A new client, in the process of painting a couple of rooms of his house this weekend, getting it ready for sale, sent me an email this morning. He had found a FSBO, a for sale by owner and wanted to know what I thought. I’ve helped clients buy FSBOs before. Private sellers are like exotic animals for us realtors. They are like that one Gadwall you sometimes see amongst the Mallards, looking like a duck, walking like a duck, a duck indeed but certainly a duck of a different feather.
Canard. That’s french for duck.
A canard is also a false report, fib or made-up story. But let’s not talk about ducks. Let’s not talk about fibbers. Lets talk about FSBOs.
Can I buy a FSBO with the help of my Realtor?
Sensible private sellers know that you know that they are saving the commission. The commission is included in the market price. It’s the way real estate is set up. If do-it-yourself sellers really want to sell but don’t want to pay the listing agent commission, they can find the true market price for their home (by asking a couple of realtors) and then sell by knocking off the 2.5% they are saving on the selling side. If they are smart, they will then get a big FOR SALE sign from the local Canadian Tire, they will pay Kijiji to stay on the top of the search page (If they are thrifty they will save the $20 and instead will re-post their classified ad there on a daily basis). The smart private sellers will find a posting agent and spend the big money to have their home listed on the MLS – Realtor.ca, where about 95% of residential real estate sales take place. If they are smart they will state clearly on their ads that they are willing to work with buyers with realtors and will pay a commission of 2.5%.
In a perfect world they will save more than $5000 with just a little extra work. But it’s not a perfect world. Good judgement often gets suspended in favour of avarice and for tragic lack of style.
The FSBO that my new client sent me said in their advertisement, “No Agents”. My client asked, besides what I thought about the property, how to handle it.
Here was my response:
We would never ask our clients to pay us a commission on a purchase. It’s not the way real estate is set up. Since the seller has specified “No Agents” if you wanted to proceed with the purchase of this FSBO (for sale by owner) you would be on your own. Of course I would help you with the public information.
For example, when I search title through Geowarehouse, it tells me that 5 homes sold last year within 250 metres of the FSBO. They sold $278,000-$399,000.
Geowarehouse also tells me that the current owners bought it in late 2009 for $305,000.
When I go to the MLS info and sort for
3 bedroom sidesplits in this neighbourhood, I find that
There aren’t any currently for sale
One is conditionally sold. It was listed for $395,000
Eight sold ast year. The average price was $307,500. The highest sold price was $377,000.
I think you’ll have a tough time with this seller.
(The seller is asking over $400,000 for the property).
Can I buy a FSBO without the help of my Realtor?
You can. But why would you? With more than 1300 homes currently on the market, why would you want to deal with that guy? To quote Mr Garth Turner, a real estate critic:
Do-it-yourself sellers are invariably cheap (because they don’t want to pay commission) and at the same time greedy (because they won’t lower a price to reflect no commission’s being paid). Most experienced buyers want nothing to do with a FSBO, who has no legal reason not to misrepresent the property, and probably is.