THE PERILS OF BEING AN UNREPRESENTED BUYER
Mostly we focus on how people shouldn’t be an unrepresented seller. We stress the importance of listing a home with a trusted REALTOR who will put their home on the Multiple Listing Service, look out for their best interest and get them the highest price.
However, there is also danger in being an unrepresented buyer. It is dangerous to blindly enter into a contract with a For Sale By Owner, especially if the buyer is from out of the area and unfamiliar with market conditions. This example will illustrate that point.
There was a house that Geordie was asked to do a Market Analysis for. The owners were set on selling it themselves but wanted a price opinion from a professional. We both went out to meet the sellers and take a look at their house. The home was on some land in a desirable area of Leavenworth. The land was excellent but the home had some functional obsolescence. It was dated with a small kitchen, had rooms in odd parts of the home and the general flow of the home was a bit broken.
After looking at recent sales in the area of homes with similar square footage and land size, Geordie presented his price opinion to the sellers. They were shocked, believing their home to be worth at least $100,000 more than Geordie’s price.
They went ahead and put their home on the market For Sale By Owner at the inflated price. After three weeks, they got a full price cash offer from an unrepresented buyer. We don’t know the full details of the transaction, or how much negotiating took place.
However, the buyers walked into the transaction blind. They did not have an agent to educate them about current market conditions and the future resale possibilities. The buyers did not have a professional negotiator helping them get the best price for the property. Furthermore, since the buyers paid cash, a bank appraisal was not done on the house to prevent them from over paying.
The final result is the buyers overpaid for the property. In the event that they have to resell the home quickly, they will have less equity than they thought. This type of costly mistake can be avoided by using a REALTOR to help with the purchasing process, ensuring that you will get fair price for the property you are buying.