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Monday, February 12, 2007

For Sale by Owner in Key West: Buyer Beware




I was nosing around on the Internet last week and found an ad for a Shipyard Condo that was "For Sale by Owner". I read further: "This one bedroom (800 square feet), fully furnished condo is located in Truman Annex..." The condo was priced at $610,000.

Thinking I might turn this FSBO into a listing, I checked out the property. While the owner did not list the unit number, it was easy enough to figure out from public records, as I knew his name, and coincidentally had researched listing the unit a couple of years earlier for the previous owner who sold it to the present owner as a FSBO. (The previous owner wanted me to cut my commission to get the listing and still offer a 3% split to the selling broker. But what he really wanted was for me to do a CMA (competitive market analysis) to establish a price for the unit).

I knew that the unit was 600 square feet as opposed to the 800 square feet the seller had advertise. I sent the owner an email advising him of his error and told him that there were 23 other units on the market in the Shipyard complex, 4 of which were also one bedroom and similar size, but priced differently. There has always been a waiting list of potential buyers for Shipyard condos, but this new market has created an oversupply of available units. So prices are dropping. It could be that the previous owner misrepresented the square footage when he sold the unit to the current owner. I just checked the site where I found the ad for the unit, and the current owner is still running the same ad with misleading information.

In the 1986 landmark case Johnson vs. Davis, the Florida Supreme Court found that sellers cannot conceal material defects. In that case, some prospective buyers were looking at a home and noticed evidence of a roof leak. When they asked about it, the sellers admitted there was a leak long ago but that it was completely repaired. Before closing on the house, it rained, and the buyers discovered that the roof was still leaking. They sued to get their deposit back and won.

Material Defect
Defects, including any property damage, malfunctions of major systems and environmental hazards affecting the condition of a home, which should be readily disclosed to a buyer.

I mention the Johnson vs. Davis case as an example of things to avoid when dealing with a FSBO. I advise every buyer of mine to engage a professional home inspector to inspect a property as part of the purchasing process. Sellers often forget, overlook, or even intentionally misrepresent the condition of their property when trying to sell it.

I am of the opinion that sellers who are unwilling to pay a 6% commission to a realtor to sell their property are going to be difficult and cheap to deal with. Difficult because they want to control things. They want to control the information regarding the property and what the prospective buyer may see, when, and for how long.
They may unintentionally represent or omit material facts regarding the property such as square footage, previous flooding, or some other matter that might kill a sale. Cheap because they think all there is to selling a property is putting up a for sale sign, running an ad in the newspaper or Internet, and filling out a printed deed form obtained from a legal stationery store. They think they do not need a realtor to do something so simple.

But buyers who deal with a FSBO do so at their peril in my opinion and experience.

In a lighter note, I am including some photos from my yard. One pic is of a huge Canary Island Date Palm with bougainvillea on a trellis below. The other pics are of baby pineapples by my pool. My Date Palm got sick after Hurricane Wilma and started yellowing. I called the Florida Extension Office and a representative came to my house, took pictures and sent them to the University in Gainsville to determine what was going on. The tree needed fertilizing to combat the salt water damage from the storm. Case solved. The baby pineapples are like rabbits, if you get my drift. I "borrowed" one from the grounds of a hotel in Miami about 8 years ago. It has reproduced itself several hundred fold. It is truly a joy to watch as each new crop of babies come to fruition.

5 comments:

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fsbo said...

Thanks for the informative article. I consider the topic of real estate to be really interesting and up to date. Today there are so many opportunities for those who are interested in real estate and also for those who prefer to sell or to buy property For Sale By Owner. One of the new tools is Climate Watch service which allows homebuyers to check what the climate is like in another town or city all year round before they move there.

Sapphire said...

People should read this.

Anonymous said...

You said: "I am of the opinion that sellers who are unwilling to pay a 6% commission to a realtor to sell their property are going to be difficult and cheap to deal with."

Than again you have reason to be extremely biased on the topic now don't you and no - I am not a FSBO seller.

Philippines properties said...

Thanks for this great reminder.

Paula M

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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.