Dealing with Buyers: FSBO vs. MLS
I understand sellers very well. Not so much, buyers. There are buyers who circle open houses for years, racking up numerous agent hours before shocking everyone and taking the plunge to buy a property. Then there are other buyers (ie. us) who do all their shopping online to narrow down their options, then spending one or two days visiting properties before making an offer. Some buyers place offers on multiple properties in case one or more fall through. My husband and I have placed offers on exactly three properties, and we bought all three.
In the last 18 months, I have fielded seven offers for three different Hoboken condos. Two were on my SW Hoboken two bedroom, one on a four-bedroom in my building, and the four on the last three-bedroom owned by the developer I work for. All seven offers came from FSBO buyers even though two of the units were listed on the MLS. Only two of the offers turned into contracts and closed sales. Six of the seven were lowball offers (20%+ under the asking price).
One the one hand, I am happy that these offers came in at all. On the other, because I am not a realtor, I cannot be involved in price negotiation unless I own the property. As a result, I wind up being a passive and usually horrified bystander as misunderstandings mount between the buyer and seller. Each party goes into the negotiation with two sets of price #s in mind; the absolute ceiling/floor they will go to, and their ideal #. When buyers start out with a lowball offer, it takes a lot of work and discussion to get both sides to a mutual meeting ground. This is where a realtor can be invaluable because they have access to market data via the MLS that can help bridge the gap between buyer and seller. The buyers and sellers I dealt with had the stomach for exactly two sets of offers, and then both sides were soured on the deal.
At first I thought the issue was money. But that doesn’t seem to be the main factor since many of the failed buyers subsequently went into contract for similar properties at sale prices above the asking prices on the units I represented. The issue seems to be the huge disconnect between buyers and sellers. Sellers start out the process believing their property is immune from the economic downturn, and buyers go into every negotiation assuming they will get a minimum of 5-10% off the asking price, even if it is priced at or below recent comparable sales.
The sale process is a difficult and exhausting experience. I think that when the buyer and seller are too far apart, without a middleman, it is difficult to close the deal. I do think realtors should be compensated for their time and expertise, I just think the current business model does not accomplish that.