When you’re looking to buy a home, you may wonder, “Does it matter if the property is listed with a real estate agent or a for sale by owner who are trying to sell it themselves?” Um, yes. It matters. A lot. The truth is: When it comes to signing contracts, handing over escrow money, and digging into the home’s history, going it alone can end up costing homebuyers a bundle.
The following are 6 reasons to avoid a For Sale By Owner (FSBO) home.
1. Are you sure it’s legit what they are selling?
Unfortunately, scams abound and the real estate industry isn’t immune, specially if buying a for sale by owner. If you don’t have an agent looking out for your best interests, it’s easy to be duped. For example, would you know what a proper sales contract looks like if real estate is not your field of expertise? Depending on the state in which your reside, there are a number of legal forms that must be completed. In addition to a contract, property disclosures, occupancy agreements, and lead paint records are just a few documents that must be signed. Because a for sale by owner is not bound by a code of ethics as Realtors® are, there’s no way to be certain they won’t try to take an unsuspecting buyer for all he or she is worth. No would-be buyer should suffer sleepless nights wondering where that escrow money ended up.
2. Full disclosure When Selling
Obviously, when you’re making a significant investment you want access to as much information as possible. Real estate agents have the ability to get you the answers you need. Whether it’s about repairs made to the home or liens against the property, the more you can find out, the better off you’ll be when it comes to negotiating. Plus, no one likes an unpleasant surprise when it come to a for sale by owner. Remember: Knowledge is power. On your own, would you know what to ask a seller? And, more to the point, would you know if a seller is hiding key information? It’s a risk better off not taking.
3. Are you a skilled negotiator?
In the course of doing business, you’ll probably have to go back and forth quite a bit — and not just about the price of a for sale by owners home. What if repairs need to be made? Are you ready to haggle over who takes care of a leak or a structural issue? What if you can’t agree on a closing date? When you have an agent, he or she will handle all that for you.
4. Is money an issue?
The main reason sellers choose to sell their homes as a for sale by owner is to save money by not having to pay an agent’s commission. So what happens if your seller is strapped for cash but problems pop up during a home inspection and they can’t afford to fix them? This, in turn, raises a red flag as you start to wonder if they took the cheap way out when making important home repairs.
5. Are you ready to deal with a for sale by owner all the time?
When it comes to arranging the home inspection or any other viewings of the house, your agent can serve as your go-between so you don’t have to contact the homeowner repeatedly. Unless you’re completely comfortable making all those appointments yourself, you should probably have someone representing your best interests.
6. What’s the timeframe for selling?
When a seller hires an agent, you know they’re serious about making a deal. With a for sale by owner, are you sure the sellers are really going to get moving? Some may have put the home on the market just to see what offers it could attract. If you’re an interested buyer, you need to know that the seller is just as eager to make a move; otherwise you’re wasting your time and getting your hopes up for nothing.
Of course, there are honest for sale by owners out there, but when it comes to making one of the largest investments of your life, you don’t want to take any chances. Having a real estate agent working on your behalf at every stage of the transaction can offer peace of mind and end up saving you money and countless headaches.
Buying or Selling a home in or around Oakland County Michigan can be a daunting task if buyers are looking for the perfect home that have few issues, but when sellers offer home warranties with the sale, things usually get moving. Buyers in the local Oakland County area love the styles and craftsmanship of the older homes that are prominent in this area ranging from 1940s to 1990’s sprinkled with new construction here and there. When buyers look at first they want a newer home that they feel would be more worry free, but newer is not always better in many cases as the construction is better built than of current days, this is where a home seller of an older home and home warranties can really benefit. In this post I will try to break-down why home warranties can really ease the worry of home buyers and also help home sellers sell their older homes.
You know that old phone prank…
Someone calls and says, “Is your refrigerator running?”
The person on the other end then says, “Yes. Why?”
And then the caller says something like, “You better catch it before it gets too far away!!”
The joke worked because, for the most part, everyone has a fridge, and it is probably working.
And that is when you should have a home warranty in place… when your fridge is working, not once it is broken.
Do you have a list of worries?
There’s a lot of things you probably notice, but ignore around your house. Until it is too late, and becomes a much bigger problem.
It’s not broken…but maybe you notice that your fridge is making a different sound lately.
Your garage door isn’t working quite right. It goes half way down and gets stuck.
The bathroom faucet is dripping.
You notice a little leak in your bedroom ceiling.
Little worries like these are super common for homeowners.
Maybe you have an even longer list of little worries than those…
What’s the real worry?
But worries like those aren’t the real worry.
The real worry is the cost of getting them fixed.
For a lot of people, it is hard enough just paying the mortgage and other household bills. It’s not like there’s tons of money sitting around to fix the little worries.
So you probably ignore it for as long as possible. Then the little problem becomes bigger and bigger. And the little problems become more numerous.
You figure you will deal with it when and if it becomes too big of an issue…which is usually once something is broken, or not working at all. You deal with it once you have to spend the money.
Get a home warranty before it is too late…
If all of that sounds too familiar to you, a home warranty can solve a lot of your worries.
But you need to get one before your appliance, your furnace, your air conditioning, or whatever else, is actually broken. They won’t cover your problem if it was a pre-existing condition…
Part of the problem might be that you don’t want to spend the money to buy a home warranty. They can cost hundreds of dollars. Maybe even upwards of a thousand or so, depending on the plan and coverages.
But in comparison to how much it could cost you if your furnace or water heater stopped working, the cost is really not so bad.
And, it isn’t like you can go and just buy a $500 home warranty once the furnace goes kapoot, call them up, and presto, have them send someone over to install a new one.
You can try… but they are gonna deny.
Expect some aggravation
As with anything… not all home warranty companies or plans are reputable or great.
Just do a little research online, and you will see tons of complaints about home warranty companies. Enough to scare you away from even buying one.
With that said, sometimes it is a matter of having the right understanding, expectations, or following the right protocol.
For instance, a home warranty company won’t necessarily get you a new furnace…if the existing one can be fixed. A lot of people complain that they wanted something replaced, but the warranty company merely fixed the problem. They have that right. If it can be fixed, they fix it. If not, they replace it. Sometimes, people misunderstand what to expect, or simply want more than they should expect.
Or, some people will feel that they should be able to call their own contractor to have a problem fixed or replaced, and expect that the warranty company will pay the bill. Most don’t allow that. The warranty company needs to be called first, and they will usually give you a choice of a few contractors that they have relationships with. Not necessarily contractors you know, or want to hire.
A lot of times, people complain just because they presumed that something would be covered, when it really isn’t. You need to know what your policy will cover. (A pool, for instance.) There are usually a few options within each home warranty company. Obviously, the more and better the coverage… the more the cost.
And it isn’t uncommon to have to fight a little bit (or a lot a bit) to get something covered. They certainly have their loopholes and language in the policies that allow for them to deny coverage if they want to. Or even just do things as cheaply as possible.
So, do expect that just buying a home warranty is not a direct ticket to getting everything you want, at least without question or a little fight.
It’s aggravating, but the old adage about the squeaky wheel gets the oil is probably a good way to approach dealing with your home warranty company. Expect to squeak.
A good, simple trick…
Hey, you may find a great home warranty company who addresses you and your problems thoroughly, quickly, and with little hassle. Without needing to squeak, even. If so, that’s great.
But probably not… judging by so much of what you read online. It is hard to find one that has an absolutely favorable reputation.
So a good trick you might want to consider is this…
…call your real estate agent.
Ask your real estate agent for their advice.
- Does a home warranty make sense for you, your needs, and your specific concerns?
- If so, what home warranty companies do they recommend?
Here is the real “trick” to this trick…
Real estate agents often have affiliations with home warranty companies. They are are in the business day after day. Home warranty companies do not want to be on their bad side.
So, if you are having an issue with a home warranty company, your real estate agent may just be helpful in getting the warranty company to get things done. Especially if it is one that they have an affiliation with, or recommend.
All it might take is a phone call, or an e-mail from your real estate agent, and whatever issue you were having might just get resolved more quickly than by you spending hours on the phone, sending e-mails, or writing a scathing complaint online.
Too often, some of the in-between-the-lines benefits of a real estate agent get overlooked.
This is one of those benefits. Don’t overlook it.
If you have any little worry around your house…or a long list of them…call me your real estate agent. Ask my advice. As an agent I will give it freely, and for free. And gladly.
It’s probably just making small talk, but there are certain questions people seem to always ask professional real estate agent at holiday gatherings, cocktail parties, weddings, and even funerals.
So, with Thanksgiving just days away, here are a few of the questions that seem to be commonly asked… and why you shouldn’t ask them.
#1 “You still doin’ professional real estate agent thing?”
I know it doesn’t sound like a horrible question for any real estate agent. It probably isn’t a question people think twice about asking… just making conversation.
But it’s essentially saying you never expected the person to make it in the business as an professional real estate agent. Like you’d be somewhat surprised if they say yes.
It also inadvertently suggests that you don’t view it as a true career.
It’s a hard business being a professional real estate agent. It takes a lot to make a go of it. People do come and go quite quickly and often in the real estate agent profession. So it helps when agents feel the love and support of people close to them. And even though this question seems so innocent, it’s also one that cuts kinda deep without anyone even knowing.
I doubt many professional agents even think twice about this question. But I also bet it affects them more than they are aware.
But it certainly isn’t as bad a question as…
#2 “Why don’t you try and get a real job?”
Being a professional real estate agent may not be a job in the sense many people are used to. It certainly isn’t one that you just show up to from 9 to 5 and collect a paycheck at the end of the week.
People who are used to a “normal” job probably can’t fathom why anyone would be a professional real estate agent instead of working for a company that gives them a steady paycheck, vacation days, and sick time.
But being a real estate agent is a career. Again, it is a tough career to succeed in. Agents are often doing everything they can to stay positive and focused.
And if they’re focused, they probably won’t have an answer for the next question…
#3 “What’s your back-up plan?”
At this point, you get it.
Just. Don’t. Ask this to an real estate agent.
#4 “Do you have any listings that are good deals?”
Probably another question people are just asking to make conversation. But it implies you’d be interested in buying a house, if the professional real estate agent happened to have a listing that was a good deal.
If the real estate agents have listings, they can’t (or at least shouldn’t) be telling you it’s a good deal, or help you buy it at a price that’s a good deal. They should be representing their client’s best interest and getting the highest price they can for them.
But this question may just be a matter of not understanding what it means when one asks, “Do you have any listings…”
Just know that the professional real estate agent can, and certainly will, help you find a great deal that they are not the listing agent on. They can and will show you listings of another real estate agent just probably not their own. (Probably better that way…)
#5 “How’s the market?”
This is too broad of a question for any real estate agent.
The market is never entirely good, bad, or somewhere in between. It’s always good for some people, bad for others. How the market is depends entirely upon you and your needs and circumstances.
Not a bad question really. But it certainly isn’t one that an professional real estate agents can or should just answer flippantly. So if you ask it, maybe you should be prepared to get into your specific scenario so they can accurately answer it.
Too many people get flippant answers from professional real estate agents and base their perspective on the real estate market, and overall economy, on off-handed answers to questions like this.
#6 “How much is my house worth?”
This one goes hand in hand with the one above.
Being a professional real estate agent, I will have a fairly decent range in mind for what your home is worth if knowing the area and know your house.
But I can’t tell you how many times I’ve sat with someone to go over an analysis of their home’s value, and then they tell me they were told by several agents that their home is worth “$XXX,XXX”.
When I dig a little bit, it often turns out it was just in casual conversations at a get-together with an real estate agent. No analysis was done. A number was just shot out of an real estate agent’s mouth.
It’s funny how often people don’t trust or believe real estate agents. Yet when given a casual answer to what seems like a casual question, a homeowner often holds onto that “value” as if it was absolute truth.
In turn, homeowners often have a false sense of what their true equity is in their home, which in turn directly affects their perception of their wealth and net worth.
There’s nothing inherently wrong with these questions, but just know that if you want an accurate answer you should ask the professional real estate agent to truly roll up their sleeves and give you a good analysis and explanation. And that just can’t be done as they pass you the gravy.
Posted with permission from the original author, Joe Kerouac
Real estate agents hear this all the time…“I wish I had called you before. But I just didn’t want to bother you. I know you’re busy…”…after it is too late.
There are times when you might feel like you shouldn’t “bother” the real estate agent you know. (Could be your friend, a neighbor, your brother-in-law, cousin, your sister…)
Maybe you’re truly trying to be considerate.
But, maybe it’s because you’re not even aware that you should.
Or, you just don’t want to feel obligated or pushed into doing something. (Despite what many people think, most agents are not pushy. Most are the exact opposite.)
So, let’s go over a few times that you should “bother” your real estate agent. Because it really isn’t a bother.
In fact, we’ll get into why it will bother them if you don’t reach out to them for any of these things.
1. No Bother if You just want to check out a house.
You see a house online. Or a For Sale sign. Maybe even just stumble across and open house.
You’re not all that serious about buying a house. Maybe you’re only just starting to think about it. Or, maybe you have no desire at all to move, and you’re just curious and want to take a peek.
So, you don’t want to “bother” the agent you know to show you the house.
Instead, you call the listing agent. Or some random agent you don’t even know. Or just walk right into the open house.
Next thing you know, you love the house. You’re making an offer. The offer is accepted. And then you regret it. Or problems come up. Or the process is miserable. Or you don’t feel like the agent you’re dealing with is giving you the best advice.
And that’s when you call the agent you know.
Too late. At that point, the agent you know can’t help. (Or at least shouldn’t…) Because now you are represented by another agent. The agent you know can get in a lot of trouble for even giving you friendly advice.
As innocent as it seems, when you just want to go see a house… you are inadvertently making a bigger decision than you think — you are deciding who will represent your interests, advise you, and help you through the process.
Even if you just go see a house with another agent, and before you even make an offer you decide to have the agent you know write up the offer and represent you… the agent who simply showed you the house could claim you as their client. It’s called “procuring cause”. I won’t get into the details here, but it can become messy.
You’re better off calling the agent you know to show you the house in the first place. You won’t be considered a bother.
What will bother him is to have to bite his tongue and not give you the help you want further into the process.
2. Not a Bother if You want to know how much your home is worth.
Maybe you’re just curious about how much your home is worth. Or, maybe you’re actually thinking of selling. It might be because you want to get a feel for your net worth.
Nowadays, you can hop online and check out any number of sites that will give you the value of your home.
So, why “bother” the agent you know about this?
Because most of what you will find online is highly inaccurate to begin with. They are “automated” valuations. They are based upon data and algorithms. They have never even seen the inside of your home. They do not take into account your local market conditions.
And if you base your hopes, dreams, and decisions off of an inaccurate value, that can hurt you quite a bit.
Again, asking the agent you know to do an analysis and give you a true market value… not a bother.
But, it would be bothersome to hear that you’ve based important life decisions off of an inaccurate value once it’s too late.
3. You are considering a home improvement project Not a bother.
The real estate agent you know probably isn’t an architect. Or a builder, a plumber, an electrician, a painter, etc. So, they probably can’t advise you about the ins and outs of a specific project or costs.
But once you have a sense of the proposed cost of a project, before you just pull the trigger and move forward, you really should “bother” your agent for their input.
Putting on an addition? That will surely increase the value.
A kitchen or bathroom remodel? Yep, your house will be worth more.
But will the value increase more than the amount you spent? Will that matter in your situation? Will the choices you make in decor, layout, or fixtures appeal to a buyer down the road? Does that even matter, given your future plans?
All questions and thoughts your agent can get into with you. Before you spend the money and go through the headaches of a huge project.
On the other hand, if you go forward with a home improvement project and spend, let’s say $60,000, and then call your agent…
You could seriously regret how much you spent, or even doing the project at all.
Your agent doesn’t want to break the news to you that your home is only worth $38,000 more after you spent $60,000. There is no joy in that. There is nothing that can be done at that point.
That’s just three examples. There are certainly more. But you get the point…
So, reach out to me before you do anything real estate related… and just trust that it isn’t a “bother”.