#91 in a series of true experiences in real estate
March 1995, Hills Newspapers
Not long ago new clients were referred to us, a family with small children who need a larger house. They will need to sell their present house, so our conversation began with what that house might be worth.
They live in an area we know very little about. We’ve never sold a house there, never even looked at houses there. We said that we are not the right agents to list their house, but we offered the name of another agent who does work in the neighborhood.
They met the agent, she estimated a selling price, and she talked to them about strategies for selling in an area where buyer traffic is light. There’s nothing wrong with where they live, it’s just that not many people know to seek it out. She suggested the usual things – multiple listing, a sign and open houses, advertising. She also said that she would go to nearby real estate offices and personally urge agents to see their house.
Now they needed to decide if they would sell first or buy first, always a conundrum. One day we were talking on the phone about this chicken/egg thing when one of the sellers casually said that they’re thinking of selling their house themselves. I didn’t say anything at the time, but later I couldn’t stop thinking about it.
Having your house available for people to see is hard enough. Being the person in charge of getting people there must be ever so much harder. But especially in this case – if we are to believe that getting people there will not be easy – how will they go about it?
I suppose they will advertise in the paper. They’ll hold a Sunday open house and open that someone will come. Next question: if people come, will they be real buyers? Most people who actually intend to buy, and who are able to buy, are working with an agent. They tend to shy away from houses offered by owners because they don’t want to negotiate directly with them. It doesn’t cost them any more to be represented by their own agent, so it makes sense to them to have one.
But maybe someone who is just starting to look will come to the open house and will want to buy it. Now what? Can the sellers tell this person what he will have to do to buy their house? Can he borrow enough money? How much down payment will be required? What will his closing costs be?
The would-be buyer can talk to a loan broker, someone who can answer these questions, and if the answers are right, and once a price has been agreed upon, they can proceed. Now they will need a contract. Who will write it? A contract to sell/purchase is long and complicated, and in this particular case, because these people need to sell and then buy a house they haven’t yet found, contract timing will be crucial.
I don’t think they’ll want to move from their house to a temporary place. They’ll want to time things so they move only once. They won’t want to pay two mortgages at the same time. Maybe they will say to their buyer, “We have to find a house now, so you’ll just have to wait until we do.”
But there are problems with delays. Things often change – the buyer’s intentions, his job situation, loan conditions. Does the buyer go ahead and do his inspections while the sellers are looking for their new house? If he doesn’t, they won’t know for sure that he intends to buy. If he does his inspections, who will guide him through them?
It seems awkward to me to think of the sellers and the buyer inspecting the house together, then talking over the results. No matter how well maintained the house is, there is sure to be a list of things that aren’t up to present code, need repair, should be replaced. Will the sellers feel comfortable saying, for example, “Well, yes, the furnace is old, but it’s always worked fine for us. There isn’t any need to suspect anything is wrong with the combustion chamber”?
Can they, in other words, protect the buyer’s interests as if they were their own? Or will the buyer be hanging out in the breeze, as it were, trying to figure out what questions he needs answers to? What about the sellers’ legal responsibilities? Will they know to provide all of the required disclosures?
If something goes wrong, someone will have to recognize that there is a problem, figure how bad it is, then think of something to do about it. Things that can go wrong range from small, fairly-easily solved bad feelings to giant impasses that require time and thoughtful action. These can be buyer problems or seller problems or both. Who is going to do something about them?
How will the seller know, for instance, that the buyer is worried about something? Will the buyer and the sellers be friends throughout the transaction, chatting on the phone daily, or will they be adversaries, or what?
Am I unnecessarily concerned? Maybe. Maybe these sellers will be lucky. They may locate a buyer who is easy to talk to, isn’t too picky, has enough money to complete the sale, and is strongly committed to getting it done. Still, a hundred difficult escrow happenings occur to me, and as I think of them, I wonder what a seller, even a smart, willing seller would do about them.
We assume our sellers know their own jobs. Presumably they trained for them, have worked in them, and now have experience doing what they do. What was it like when they first started? Probably they asked a lot of questions of someone who’d been there awhile. Probably they didn’t know when things were unusual and when they were going just fine. It’s like that with any new job. It’s like that with real estate sales.
People hire real estate agents for the same reason they hire anyone – for their experience, knowledge and time. Most people don’t try to do their own car repair or roof work because they don’t know how. Given enough time and the right equipment, they could do these things, but that is precisely the catch. It’s not that it is impossible, but it is often impractical.
Few sellers have the time to market their houses, familiarize themselves with reports, disclosures, and the contract provisions that will protect themselves and their buyers. Few know what is needed by a lender or title company. But virtually every seller who handles his own sale will expect to save the fee he would have paid had there been an agent taking care of these things. The trouble is, the buyer will want the price he pays reduced, too.
Question: whose money is saved?
