Do you really want to sell by owner?
Approximately 10 % of sellers try to sell on their own and many end up selling with an agent. Situtations like the one I describe in the post below are prime examples why it is beneficial to have an experienced agent. How many sellers would have thought of the potential liability issues described.
Here is the original blog:
But, I just want to…
Although this is not the first time a situation like this has come up, we thought we would post this just because of the persistence of the buyer. We have a seller client that recently accepted an offer on the listing. This home was a “fix and flip”. The initial home inspection when this property was purchased to fix up did not reveal any major issues, and pertinent issues were addressed during the fix up. The house was refitted with all new paint, flooring, cabinets and bathroom. Additional minor cosmetic items were addressed as well. Although priced competitively for the neighborhood, the home had been sitting a little longer than the client wanted. The accepted offer was taken to stem any substantial loss. At the time of acceptance the buyer’s agent was informed that no repairs would be made due to the low price of the offer. (It definitely comps better). A subsequent home inspection revealed some issues, all of which can readily be fixed. Now keep in mind also that the seller received a substantially better back up offer the day after acceptance.
So, now we have already established that no repairs would be made, and there was a better offer waiting. The inspection notice in AZ allows response identifying whether requested items will be addressed or not. If not, it is the buyer’s right to cancel with full refund of earnest money. The buyer still decides to go forward. Now comes the interesting part.
The buyer is purchasing this property as an investment, and will be leasing it. The buyer now requests that he be allowed to go into the property to commence repairs and do some landscape work prior to close of escrow. The buyer’s agent sends a letter signed by the buyer stating that the seller will be held harmless should anyone be injured doing this work. He requests this so that the property can be ready to rent upon COE. Hmmm. The question back to the buyer’s agent was would you let your client sign this if the situation was reversed. I won’t bother with the answer.
Considering that this is an investor to investor purchase it is easy to say this is business and not personal. The old adage of “Nice guys finish last” really applies in this situation. How many ways can the seller be screwed in this scenario? Here are some key aspects:
- Money talks and you can be sure if someone were injured, a lawyer will try to find a way around the signed agreement. Even if the seller prevails, what about the legal costs?
- Some of the repairs were minor electrical. Suppose the repairs were faulty and the house burns down. Who takes responsibility for the mounting costs as the situation is resolved. And suppose the buyer uses unlicensed repairmen. They have no insurance to cover the structure loss, and surely the seller’s insurance company won’t cover it due to negligence.
- Suppose the buyer doesn’t close. They have started landscape renovations and leave it unfinished, making the property harder to show until completed (now at the seller’s expense)
Clients should always know that real estate transaction can be an emotional roller coaster. It is too easy to give in to a request in the effort of being nice and trying to make the transaction go easier. This is ok when there is no real risk involved with the request. Buyers and sellers need to realize that in the end, this is indeed a business transaction and should be handle in a fashion that will protect all parties in addition to being kind and courteous to each other.-----------
Take this original post and look at it in current (2017) market conditions as well, and take it a step further. Someone selling on their own (FSBO) might not think of all these pitfalls. There are now investors marketing directly to sellers who may not know they can get more for their home than an investor will pay, despite all claims of a fair price. Having an agent guide you through all this can save you money and headaches.
Adam Tarr PC
Realty ONE Group