Real Talk!

These days a lot of buyers start their property search on the internet. They visit sites like www.realtor.ca and if they find something that catches their interest, they might email the listing agent for more information. While this is not a bad plan, it may not be the best.

Buyers should consider entering into a Buyer Representation Agreement with a Realtor ® and have a professional do the research for them… AND protect them from the risks involved in purchasing property.

In the industry, we call an unrepresented Seller a “Fiz-bow”- that’s how we pronounce the acronym “FSBO”- meaning “For Sale By Owner”. There are a variety of reasons given by Sellers when they’re asked why they are considering “FSBO”… some are: “I don’t know any agents” or “I’ve had a bad experience”… but, by far, the most frequent is “I want to save the commission costs”.

Speaking of FSBO’s, a colleague of mine once said, “If you were being sued for the full value of your home, would you hire a lawyer or defend yourself?”

I can’t think of a better for the risks of not using the services of a professional in the field.

Every Buyer and every Seller wants to have a successful experience... and here are my top ten reasons that “Buyers and Sellers” should utilize the services of a real estate professional:

1/ Honest & Professional representation:

Probably the most serious drawback of a For Sale by Owner is the lack of protection for both the Seller and the Buyer. A Realtor® has knowledge of all of the requirements and must adhere to rules, regulations, legislations and a strict Code of Ethics. Once you agree to have a Realtor® represent you, they are under contract to provide you with competent service.

You can verify the status of any Realtor © by visiting http://www.reco.on.ca/ (The Real Estate council of Ontario.

AND, particularly as a Buyer, you want to avoid scams like this:

Canadian Woman Informs Police about Real Estate-based E-mail Scam
Waterloo Regional Police have recently received a report from a woman residing in Kitchener (Southern Ontario, Canada) that someone tried to deceive her by sending spam messages.

The woman revealed that she had received spam messages while searching for a home online in the first week of July 2009. She disclosed her name as well as personal details.

However, she got suspicious of the deal after she had received an e-mail that asked her to transfer money in the account of an unidentified person.

It is said that after the woman had got apprehensive about the deal, she applied her investigative skills and found that the home owner was suspicious.

Olaf Heinzel, Police Spokesperson, said that the home owners had indicated that it was not available for sale, as reported by therecord on July 6, 2009.

Hence, the sale was fake and advertisement posted online primarily meant to fool people.

Heinzel further said that there were potential risks involved while dealing on the Internet. Sometimes dealing on the Internet could not be trusted as the person with whom the dealing is going on not a genuine one.

Furthermore, these e-mail scams operate from outside the country which makes tracing them a difficult task. Police have advised the woman that she should lodge a formal complaint against the website hosting that advertisement.

Internet users need to be extremely careful while accessing information online and confirm the legitimacy of the website, said Heinzel.

Internet scams that dupe innocent users have become very common now-a-days.

Security experts have warned netizens that cyber criminals especially spammers advertise fake houses for sale through spam e-mails in bulk. They are confident of their techniques that someone would fall to them.

In fact, scammers are very intelligent in their methods as they take real ads and modify their details slightly so that they seem realistic to users.

Hence, there are few points that can be used by netizens to find out the legitimacy of home advertisement. For instance, if the price of a home is relatively low to the market price, then the deal should not be made. Secondly, if the home owner is asking to wire money before the deal is signed, then it is certainly a fake deal.

2/ MLS ®

Realtors® have far greater resources than the average homeowner/homebuyer. Certainly, a determined FSBO can put a “for sale” sign in the yard and run an advertisement in the local paper, however, the home won’t receive nearly as much exposure as it would through the MLS®.

It is nearly impossible for out-of-town Buyers to know a FSBO is available and a great number of sales, especially in rural/recreation/retirement areas, come from out-of-towners.

Buyers can rest assured that their Realtor® must and will include any appropriate FSBOs in their presentation of prospective properties.

3/ PRICING

Determining what each particular piece of real estate is worth is crucial, but extremely difficult. Most homeowners honestly believe their own home is worth more than comparable homes in the same area… and often, they’re wrong.

A Realtor® has access to statistics, current market conditions and other information that is important in assessing the likely selling price of a property AND tips for improving Buyer appeal.

Overpricing any for-sale home is a sure way to deter potential buyers… and most Buyers looking at a FSBO assume THEY will be saving the commission… not that the Seller will be saving the commission. In fact, many buyers making an offer on a “For Sale by Owner” will take into account that the services of a REALTOR® are not being used and they will deduct their calculated savings of commission from the FSBO asking price.

Both Buyers and Sellers need to be informed of the recent sales comparables and current local market- the kind of information a Realtor® will provide- in order that they can come to a reasonable agreement on price.

4/ Representation

FSBO=an unrepresented seller

Potential buyers will spend less time in a for-sale home if the owner is present during the showing- they’re often shy about discussing its pluses and minuses with their own agent if the owner is within earshot.

Buyers are less inclined to make an offer if they know they'll be negotiating directly with the seller. It’s just not as comfortable as dealing through a third party.

A Realtor® creates an effective emotional buffer between the Seller and Buyer- helping the Seller evaluate every buyer's proposal without compromising market position and write a legally binding, win-win agreement that will be more likely to make it smoothly through the process.

Buyers who have contracted a Realtor® in Buyer Representation can discuss FSBO opportunities with their Realtor®. A Realtor® will show FSBO properties and most Sellers will agree to pay commissions to a Buyer’s Agent….

In fact, Buyers should be concerned, if a FSBO Seller is not willing to pay the Buyer’s Agent- it may be that something is not quite right about the whole deal, if they balk at having an expert help a Buyer check things out and write up a contract.

A simple grammatical error or missing word from an Agreement to Purchase can create a dispute that will give rise to a lawsuit. Most after-sale complaints involve alleged damages of less than $10,000 that may spiral into thousands more if legal action is required.

A Realtor® knows contract language and has learned how to reduce the likelihood of confusion by drafting a clear concise offer, reducing exposure for both parties.
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5/Security

As a Seller- when your property is marketed with an agent's help, you do not have to allow strangers into your home. Agents will generally pre-screen and accompany only qualified prospects through your property.

As a Buyer- A Realtor ® will help you avoid being lured into a “FSBO” that may be unscrupulous or fraudulent by calling and checking them out, in advance AND provide you with company on your visit to the property.

6/ FSBOs are likely to stumble into legal trouble

While the previous 5 items have included mention of potential legal disputes, this concern warrants serious attention.

Real estate transactions are fraught with potential liability- for unwary Sellers, as much as unwary Buyers.

There are laws regarding disclosure requirements and a FSBO or FSBO Buyer who overlooks even one mandated requirement could lose money or worse, face a protracted and expensive lawsuit- after the transaction closes or fails to close.

It is important that Buyers and Sellers understand that the sale of real property is not just a marketing exercise; there are many legal issues involved which can create liability. Of all the things you want and expect from buying or selling property, a lawsuit is probably not one of them.

7/ Monitoring, renegotiating and closing

Between the initial sales agreement and closing (or completion), questions may arise. For example, unexpected repairs might be required for the Buyer to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most people… not to mention the stress.

A Realtor® can help to objectively resolve any issues and move the transaction to closing because of their experience and the simple reality that they aren't emotionally invested in the transaction- they can keep a cool, level head during the ongoing negotiating process.

8/ Time

A Realtor® can save you valuable time- working many, many hours, behind the scene, for every hour that they’re in your presence.

Under contractual responsibilities, a Realtor® has a vested interest in fulfilling their obligations to Buyer and Sellers alike- not to mention it is how they earn a living.

Statistics tell us that 90% of FSBOs will contract a Realtor® after approximately a month of the hassle, time, energy and emotional stress of running ads, fielding phone calls, holding open houses and showing parades of people through their properties. FSBOs get tired of people who need “help” to buy a home and who ask the seller to take less, carry a second mortgage, engage in creative financing, or even entertain some form of fraud. And then there are the onces fresh out of some “no money down” seminar.

Statistics tell us that some 90% of Buyers will contract a Realtor® after spending a few frustrating weeks trying to find property by calling listing representatives on ads… or trying to negotiate with a FSBO on their own.

9/ Connections

Realtors® spend a great deal of time developing relationships with appraisers, local banks, township officials, lawyers and other Realtors®- all of whom can help streamline the many steps involved in the listing and selling process. These same connections are helpful for Buyers seeking advice. Further, it is sometimes helpful to speak to your local Realtor® if you are planning to purchase out of town- they may be able to recommend a good Realtor® in that area.

10/ Success

Even in a robust market, fewer than 30% of FSBOs will sell… statistics tell us that FSBOs fail at a rate of more than 87%.

More than 9 out of 10 FSBOs will contact a Realtor ® within 4-5 weeks, if they really want to sell.

87% of residential home sales involve the Internet, particularly www.realtor.ca AND 92% of Internet buyers find their agent that way.

Sure, it costs money to employ a Realtor ®, but they work… and work hard to earn their commission.

When a Realtor® is involved: a Seller is more likely to sell their property faster and a Buyer is more likely to find a desirable property… and at the same time… both Buyers and Sellers reduce the chance that anything will come back to haunt them.