Recently while catching up with Twitter, I scrolled past a @FOX5Atlanta post with the caption, “Interested in a home that’s For Sale By Owner? Here’s a look at some tips.” Being my career is real estate and I’ve had successful and not so successful engagements with DIY Sellers, I had to check it out.
Upon reading the article, I have to admit some disappointment. The article lacked specifics and spent more time on agent commissions than focusing on buyer education and advice. It was like watching a movie trailer, with commercials, sponsored by FSBO websites. So, let’s attempt to provide some specifics and finish the drill with this two-part educational blog on Do it Yourself. Part 1 will focus on DIY buyer advice and Part 2 will provide some tips and guidance for DIY sellers.
Georgia and many other states are “buyer beware” states, whether the home is listed with a brokerage or it’s a DIY listing. Overall, it’s the buyer’s sole responsibility (caveat emptor) to uncover deficiencies and defects. Even though most States require all home sellers including DIY to disclose ‘what they know,’ think about why consumer protection pamphlets would still have Buyer Beware advice written in them? For example, I was representing a buyer who was interested in a 5 bedroom home marketed by a DIY seller. My buyer liked it and wanted to submit an offer, but before we did, I urged my buyer to slow down so we could do a little more research. After a few phone calls to the County, we learned the home was only permitted by Environmental Health for a 3 bedroom septic system and my buyer planned to occupy all 5 bedrooms with the water usage of 6 occupants. Do I think the seller was hiding this fact? Absolutely not. I don’t think the sellers knew because they weren’t the original owners. Nonetheless, 3 bedrooms at a 5 bedroom asking price? Not so fast. In the end, I was accused by the DIY seller of unethical tactics and the seller vowed to never do business with me or my brokerage. So sorry, my buyers and their 5 kids wanted a backyard, not a smelly back-bayou. Do your research. Be diligent. Gather as much historical information as possible. Most sellers will cooperate and for the few that do not or are insulted, give them the same advice and walk, because chances are, if they sell their home they’ll be sporting a new role as “home buyer.”
Most DIY sellers and buyers are somewhat familiar with the “sales process” by self-educating through on-line articles or self-help tips provided by Zillow, Trulia, or ‘by owner’ websites, but the odds for a costly mistake by one or both sides of the deal are higher without professional advice. For example, this past winter I took a buyer to see a DIY seller home. It was an older home and we suspected the possibility of asbestos and lead-based paint, so I asked the seller to complete a formal Property Condition Disclosure as part of the sales process. The seller refused stating her understanding of the ‘Order of things’ was to release a written disclosure after a Purchase Agreement was executed. Wait, what? Are you telling me my buyer needs to sign a contract to buy your home before you will disclose defects you know about in writing? See the screen cap to the left for the actual verbatim email conversation! Even though my client walked from this deal, this engagement did provide a fantastic learning moment with DIY transactions.
- The only ‘order of things’ in this specific situation is there is no order of things, though in transactions between brokers, the practice is to disclose, disclose, disclose and it should be NO different for DIY transactions.
- The Seller while trying to act ‘knowledgeable’ about the process actually draws attention to the possibility of undisclosed defects, albeit the Seller denies hiding anything.
- Where did the seller learn the sales process dictates the buyer sign a purchase agreement before the buyer can find out what’s wrong with the home? There’s a rhyme to that! What if the situation pairs this DIY seller with a DIY first-time or inexperienced home buyer. The odds for a costly blunder would be very high.
My advice, partner with an experienced professional who can run a competent sales process, has your best interests in mind, will monitor potential seller defaults, and who will protect your earnest money and investment. Contrary to rumor, most DIY sellers welcome the opportunity to work with an Agent and pay the commission. I call on the DIY market every day and it’s very rare a DIY seller will refuse agent compensation and turn a qualified buyer away.
Most recently, I called on a DIY seller for an out of town client who had some interest in their property. First impression, the DIY seller had no interest in working with an agent, but most importantly, the seller mentioned he already had two offers ‘in hand’ with two more offers on the way and advised me there really wasn’t any point in showing the property. OK, good for the seller but maybe not so good for the other buyers who have submitted or will be submitting offers. As an agent, it is our duty to present ALL offers to our sellers and highlight the strengths and weaknesses of each offer. If there are multiple offers, it is ethically irresponsible for the listing agent to coach one buyer where it may provide an unfair advantage to another buyer. In extreme cases, the agent could lose their license or career. That said, think about the following very carefully. A DIY seller doesn’t have a career at risk if he/she is unethically playing favorites or misleading an honest buyer. In addition, shill bidding just doesn’t happen at road side auction houses. A form of shill bidding can take place in DIY negotiations with purposeful, misleading information and it could cost an unsuspecting buyer plenty. DIY buyers should have their guard up at all times. This is a business transaction, not a social call. In the end, the seller wants as much of your money as possible and you want the most and best for less. The seller must earn your respect and visa versa. If there are any signs of impropriety, shake hands and walk. Another forever home is just around the corner.
In closing, DIY buyers with the slightest apprehension should consider partnering with an experienced real estate professional who utilizes a competent buyer playbook. That playbook would include everything from investment strategies to handling material defects, researching liens, debt, & permit history and compiling CMA data for determining value and negotiating. Would this kind of buyer playbook provide an unfair advantage over a DIY seller? Absolutely! It’s all a negotiation, but also there’s nothing unethical about being more wise, diligent, and humble than the other party in a negotiable transaction.
-Guy Victor is a Founder, Principal, and Operating Partner of Living Down South Realty, LLC