Trulia Voices, a conglomeration of Q&As from real estate consumers and frequent shameless grovelings by real estate agents is often a source of amusement, frustration and head scratching.
It’s also frequently provides insight into the minds of home buyers, sellers and real estate agents.
Here was a recent question from “Todd”, a “Home Buyer in Arizona”:
I am trying to buy a house from a FSBO and we have agreed on a price and agreed to buy as is. After an inspection, I don’t want to pay that much can I send an addendum to see if they will lower the price or should I cancel the contract and then send a new contract for the lower price taking into account the inspection items? Thanks.
It would appear Todd is an “unrepresented buyer” — meaning he has decided to not use the services of a real estate agent. And Todd is attempting to buy a home from an “unrepresented seller”, a “FSBO” — For Sale By Owner.
So we have both sides of a real estate transaction going it alone, both deciding for whatever reason that they do not need the services of a real estate professional.
I do find it curious that Todd, who ventured off on his own, is now seeking free advice from real estate professionals as he finds his real estate deal beginning to swirl down the drain.
The problem is, no matter how many agents think (for whatever bizarre reason) that they will somehow secure Todd’s business, no one can possibly answer his question.
Why? Because we haven’t seen the contract between these unrepresented parties.
Oh, several agents have answered assuming the standard Arizona Association of Realtors Residential Resale contract was used. An interesting assumption given that no Realtors are involved in the transaction. Even more interesting when one considers that anything in the AAR contract form can be modified.
Did Todd and Mr./Ms. FSBO take a quick trip to OfficeMax and pick up a “real estate contract”? Maybe they went online and found one. Maybe they wrote their own contract on the back of a napkin.
We don’t know what is in this contract. Therefore there is no possible way to give Todd the free advice he so desperately seeks.
There are a few things we can glean from Todd’s situation:
You agreed to buy a home in “as is” condition — now you are finding “as is” means “needs repairs”. This should not have been a surprise.
You are now considering re-negotiating, or possibly canceling a contract. Contracts are, well, they are contracts. They generally aren’t designed to just be canceled on a whim. Often you can’t “just cancel” a contract.
My favorite part of this question is, “…and then send a new contract for the lower price…” You can’t just send a new CONTRACT for a lower price. You can send a new OFFER, which Mr/Ms FSBO can then soundly reject (and likely would — why enter into a contract with the same guy who bailed on your previous contract?).
Todd is frustrated. He may even be concerned, asking himself, “What am I going to do? Am I going to be stuck in this thing and get a home I don’t want?”
I feel bad for Todd. I really do. Buying a home is a lengthy, involved process jam-packed with potential pitfalls. It’s not a process most people go through on anything close to a regular basis.
What I can’t understand is why Todd decided to go through the home buying process alone. Yeah, of course I am biased, I’m a real estate broker for Pete’s sake. But honestly, I see things like this all the time. People come through this very blog all the time, with questions, and with very valid and deep concerns. I know Realtors are a group that many love to hate. Part of that we’ve brought on ourselves. Some of that, not-so-much.
I’m not going to beg and grovel for your business. But I am going to plead with you to at least look into using the services of a real estate agent. The ramifications (in cost, time, stress, legalities and more) of not using an agent need to be explored. We are not all evil twisted devil-spawn. Yes, there some lousy agents out there. But there are some brilliant ones too. Interview a few, find one that you can work with and trust and they will work their butt off to make sure you aren’t relegated to asking unanswerable questions on an Internet message board.
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Jacki 07.02.08 at 8:07 am
In a market where buyers are getting bombarded with so much negative information, I’ve seen them trying to go it alone more and more frequently…and ending up in a big mess. It’s unfortunate that they are turning away from the very people that can actually HELP them muddle through all of the info to determine what’s valid and what’s not. Thanks for sharing this insight with buyers.
Todd Tarson 07.02.08 at 8:46 am
I read the anti-realtor blogs and one thing from the comments often found there is that negotiating a real estate deal is easy and only ‘morons’ would hire a pro.
Heh.
Paula Henry 07.02.08 at 9:00 am
Ironic - a buyer goes to a FSBO, neither wanting a Realtor, then, when it gets, sticky, they want help. Great advice for both the buyer and the agents who are trying to answer this question without knowledge of the contract.
Scottsdale Real Estate 07.02.08 at 9:26 am
Great post, I really enjoyed it. I will have to bookmark this site for later.
Robert Mickalson 07.02.08 at 9:48 am
Great post Jay - it’s amazing to me how many buyers out there really feel like they don’t need an agent, feel like they can properly navigate the negotiation and escrow process basically without help, all that when having an agent is completely free to them as the buyer. There’s a notion that they’ll get a cheaper deal when the seller isn’t paying as many commissions, or higher commissions, and I’d have to say that’s bull. I’ve never seen or heard of a seller selling for 3-7% less than his/her home is worth, because they’re saving money on real estate commissions. When the seller cuts his price, due to the savings on commissions, the gain he has is ZERO. And since when do sellers elect to go a route where there is no benefit (no agents to help protect deal, pick up slack, and guide it all), when the benefit is ZERO? I don’t think so.
Steve Belt 07.02.08 at 9:54 am
I saw this question myself yesterday, Jay, and almost replied simply: “Let me know what you figure out” or some other wise-cracking type response. Today I decided to go ahead and post it.
Not to be a jerk (which is a word that Trulia Voices thinks is taboo, btw), but really it makes no sense to offer free advice in this situation, just like you point out. When a buyer and seller enter into uncharted territory, and then the (un)expected comes up, professionals shouldn’t jump in to save the day for free…that simply undermines our worth.
Chantal 07.02.08 at 12:09 pm
But Jay, he saved money on the commission didn’t he? LOL.
It was a FSBO, so he probably agreed to pay more than it was worth.
Before my clients are locked into a contract, I’ve had not only an inspector look at the house, but several building contractors to give firm quotes on what any repair costs are going to be. I’ve started doing this as a service to my clients as a result of the foreclosure properties that are in need of some serious TLC.
But hey, if you want to save on a real estate agents commission - go right ahead. Let the buyer beware.
Tucson Michael 07.02.08 at 12:23 pm
Yes everyone wants that “free” advice and there is a amazing amount of that online, however most people will never accept this but free advice does not = good advice and certainly not advice you should be risking 100’s of thousands of dollars on……. Yet people do it every day and then blame others when it doesnt work out so well, real estate agents also seems to be the ones most receptive to just giving out free info even when they could not possibly truly know the situations because many are just dead pressed to try to latch onto a commission check, its a vicious cycle that only once you have hurt yourself do you realize a need for that service.
Scottsdale Homes 07.02.08 at 2:19 pm
I’ve answered many a “Trulia” question… but, I always stay away from ones like that.
“Should I cancel the contract…” ya, right, like I’m going to advise someone to cancel a contract. I think not, especially since I am not familiar with the deal nor have I seen the contract (as you pointed out Jay).
I am always amazed at the things I hear about FSBO deals, and I’v eonly been doing this since 1994. I imagine there are a lot more horror stories out there than I’d ever care to hear.
Matt Pellerin - Realtor
Jayson 07.02.08 at 6:50 pm
Nice post Jay - I agree 100%. Unless you’re a real estate professional, buying a home without a real estate agent is equivalent to taking it upon yourself to decide what to do with your retirement, where it should come from, how much monthly should be dedicated to it etc.. - would you really make a decision like that w/o professional advice? I doubt it -
ForSaleByOwner 07.03.08 at 7:36 am
FSBOs websites, like (link redacted), provide alternatives to paying commission and FSBO listings are about 20-23% of listings.
Todd, the referenced FSBO buyer, would do very well if he consulted with a real estate attorney to review any and all sales contracts, as well as provide advice on how to proceed with altering the offer price, etc. And, oh, a real estate attorney would cost just a couple hundred dollars… extremely less than what a real estate agent/broker would charge in commission (i..e. thousands or tens of thousands of dollars).
Consumers need to know that real estate agents are not licensed to give legal advice on how to proceed with contracts… hence that’s why there’s a thing called “Attorney Review Process.”
On a last note, it’s amazing that so many agents on this blog are against sharing information/advice on the Internet with the general public. This anti-consumer behavior only serves to confuse the public in an attempt to protect commissions, and is very unlike how other professions use the Internet to share information. Imagine nutritionists not sharing info on the web about the latest health news, or the dermatologist industry being against providing free advice on how to avoid getting skin cancer.
(link redacted)
Julia Bridge Phoenix Real Estate 07.03.08 at 8:21 am
Would you please send this article to the AZ Republic so the public can read it? Most “lay people” just are ignorant (not knowing). They need to be educated “en masse”! And yes, they DO go to the Office store for the contracts. A man in Sun City showed me his one page contract…”Now that is all you need” he said! I quickly educated him on the litigiousness of our world. He agreed.
Jay - The Phoenix Real Estate Guy 07.03.08 at 8:44 am
“ForSaleByOwner” -
I removed all the links to your site, as our comment policy clearly states no advertising.
I’m a real estate agent/broker. I don’t come on to your site and advertise my services.
That being said, I’m leaving the rest of your comment as is, because you make some interesting points…
“Consumers need to know that real estate agents are not licensed to give legal advice on how to proceed with contracts… hence that’s why there’s a thing called “Attorney Review Process.” ”
And that’s been made clear here countless times. However, the Arizona State Constitution does have provisions that allow licensed agents/brokers to work with real estate contracts. No, we can’t give legal advice, but we do know a little bit about real estate contracts.
There typically is not a legal review process in Arizona. It is very rare here to have attorneys involved (I realize that is not the case in all states).
“On a last note, it’s amazing that so many agents on this blog are against sharing information/advice on the Internet with the general public. This anti-consumer behavior only serves to confuse the public in an attempt to protect commissions…”
Please. There is untold information sharing/advice provided on this blog and across the internet by myself and many other real estate agents.
I don’t want, nor need to “protect my commission”. My clients know exactly what they pay, and what they get for that.
There are over 1,000 posts here on this blog. Yes, some have nothing to do with real estate. But the bulk are provided free of charge, with no solicitation for business.
I’m not saying every real estate agent is perfect (in fact, I’ve been quite blunt about quite the opposite) nor am I saying there is no place for FSBOs (and I’ve said that here as well.) If someone wants to sell their home themselves and/or buy a home without representation, that is clearly their choice, and I wish them success.
But if someone asks me specific questions about a real estate contract I’ve never seen, providing free advice on said contract would not only be stupid of me, it would be stupid of the person to accept if it were offered.
Todd Tarson 07.03.08 at 12:29 pm
I see Jay already took care of the ‘light work’ in response to FSBO.
I see comments thrown around quite a bit about attorney’s only charging a couple of hundred bucks to look over real estate related contracts. The attorney’s I talk to laugh at those comments.
The other thing I’d like to respond to is there is NO protecting commission, this is just another anti-realtor rant that can be found on any anti real estate blog.
Yes… I do believe that anyone can negotiate the transfer of property on their own. I’ve helped a few folks do just that… for zero commission dollars (typically on land deals that are normally fairly simple in the first place). I have no problem with folks going the FSBO route… I recently bought a home in another state and there were no realtors involved on a commission basis (bought a home from a FSBO and on the offer I simply noted that I was a licensed realtor in the state of Arizona).
This blogs host and many, many others offer FREE insight and other useful information to anyone who may come across the blogs and other web-sites.
Colorado Springs 07.03.08 at 3:19 pm
FSBO’s are selling at an all time low these days, meaning that the services of a professional are more important than ever. If time is on your side try to FSBO, but if you are in a hurry let the experts deal with it. They will get you more money any way in most cases.
Candace Robinson 07.03.08 at 5:07 pm
Jay - well pointed out reasons of why to have an agent/broker on your side. As well, if anyone were to find your blog they would know you’re just that kind of guy to offer help for the consumer, buyer/seller alike. I agree with you whole heartly about not advising on a contract if you have not reviewed it personally. Great answer and one that all agents should think twice about.
Cedar City Utah 07.03.08 at 8:34 pm
Funny how the buyer doesn’t want to pay for advice but he wants you to give it to him for free. Yet buyers don’t typically pay for real estate agent advice since the seller pays the commision. (most the time)
I hate to say this but im glad to see I am not the only one that has to deal with these types of issues from buyers.
Gregory Bain 07.03.08 at 8:41 pm
Jay, you real do have a gentleman’s touch with words. I get so angry with these agents stepping all over each other trying to get a buyer or seller on Zillow and Trulia. I must confess I sometimes go on a leave a quick one liner or stir it up with a what if question back to the person seeking free advise just for kicks. I am hoping the free loader takes the advice given by those agents and then he sues them for giving him bad advise.
You seem to be able to take every situation and turn it into a plesant learning experience where my blood pressure just goes up to the point my brain is about to explode. I noticed your nice post on Inman about the NJAR, too. Man - I swear I don’t know how these people got to be in charge. You would think they would have a GROUP on linkedin under the association and that the FaceBook would be a group membership - at least that how I think.
Well, maybe I think too much? NIce post.
Austin Real Estate Blog 07.04.08 at 1:38 am
“On a last note, it’s amazing that so many agents on this blog are against sharing information/advice on the Internet with the general public. This anti-consumer behavior only serves to confuse the public in an attempt to protect commissions…”
This just cracks me up. Does the writer at all realize he is on one of the most imformative blogs out there.
“Imagine nutritionists not sharing info on the web about the latest health news”
There are so many realtors out there sharing information on their blogs its incredibly.
But if you wrote a nutritionist something along the lines of
“I think all you nutritionists are a bunch of blood thirsty scumbags that are unneeded. Buuutttt I have this health question and I want you to spend all your time helping me figure out whats wrong. But just remember I would never pay you because you are worthless”.
I got an email from someone asking me a ton of questions with the bottom saying “Dont call me I dont want to use a realtor”. I don’t know what these people are thinking.
Jim Gatos 07.04.08 at 4:42 am
Gee, for a buyer to deal directly with a fsbo, they have to both be of the same “stock”..
A good amount of FSBO’s have the potential to “eat their young”.. LOL.. (Just Kidding)….
I wouldn’t even answer a question like that. If you went without a real estate agent, use a lawyer.
Brett Tousley 07.04.08 at 9:29 am
Jay, Not sure what keyword they are using to find my site, but I get calls from FSBO’s asking similar questions from time to time. When I was new to the business I found them amusing, now I ust find it sad.
Surprised to see you are on Trulia.
Upstart Agent 07.04.08 at 9:47 pm
That was something that always killed me too - they don’t want a real estate agent, and yet - they do. But for free and without any kind of loyalty.
It’s one thing to do FSBO if you know what the heck you’re doing and have experience in negotiating and understand real estate law…but if you’re clueless, it’s a very foolish mistake.
Jim Johnson CRS 07.05.08 at 8:29 am
Great Blog! I have been selling real estate in Bend Oregon since 1981 and find it refreshing to find a helpful blog like yours! Keep up the good work!
Gordon Baker 07.05.08 at 8:25 pm
Interesting.
I’d like to see where a dermatologist offers free advice regarding a specific medical problem that the doctor has not seen over the internet. However, Mr ForSalebyOwner believes this happens all the time. Poor analogy.