Articles
The "Fizzbo"
by Bill Jardine Feb 07, 2007
As an Exclusive Buyers Agency, we often work with properties that are not listed with Realtors and are called For Sale By Owner properties in our industry jargon. The first letters of this term are FSBO, so the term in use has become Fizzbo.
Our clients often ask if a FSBO is a better deal than a property that is listed with a Realtor. Our answer is almost always that it is not likely to be a good deal and is quite likely to be a bad deal. Here are a few of the reasons we have come to that conclusion.
- Owners who attempt to sell their own property without the assistance of a Realtor are not inclined to seek a lower price to account for their not paying for a Realtor’s services and protections. They almost always price their property as high as they can, based on the prices of listed properties.
- There is no particular reason to believe that the seller is sophisticated in property values and will be able to negotiate in a meaningful way.
- There is no insurance supplied for errors and/or omissions that may injure the buyer.
- The contract drawn between the parties will likely be deficient in many ways compared to the copyrighted purchase contract used by the Realtors.
- The seller will not usually be able to assist the buyer in any meaningful way when it comes to managing all of the complicated processes that are required by a modern real estate transaction.
- The seller is not bound by a code of ethics and may not suffer consequences for unethical behavior that may injure the buyer.
We often work with buyers who purchase a FSBO property, and we find that we have to charge extra to account for the extra work we must perform on behalf of the sellers, who are usually not completely familiar with their obligations and the many materials they are required to produce and execute.
It may be possible to find a seller who is willing to reduce his price in order to accommodate for the lack of a Realtor’s services, but you gotta wonder, “Why didn’t he just list the property and protect himself if he is going to end up with the same net proceeds anyway?”
The FSBO property is set up to get more for the seller while making things harder and riskier for the buyer. It is pretty obvious, don’t you think?
