WatchVery interesting:
FSBO owners often fare well. A 2008 Consumer Reports study found that nearly all homeowners in their survey who sold on their own got their asking price, while sellers using agents received an average of $5,000 below their asking price. Similarly, National Association of Realtors figures show the average sales price for by-owner sellers was 97.5 percent of their asking price — while sellers with agents got just 95 percent.
From http://www.cbsnews.com/8301-505144_162-51417739/for-sale-by-owner-sell-your-house-without-an-agent/
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elliemae's website
Pragmatism. Is that all you have to offer?
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First off, they are quoting Percent of asking price... that hardly proves you sold for more net money...
second off, 2008 was not exactly a normal real estate market...
Plenty of other studies have found that something over 80% of FSBO's eventually list with an agent. Why would they do this if they all sell for more money?
Normal patrick.net nonsense to resume in 3...2...1...
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Patrick says
Plus the sellers with agents lost an additional 6% in commissions on top of a lower price.
See, per the statement from NAR, using one of their members with all that professional experience is a negative to your selling experience! It costs you almost an additional 9% for their services...... oh well....
And all this time, we thought the realtors were there to "help" us get the best price for our houses!!
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robertoaribas says
They would do this because of Fear, Uncertainty, and Doubt (FUD) expertly sown and carefully tended by a large professional association that I don't need to name.
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FSBO sellers do not have to be in the same room with Realtor, either. Imagine the relief of the sellers, not having to listen to the Realtor scumfuck make vague comments about a convincing blowjob being the only assurance of a speedy sale.
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Patrick, this is bizarro world. Step back from the cliff, my friend
You find it interesting that its those stingy fsbo sons of a bitches driving up prices while realtors are working towards more affordable prices for buyers?
The analogy sucks
If fsbo person asks 100k and gets 97,500 because the buyer knew he had room to dicker, seeing as how the tight ass smarty pants was saving 6k in realtor fees
Was listing an identical property as
The seller that utilized a realtor, asked 120k, and got 114k. Then paid their realtor their 6% and still had an extra 10k to vacation with
This is a silly article, and id like to vote it thumbs down but for some reason you can't vote on the article here in the comments thread. People bitch because they want you to handpick the newslinks they read,,,,,they shouldn't be subject to this tripe
500k house in new jersey? Realtor or not, the buyer overpaid. The privilege of living in nj is not worth the tax bill that accompanies their inflated RE.
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Patrick says
Patrick, you're smarter than this... Take off the blinders! If someone tries several months as FSBO and later lists, they did it because they didn't sell it by themselves...
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Minneapolis, MN
One of the biggest problems with FISBO is that local agents will not show your house. We tried to sell a couple of years ago by ourselves. We had a very nice home that was priced properly for the neighborhood. I am a Remodeling contractor and every room in the 1950's home we lived in had been remodeled over the years. Two of the top local agents, who I knew and had helped out in the past, had said our house was one of the nicer homes for it's price in the neighborhood. Neither agent ever brought a buyer by our home while it was listed by us. We eventually took it off the market. A year or so later we had become friendly with some of the new neighbors who had bought in the neighborhood while our house was for sale. They told me that they had wanted to see our home and their agents had told them that it hadn't been updated and wasn't worth the time to look at it.
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stevenjbailey says
Which just proves what everyone knows: where there's Realtors®, there's crime. Did you demand the AG indict the criminally mendacious Realtor for fraud and breach of contract and go away for 100 years?
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errc says
Actually, a $500K house in Northern NJ isn't all that uncommon, hell, the west coast of CA has higher prices... where the people in the article are delusional is where they think their house value has only dropped 7% in the last 4 years...... they're in for a RUDE awakening!!!
Now the inflated R.E. tax bill in NJ, that's a whole different story..... we get corn-holed without even the benefit of a little KY beforehand.....
It's tough living in paradise I guess...... :)
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Call it Crazy says
You opened up another can of worms they DON'T want discussed, tax on all this grossly inflated real estate. They want the prices inflated because municipalities got used to milking the inflated assessments.
You think they are going to quickly or easily lower those assessments now and take in less money? FUCK NO. They want to milk YOUR cow as long as possible. The real estate tax issue is another factor in this economic mess.
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Patrick says
I wouldn't say "often." VERY rarely. I watched FSBO versus MLS for three years working for BuyOwner.com. And when I got to a sellers house most were trying FSBO on their own for quite some time and now it was crunch time. I have a collection of photos in my old sales book of people pulling up their home made yard signs. Illegible phone nubmers. Yard signs so old they're faded beyond recognition. Dented and twisted from being run over by the lawn mower. LOL
As much as I hate to say it, you're screwing yourself royally not listing in the MLS. You may not need a listing agent but you can't beat the power of all these starving buyer's agents out there. Do both unless you have the time to try FSBO first. Just insist on a "non-exclusive listing agreement."
That said, it all depends what type of home. In my case I got a better offer on my condo by putting and ad on the condo's bulletin board. But my unit was an ocean corner that was highly sought after in the building. The ocean corners floor plans were so much better than the non-corners people who lived in the building knew their value and uniqueness but someone who didn't live in the building wouldn't know that.
A yard sign can work great too IF there's lots of traffic passing it or IF you have a unique house that your neighbors have had an eye on.
Under typical circumstances you'll get FAR less exposure without the MLS. It's all about EXPOSURE.
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I just checked FSBO near me and all that came up were a few very overpriced homes. The ones in neighboring cities were very overpriced too. This is what I've always been told: that someone who wants to sell this way is a stingy miser who will want every last penny. Looks like they also are all stuck on prices from 2007. Ridiculous to even consider working with people like that. I'd have to get them to drop the price 200k to even be in the same ball park, when they are worried about 6%? Hah! No chance until they get realistic. Of course then they will be either desperate to sell, or more likely dead of old age and they or their kin will use a realtor anyway.
As a buyer I don't see an advantage.
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Fort Lauderdale, FL
Quigley says
Most buyers and sellers are stressed out enough by knowing they have to move that to have to deal with the details of buying or selling a home. If they're normal they would rather have as many burdons as possible removed for them. In my sales book I even had a Life Stressor chart that showed that moving created almost as much stress as the death of a spouse. Especially if moving involved a change in job, or a divorce. See http://www.medindia.net/patients/calculators/life_stressor.asp
In my experience of over 1000 transactions of selling FSBO advertising and listing them in the MLS or both, the ones that wanted to do it on their own usually had some sort of an attitude problem. Either they were still attached to their "home" and really weren't ready to move. Or only one of the two spouses wanted to sell and the one that wanted to stay was putting a monkey wrench into the sale by wanting to do it themself. Or they were so abused in the past by asshole Realtors they wanted to avoid them at all costs. And yes some were just cheap ignorant fools.
And as far as overpricing goes, homeowners if left to their own devices thinks their garbage is gold. The key word here is "home." Once a house becomes a home it's goes up in value in the deluded mind of the owner. They even become impervious to the foul stench that hits you like a punch in the face when you walk in.
However there was a percentage of them who needed to save that 6% so they could pay off their mortgage and have enough left over for moving expenses. Another percentage were just curious and open minded as to another way than the traditional route or hiring a Realtor.
FSBO buyers may or may not be using a Realtor in addition to them FSBO shopping. I hear stories all the time of Buyer's Agents spending months carting around someone only to have them buy FSBO. But these agents don't have the skills and the guts it takes to put a buyer under contract so that doesn't happen. They're reduced to basically being beggers relying on the kindness of strangers.
So there's many different motives for someone to be buying or selling FSBO.
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So if the sellers are getting more $$$ Patrick then the Buyers are paying more $$$ right? So who is watching out for the Buyer? I am SURE the seller is NOT passing on ANY SAVINGS if there are any to the Buyer . Their whole purpose is to save $$ so they are not giving any discounts to the buyer so in reality at the VERY BEST it is putting more $$ in the sellers pocket and the buyer is dishing out more $$.So in reality it neutralizes any savings? Plus as has been stated so many times if FSBO was so great everyone would do it. FSBO has been a terrible failure over the years. Even the discount Brokerages have failed heavily. Help-U Sell, Assist to sell, Red Fin, all these guys have failed to capture any significant part of the market. There must be a reason? MOst of these discounted Brokers are almost non existent or out of the market entireley.The Consumer is willing to pay for knowledge and service and marketing or they would not use Realtors. Maybe someday it may change but despite al the technology and all the anti Realtor rhetoric and consumer knowledge people have these days ove 90% ( maybe more ) keep hiring realtors to sell and buy homes. Most FSBO's who try to sell their own hmes end up going with a realtor after they have tried to do it themselves. The public is smart and educated and they have spoken.
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Maybe an FSBO seller will be reasonable and maybe not but at least you can go talk directly to him!
The point is to cut out the agents because they are on no one's side but their own.
If a buyer really wants an agent, he should hire one by the hour and not on a commission basis. At least then the buyer's agent won't have the huge obvious incentive to screw the buyer. But the agent could still block offers or play other evil games.
If sellers want an agent, same thing: hire one by the hour -- but be sure that all offers come directly to the seller personally and him alone, never to the agent, who can block them, or lie about your response, or do any of a dozen other things against the seller's interest.
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mike2 says
We sold a couple properties as FSBOs.
We cared that they were priced realistically so we got as much as practical in a reasonable time frame so carrying costs would not cut into the profits. On the one where there was ambiguity on comparable properties we hired an appraiser; on the other there were enough very recent sales of similar units in the same complex so we didn't bother. Both were under contract in a few weeks suggesting our prices weren't too high (although on the second it was the highest recorded sales price in the complex).
Given the prevalence of "buyer's agents" we assumed we'd be giving one a 3% cut and told buyer's who came without one that we'd accept 3% under asking price if they didn't get one the idea being that agent less buyers would prefer our properties over similarly priced units listed by agents that wouldn't be so flexible.
One who bought came without an agent, we told him about the deal, suggested he have a real-estate lawyer represent his interests, and told him about what that would cost (thousands less).
He came back with an agent and didn't get the discount.
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FSBO sounds good in theory, but the biggest problem is that while houses are just a commodity, homes have an emotional value.
People already tend to overestimate the value of their cars when selling or trading in, imagine the ridiculous valuations a homeowner could have.
A homeowner sees their wood-paneled walls, floral wallpaper, and garage turned zen meditation room as upgrades while a buyer thinks about how much it's going to cost to replace everything.
I don't believe realtors don't deserve 2.5% of 500k sale, but there is some value in having someone bring the homeowner to reality.
All that being said, I'd probably try selling w/o a realtor but list on MLS first for a couple months before capitulating. That 5% is hard to give up.
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zesta says
So why not hire an appraiser or inspector or someone else to bring the seller to reality? Or even just hire an agent for a couple of hours.
Just avoid the commission racket and everyone will be better off. Except commission-based agents.
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Well, I imagine many sellers won't want to shell out for an appraiser when they can just look on redfin and point out homes that they believe are worth less. I'm sure they probably wouldn't want to shell out extra money for someone to "stage" their home either.
Look, I'm sure there are some sellers out there like drew_eckhardt that are able to separate emotions and set a fair market price. There may even some that are willing to put money up front to and fix/upgrade minor problems that will help increase the selling price.
Those type of homeowners should definitely try listing FSBO first as I would try to do.
I'm just of the opinion that many people won't/can't do it effectively.
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San Clemente, CA
FSBO should be the only way IMHO, however in my area (San Clemente, Dana Point) there's only a bunch of delusional idiots who're putting their places on FSBO sites, if you ask me they only do because they can't find a sellers agent willing to list their house for the price the want...
BTW - you can do FSBO and still list on MLS for $400 and for free on Redfin, which really is all you need in CA.
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Los Angeles, CA
stevenjbailey says
OK, I'm confused. Was it on the MLS? If so, as a potential buyer, I would have seen it there, seen it was updated (pictures), and insisted my agent show me the property. And if s/he refused, I'd see it myself and cut him/her out of the deal, if I wanted to buy it.
Seems to me key to FSBO success is getting listed in the local MLS.
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Patrick says
Has anyone actually done this? Unless they're a friend, what real estate agent is available to hire by the hour? I suppose one can always offer, and the worst they can hear is no.
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% of asking price is a total joke. meaningless.
Also- why why why would a RE agent list your home for by the hour charges? they would have to charge you $1000 an hour or more and then maybe have a cap - too crazy.
It still think its funny that patrick is a noob in RE after all these years. If he only spent 4 months 'pretending to be an agent' inside the belly of the beast (haha) he would know the MLS fees+licensing fees are like2k a year PLUS LEGAL LIABILITY PLUS e&o insurance.
RE deals are like half the lawsuits in CA and brokers have special laws making them liable (thus all the 1000 difference CAR forms and disclosures)
If you sell via FSBO and miss one little form (such as asbestos disclosure, or land fill nearby disclosure, or lead paint on older home disclosure, etc etc ) then you are handing the buyer a free 50k lawsuit. ESPECIALLY if the value of the home falls, then they freak and sue everyone invloved for everything.
FBSO=massive legal liability for the seller.
BUT the best way of course to FSBO is get the dumb $300 license, become a broker, join MLS and list it yourself. Then you get at least the 3% whcih pays the mls fees. and a bit o profitz. (i did this and its easy.)
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JG1 says
Just go and try cut him/her out of the deal.
You'll most likely find you totally screwed yourself when you signed papers with that agent, and that you are legally obligated to pay your agent no matter what you buy, even if it's your parents' own house and the agent had nothing to do with it.
That's why it's so important never to sign papers with any comission-based agent.
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PockyClipsNow says
You wouldn't be trying to spread fear, uncertainty, and doubt (FUD) to get people to just roll over and pay comissions and screw themselves out of the best price now, would you?
I still say all sellers should sell FSBO, all the time. Anything else is just screwing yourself to benefit commission-based agents.
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Well its also true that even with an agent you can STILL get sued selling anything to anyone.
But its beyond redonkulous to expect 100% of people to fsbo.
I know people who cant even manage to do thier own taxes and that is every year. Taxes are like way simple and easy and risk free compared to fsbo a home. And still people are too afraind/lazy/dumb to diy.
Im a huge fan of diy - thats why I did the best fbso possible. as an agent. half the flippers are also agents to sell thier own flips. smart. like roberto.
the people here who bash agents and lanlords and flippers are so 'poor minded' it boggles the mind - they shouuld be taking notes on how to make money, not bashing job creating capitalists.
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robertoaribas's website
PockyClipsNow says
Yes. I would argue: failure to disclose = real possibility of a lawsuit. I've had acquaintances tell me their plan to "fill the leaking pool the day before inspections" or "paint over the roof leak" or "not mention that the laundry room floods 3" deep every time it rains... , forget to mention the termites they had treated a couple years back, etc. etc.
When in doubt, disclose. PERIOD. and in writing, as early as possible. Hell, fill out the disclosure and give it to everybody who looks at the house, so that if they send an offer, they have already been made aware of everything that you can think of.
May cost a few thousand in price now, but a hell of alot less than a lawsuit...
This applies whether you are fsbo or using an agent.
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PockyClipsNow says
I mean FSBO with hourly professional help if desired.
The point is that commission-based agents have big financial incentives to do bad things to their clients.
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Monterey, CA
Just go with a flat fee realtor. You house gets listed on the MLS, and you usually end up out the door at around 3.5% in fees.
Sometimes more, sometimes less - and if you buy with them after selling, they kick back some of the commission.
It's the waaayyy of the fuuutttuurreee..
As mentioned before, used these guys in Fort Worth (http://www.creekviewrealty.com/) and they saved us a ton. Better service than a standard listing agent too.
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Fort Lauderdale, FL
Patrick says
Have you ever actually tried what you are recommending people do?
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Fort Lauderdale, FL
joshuatrio says
To prevent them from steering your buyers to one of their properties just make sure that on the MLS listing the calls get routed directly to you 24 hours a day. The MLS rules don't allow your phone number to be placed as the agent's or broker's phone number. The way good Flat Listing brokers get around this rule is their voicemail tells the buyers agent your phone number when they punch in your MLS number. You don't want their secretary having any contact with the agent who calls in to show your listing. And just to let you know some buyers agents still stubbornly refuse to show these listings but that's pretty rare these days.
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Fort Lauderdale, FL
robertoaribas says
The seller needs to understand that the inspection service is going to find out what's wrong anyway. Then if the offer falls through that's another two months wasted! Then the next potential buyer is going to want to know why the last offer fell through and the property is back on the market.
When you tell them that it usually gets them to cooperate. No need to use BS about lawsuits to intimidate them. As a Realtor if you start talking to a seller about lawsuits, anyone with half a brain knows that you are more worried about getting sued yourself than you are worried about them getting sued.
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joshuatrio says
I agree..... Sold my last house that way with a flat fee, paid some commission to the buyer's agent.... ended up spending 2.7% out the door for full service...
...a lot better than 6% !!!
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Monterey, CA
ELC says
That's how most of them operate. We got contacted directly through MLS. It was a breeze. We sold in less than 2 weeks.
It was funny - we discussed the flat fee deal with the title agency - they got angry because we didn't use a "full service" real-turd. In other words, less money out of their circle of friends.
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Monterey, CA
Call it Crazy says
Nice job.
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Chandler, AZ
I’ve sold several houses FSBO very successfully over the last 15 years, but it’s hard work and most people don’t prepare enough and aren’t realistic about their house.
One was purchased in NorCal by my ex at the height of the market in 1990. Possessing a 10.75% interest rate, it had dropped 1/3 in value within a year of his purchase. I came into the picture several years after this fact and was pretty appalled that he decided to sink that much $$ into this worthless little house (should have raised numerous red flags, but that’s a whole nother story…).
When it came time for us to move out of state 10 years after his purchase, the market had just recovered enough to where the house was worth its original purchase price. Real estate agents I solicited brought low comps from a surrounding neighborhood that was decades older than ours, and our house was much improved over the years. Linoleum ripped out for tile, immaculately landscaped front and back (I owned a landscape architecture business at one point), backyard deck, pergola, covered patio on the side yard, hot tub with gazebo, etc. Not only that, but I had arranged a preemptive home inspection and we fixed the few little items it found – scrubbing out the chimney, replacing a few cracked concrete roof tiles, etc. I knew our house would fetch more than they were saying.
We couldn’t afford to lose 6% commission on the house due to the staggering losses already incurred, and since I’m a capable girl I decided to pay myself 3% and do some hard work. Soooo, I got a storage unit, emptied and scrubbed our house for two weeks, followed a great book on house staging, and paid a flat fee to list our house on the MLS without a realtor. I even commissioned my own sign and purchased an 8’ tall professional wooden lawn post complete with plastic sleeve for our house’s fact sheet. All our neighbors who walked through our house before it was listed were amazed – after cleaning out the garage, every closet, every cabinet, scrubbing it clean, staging EVERYTHING including inside each cabinet and closet, and removing everything that we didn’t need on a day-to-day basis, it looked and smelled like a model.
Tried to offer a discounted fee to the buyer’s realtor, but realtors wouldn’t bring the buyers to my house – not ONE. After raising the fee to the standard 3%, the first person that walked in the door told me they absolutely loved my house. That same day while the second person was touring my house, the first person faxed in an offer. After disclosing that I had just received an offer from the first person who had toured, the second person sat down right there at my kitchen table with their real estate agent and offered me several thousand over asking. Their agent did all the work on that transaction, a contract attorney review the paperwork on our end.
While only a small amount over the original purchase price paid by my ex, it was the highest price ever fetched by that home plan in our subdivision and my neighbors were going crazy.
I did it all over again in another state. Again, real estate agents told me I was crazy, but I am a research junkie so before listing I spent several months scouring the real estate offerings around my house. I KNEW how my house compared. This time it was in 2005 at the high point of the market and once again I got my asking price within a very short period of time after listing, the highest price ever fetched for our model in our subdivision.
I don’t think anyone else is as detailed or realistic as I am, though, and I don’t think they are willing to go to the sheer lengths I will to make sure buyers want my house more than others. I also make sure that my house is priced realistically compared to other houses buyers might look at, even if the realtors don’t agree. They are pretty worthless.
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Monterey, CA
exflirt says
Good point.