News
July 22, 2018

Today's complex, fast-paced housing market is no place to go it alone

By AARON TAYLOR


Aaron Taylor
2018 NETAR President

 

A headache for some buyers and sellers in today's real estate market isn't necessarily the tight inventory, increasing prices, multiple offers or picky lenders. It's the crush of a fast-paced market swirling around them like a tornado and the temptation to save a little time and money by cutting some corners. It can be very confusing and - if you're not careful - sets the stage for costly mistakes.

There's no question that sellers now have a market advantage. But despite the allure to stick a "For Sale by Owner" (FSBO) sign in the yard and save some money by cutting out the Realtor® is not necessarily a good choice. In fact, in many cases, sellers end up chucking the FISBO sign and hiring a professional to get the transaction on track. And there's a downside for unwary buyers who don't have a professional Realtor® in their corner.

Consider this as a baseline in the FSBO consideration. According to detailed research on buyers and sellers by the National Association of Realtors® (NAR), FSBO transactions are at an all-time low of 8 percent at the same time the market is at a record high. There's a reason for that. Kaycee Wegener who manages marketing and media relations for Rentec Direct and shares industry news, products, and trends recently published a story that illustrates a couple of those reasons.

Her story is about the experience of some friends who bought a FSBO from a seller who insisted that no real estate agents be involved. "At the time, it seemed logical to the buyers to save money (plus, they were a bit desperate in a tight market with a tight timeline). They entered into a transaction with the seller using an independent, non-local mediator to help with drafting sales agreements and required paperwork. It was a decision they came to regret."

Since a Realtor® was not involved most negotiations were verbal. "If they had written documentation to reference, they likely could have saved several thousand dollars on the transaction."

In her example Wegener wrote that her friends experienced a seller "who tried to downplay problems or flat-out lied at every stage of the transaction, causing them (the buyers) no end of grief before moving in."

And the buyers were not allowed to be present during the home inspection where the seller "hid some issues " that may have been caught if a Realtor® had been involved. "For example, two of the home's three toilets were faulty. But the seller turned off the water to them before the inspection and the inspector didn't notice the issue."  If you're curious about the full story point your browser to https://magazine.realtor/for-brokers/network/article/2018/06/lessons-from-a-bad-fsbo-purchase?tp=i-H43-Bb-2KR-3fKqV-1p-AoRh-1c-3fUHV-1GfNIT&om_rid=54180591&Om_ntype=RMOdaily&om_mid=8955

It's an extreme – but classic - example of the sage advice of "let the buyer beware." And yes, it can be balanced by finding a transaction where everything in a FSBO transaction worked out just fine. But remember that only 8 percent transactions are for sale by owner, and many of those are among relatives or friends.

For most people buying or selling a home is the single, biggest financial transaction they will ever make. Something that big deserves having professional advice and involvement to ensure it goes as smoothly as possible. Fortunately, there's a simple solution that will give both buyers and sellers peace of mind that the transaction is handled professionally. Partner with a professional – a Realtor® - who adheres to NAR's strict code of ethics to navigate the choppy waters of today's market.  What does that code of ethics do for buyers and sellers? Here's a link to the detailed explanation: https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/2018-code-of-ethics-standards-of-practice .

Aaron Taylor is the 2018 president of the Northeast Tennessee Association of Realtors®. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,200 local Realtor® members and al most 100 affiliates.

 

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