Today I want to talk to you about for sale by owner or as realtors we call them FSBO’s. It’s gonna be a little bit longer, but hang on I think you’ll find this valuable. What we talk about the real estate is that, there’s really only four kinds of buyers. We’re gonna call them the A buyer, the B buyer, the C buyer and the D buyer. A buyer is the best buyer you can get, the D buyer the worst buyer you can find. I’ll go through the way real quickly here. The A buyers again that’s being transferred into town. So, he’s being transferred in here from Vancouver or Toronto.
He has money because he’s probably being transferred in from by business or something like that, he’s getting a promotion, so he’s got money. He’s highly motivated, needs a place for his family and you’ve only got one or two days to find a house. Because what he’ll do is, he’ll call me a couple weeks or a month before coming out and saying, “Pete, here’s my criteria. I want a two-story, I want at least three bedrooms, I want a finished basement, a garage blah blah blah blah. Here’s my price range here’s the area I want to be in. Let’s line up ten or fifteen of them for the couple days that I’m there. I’m gonna looking a ball I got to pick one and then I’m gone”.
Is he gonna look at a first sale by owner? Ask yourself this question. Is he gonna call you and say, well your kids have soccer then but can I come out?” Let’s forget it not gonna happen he’s going to use a real estate agent he’s not gonna be looking at a the sale he wanna.. In terms the B buyer, this is the buyer that just sold his property. He’s got money, he’s highly motivated because he just sold his property. He also has a relationship with realtor that he just paid a lot of money to for selling his property.
Now he’s going to use the realtor for free to help him go and find a house for him. This guy might have thirty days, maybe in sixty days to find a property and again he has a realtor. The realtor is not going to be showing him first sale by owners for the most part. He should you know I do would it make sense. But the reality is the Realtors are in business and when you can make money doing it this way and nothing doing it that way or a substantially less enough to represent both sides and yep, they’ll just show you the ones there in the MLS.
S, in terms of his C buyer, the C butter is one of my favorites. He’s the first-time buyer, first time. We will put them in their car usually until they’ve talked to the mortgage broker, the bank and they’re pre-qualified. So, we know that they’ve got money or not gonna show any properties, are be highly motivated. Usually when they’re looking at a home, it’s because they know they’re getting married, they just got a raise at work, they got a great job, they want to get into the market. In terms of time, these guys might have a little bit more time. But usually they buy in the first month, they’re excited they want to get going. Well, they see a for sale by owner. Well, the reality is again they’re gonna be using a real estate agent that they trust.
Because they’re first-time buyers, they don’t have a lot of experience in buying homes and a good realtor be able to say, “Well yeah, it’s the house that you like, but I’m determined to determine what the price is. It’s not a matter of just offering less”. So, they want a realtor to walk them through the process and that kind of thing is the realtor going to be looking through for a first sale by owners and negotiating is commission all over again and doing all that stuff. He may, he should, I do most won’t it’s the reality.
In terms of the D buyer, this is the buyer I called him the ‘Bargain Hunter’. Because for the most part back in the day, that’s where you would advertise to find these guys. For sale, we find you in the bargain hunter and the reality is these are usually very astute buyers. They’re not afraid of writing a contract on their own, they’re not afraid of negotiating on their own. They know a good deal is, they don’t need a real estate agent. Trust me, all the money you’re hoping to save on commission they’re gonna be saving that money instead of you and probably more.
So, what’s the difference when you’re for sale by owner. If you’re for sale by owner you’re discounting a lot of these showings and a lot of these buyers, that one’s you’re attracting are the bargain hunters. So, as a result depending on what study you look at the amount of commission’s that you’re gonna pay selling it this way is going to be three and a half four percent, when average is down. Because of course you pay 7% of the first hundred thousand but only 3% of the ballots. Well, these ones here they can cost you from 7 to up to 14% in the sale price. This is why it makes more sense to use a real estate agent. Their value is built into the process.
If you don’t want to use a real estate agent, you’re gonna get a lot of lowball offers ask anyone that sold their house for sale, they’ll tell you the same thing. But it’s worth thinking about. If you have any other questions give me a call. My numbers at the end of this video, I’d love to chat with you.