Why for sale by owner usually fails

Dan Polimino is a residential real estate expert in Colorado. Today’s episode of Ask the Colorado Dream House covers the reasons why for sale by owner is generally a bad idea and the three reasons a home might not be selling. 


Full transcript.

00:02                                 Hi everyone and welcome today’s show, Ask the Colorado Dream House team. I’m Dan Polimino coming to you live from Denver Colorado. Great to have you with us every week. Right here we’re giving you great real estate advice and it doesn’t matter where you live in the country you don’t have to be in Denver. The information we give you is from years and years of experience and thousands of transactions. It’s good database driven information. So take it run with it and use it for whatever you’re trying to do bi or so real estate to the things we like to accomplish every show. One we want to give you a little information about what’s happening in the market and we want to answer your questions. And again we’d love for you to participate at any point if you’d like to leave a comment here on facebook please do so.

00:48                                 Or you can e-mail us at team@coloradodreamhouse.com or give us a call at 7204466325. All right. What’s the topic today? For sale by owners and a lot of people think you know what, I’ll just sell my property on my own. I don’t need a realtor. I don’t want to pay the commissions and I don’t want to pay the fees. How hard could it be. Other people have said well I’ve done it in the past I can do it again. Let me tell you. For sale by owners are rarely, rarely successful at selling their own property. We’ve had a rash of them this summer where we the agents have been representing the buyer and the seller was for sale by owner and almost every one of them turned out to be a disaster where the buyer ended up terminated and they terminated for a variety of reasons.

01:42                                 Number one most for sale by owners don’t really understand the Colorado real estate contract. They may say they do but they really don’t understand the meaning of the dates and deadlines and they don’t understand all of the paragraphs and the subsections. Again they’ll say they do but they don’t usually a For Sale By Owner doesn’t understand the meaning of the appraisal and how important the appraisal is or the impact on the inspection and how to resolve it properly. And a lot of times we run into for sale by owners that are just very Were you really unrealistic. And so every time we get into a deal with a For Sale By Owner on behalf of our buyers we kind of cringe because we know this isn’t going to go well because the other party doesn’t have representation.

02:34                                 They don’t have somebody with experience advising them how to get through this how to navigate it and how to get through. Well to the closing table and so a lot of these for sale by owner deals fall apart. We just have to fall apart again yesterday for all of the same reasons we just went through. They weren’t realistic. They didn’t understand the contract. They didn’t know how the appraisal worked. And again dead deal wasted a lot of people’s time energy and money. So again don’t you know I know what people are thinking out there. You’re

03:10                                 going to think I’m going to I’m going to send Dan an e-mail or I’m going to leave a comment that I’ve sold two or three properties on my own is for sale by owner. Yes I get that I get there so there’s some people out there that have done it and done it successfully. You don’t need to send me an e-mail. I know it happens it just happens very rarely. And if you are one of the people that sold your own property this year or last year as a For Sale By Owner Congratulations you’re in a very very small minority. All right.

03:40                                 Dear Colorado dream house team. Why can’t I have multiple realtors looking for a home for me or more than one realtor selling my home. Well let’s talk about the buy side first. If you have multiple realtors looking for a home for you that’s OK. You can do that. However they’re all going to want to get paid. Right. And so the question becomes when it’s time to actually choose the house and write a contract which realtor do use of the three or four that may have been looking for a home for you because again they don’t work for free. Not many people do. So how do you decide which one gets paid. Probably not fair to all four of them. It’s probably better just to interview four or three and find out who you’re most comfortable with on the selling side.

04:33                                 You can’t have more than one realtor selling your home now. Technically I guess you could but then you’re going to run into some problems right. The problems are who procured the buyer and by what means did they procure the buyer so they can get paid and can they prove how they procure the buyer. And since the real estate commission only allows one sign in the yard who sign goes in the yard and since métro list only allows one realtor to put it in the MLS which realtor gets to put it under the MLS under their name because the realtor putting it in the MLS under their name is probably going to get all of the other all the leads. And so what happens to the other realtors You see it’s just a mess. It doesn’t really work well. Did Colorado dream house team do you feel like the market is starting to pick up because it seems like the last two months have been slow.

05:28                                 Spot on. Congratulations. You’re not even a realtor. You got it. Yes. The last two months have been slow. But the question is is that seasonality or is that a shift in the market. We had told you early on that seasonality was coming July and August traditionally after Fourth of July. Pretty pretty slow. And then the market starts to pick up in September. I am seeing signs that the market is starting to pick up. We’re putting about six to eight properties on the market. More buyers are coming into place. So I’m encouraged. All right dear Colorado dream house team. My house did not sell this summer. What did we do wrong. Well you may not have done anything wrong but traditionally when your house doesn’t sell it’s probably one of three things or maybe all three things.

06:15                                 First was it priced right. Was it priced too high. Did you make the adjustments when you need to make the adjustments in price. Did you chase down the market. So what did you do with price. Number two. How did it show did it show. Well because if it didn’t show well well that could be one of the reasons. And number three did you hire a real estate team or agent with really superior marketing. I’m not talking. Put it in the MLS and put a sign in the yard. I’m talking about a rock solid marketing plan that goes above and beyond your expectations. Did you hire that person. So those are the big three I mean as long as I’ve been in this business it’s usually one of those three or all of those three or a combination thereof.

07:00                                 Was it priced right. How did it show. Did you have exceptional marketing. And if you know you hit on one or two of those are three of those then by all means contact us and we’ll help you out or we’ll talk to you about selling your property. All right. That’s it for today’s show. Everybody have a great weekend. We’ll see you back again on Tuesday.