, the situation with tenants makes it all a bit more complicated. Teresa explained the lockbox to the tenants so that they feel secure about REALTORs coming in for showings. The tenants also have 24 hours of notice before a showing. Getting all this to work properly has a lot to do with the fact that Teresa knows tenant law.

In addition to all the tenant stuff, Teresa has had a few very creative ideas for marketing the place.  There’s a great phototour of the place on its own website.  Teresa also provided a lot of information to help price it appropriately, and could give reasonable estimates of how long it might take to sell with existing market conditions.  Most importantly, Cristy likes not having to spend her weekends doing showings to buyers that aren’t pre-qualified.

How will this work? Well, it went live on March 1, just in time for a big snowstorm. But the season of selling is on us, and we will just have to see how it goes.  It’s not a market for the impatient.

The first report is that it is very refreshing to know that these details are being handled as professionally as they are. Will a REALTOR be worth the commission? Certainly, a sale is worth more than not having a sale, so the answer is likely to be a resounding “Yes!” if it goes anything like we plan.


Follow up on confessions of a FSBO 2

Soldkw Some comments on Erik Hares two part post on being a FSBO.

In general Erik and Christy have not experienced all the services a good REALTOR should provide and do not know what they are missing so it all seems fine to them.  We do more than provide a for sale sign, an MLS listing and advertising on Craig’s list.  Those three are a great start but I can think of at least eight additional ways that I advertise my listings.

The buyer leads  from Craig’s list and from the for sale sign seldom buy the home they saw advertised.  They are often in the early stages of home buying and are not pre-approved and have not looked at enough homes to be ready to buy one.  They do buy homes but usually a few months after their initial contact with a REALTOR,  and almost never buy the home that they called about in the first place.  Not all leads are equal.  These leads are valuable to me  because I am a full time agent and can find them a home, but are not so valuable to my sellers.

As for open houses, the main purpose of an open house is to give a REALTOR a chance to meet people.  I occasionally sell a home at an open house but on average about 3% of all homes sell because of an open house.

I believe that Christy and Erik will sell the townhouse if given enough time and think that it is a smart strategy to rent it out while they are working on it.  It will take them longer to sell it  than it would take me,  because selling houses is my full time job, I have access to more marketing resources, I spend more money marketing homes and I have more experience.

If they do decide to list with me next spring I will bring them a detailed marketing plan, that will contain many items that they may never have thought of.   Maybe I will even been able to convince them to write a post about it. 🙂


Confessions of a FSBO, Part 2

1599junoBy Erik Hare

In Part 1 of “Confessions of a FSBO”, I told the story of how Cristy and I found ourselves in the position of selling a property before it had appreciated significantly in value.  We considered the possibility of selling it FSBO, and found that through a local minimal-service REALTOR this seemed to be a viable option, if not technically a FSBO.  So how did it turn out?

To start with, this is a difficult market for a small townhome.  As attractive as this house is, it’s still small and rather unusual.  Teresa has reported here how it is indeed a buyer’s market, especially for condos and townhomes, so we had our work cut out for us.  On July 17, it went up live.

The MLS listing that comes with   Buy Self Realty was, without a doubt, the most important source of interest, which we kept track of by counting showings.  In the first two months, there were 2 open houses and 22 showings, of which 12 came from REALTORs.  The minimal fee REALTOR was absolutely essential, as far as I am concerned.  There were an additional 5 showings that came from the Craig’s List offering, and another 5 that came from people who walked by and saw the sign.

That’s quite a lot of interest, especially in a tough market.  But it is an unusual property, and we had our share of the curious.  Sadly, though, it has not sold in the 3 months it has been listed, even with all of these showings. 

The Craig’s List offering had the most interesting side effect, however.  Even while it was listed as “for sale”, inquiries about short-term rental dominated the contacts we had.  The people who called or wrote were generally listed in short-term (6 months) or very-short-term (week by week) rentals, and were willing to pay reasonable prices for it.  Apparently, few apartments are available for less than a one year lease, which can be quite a burden for people.  In addition to that, business people on temporary assignments or couples waiting for their home to be built can find very little in the way of week-by-week housing. 

Once Labor Day came, we made a decision to take some of these renters up on the proposal.  And the house has now been occupied ever since, excepting one week, at a rate that just covers the mortgage and utilities.  The property is essentially “parked” until after winter, although it’s still listed and the sign is still up. 

Have we gone to Teresa on hands and knees, begging her for help?  Well, let’s just say that we’ve had a long conversation with her, and leave it at that.