Selling FSBO: 5 types of unrepresented buyers

Short version: They know more than you do, or are wasting your time.

The Seasoned Small Investor

He/She knows more about the Real Estate market than you do. Or at least they think they do. They don’t need an agent. They know what they’re doing. They understand real estate contracts. They may be using one they wrote or had an attorney write, or may be using a pre-printed contract. Their objective is to make money. They represent themselves, no matter what spin they put on their pitch. They want to buy low and sell high, or buy and hold and rent. Either way, the less you get for your home, the better ROI. Use caution with them. Read everything before signing and if you’re not sure what you’re signing, hire a lawyer.

The "Late Night Infomercial/Corner Sign Investor"

There are a lot of “make money in your spare time” ads and a lot of people that do it. Some of these investors haven’t actually bought a home yet, they’re just excited and want to get started to make their millions. Some are option buyers. Meaning, they will put your house under contract, and then sell the right to buy it to someone else. There are too many variations to list. Ask them how many homes have they bought, at all? In the past year? Do they have any references of past buyers that were satisfied? Or vendor partners they work with? Usually, you see these investors in highly distressed properties or estates. They look for properties where the owners simply want out. That doesn’t stop them from making offers on marketable properties though, so keep an eye out.

The iBuyer

New onto the scene is the iBuyer. They come in many names and forms, but share many similarities. They represent their shareholders and corporate owners and their goal is to make money. They may make you a great offer, but then come back later and reduce their offer or insist on repairs or both. As with traditional investors, they buy and flip or buy and lease. In both cases, they don’t make money, unless you lose it.

This is a great option for distressed properties, or situations where showing the home is difficult or unpractical (aging parent at home for example). They have their use, and in some cases are better options than traditional listing. Google what people say about their company and ask lots of questions. Know your opponent. Remember, that agent, no matter how nice, represents the buyer, not you.

Lookie Lou's & Dreamers

There are a lot of people that just like looking at homes. Maybe they live nearby and are curious. Maybe they want to buy but can’t get a loan. Most agents will not show homes to an unqualified buyer. Ask them for the loan pre-qualification letter. If they aren’t serious enough to talk to a lender, then do you really want to waste your time showing them your home?

Unicorns - The savvy buyer.

Okay - I’ll admit, I’ve heard of these, but haven’t met one yet. These buyers buy lots of homes. Probably someone that moves a lot for work. They have been there, done that enough times that they know the ropes. They’re willing to do the work of an agent and find the home themselves. Why? To save the commission. See the Unicorn will give you fair market value (or close to) minus what you would pay a buyers agent in commission. That way they get a deal. If you meet a Unicorn, use caution. Remember, they are still a buyer and still want a good deal. That’s why they’re doing the leg work. Read everything before you sign and consider using a transaction agent. A transaction agent is a licensed agent that can do the paperwork for both sides for a nominal fee. Your other option is to hire a real estate attorney to write up the paperwork. The downside to attorneys is that they charge by the hour, and want to get paid whether you sell your home or not.

Overall, best tips.
  • Set a price limit (net) that you will go no further and hold your self to it. The initial offer is seldom the final offer.

  • Remember who you are talking to. No one buying your home has your best interest at heart. No one.

  • Read Read Read. I cannot stress enough to read everything you are signing. Google is a great resource if you don't know what something means, google it. This is likely the biggest investment of your life, don't sign something unless you know what it means.

  • Be prepared to walk away. Know your rights and be prepared to say "No. I won't reduce the sales price, No I won't pay for these repairs." Remember if you're selling yourself, you are selling below market value. There is always someone else who wants a deal.

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