By owner vs realtor

[Karen]

I’m trying to avoid the high commission by thinking I could do this myself. Is it difficult? Like I mentioned in my introduction, I have some forms needed provided by the title agency, and I have an attorney that handled the sale of my dad’s house. But this is all greek to me.

Shouldn’t it just be easy to put a sign in your yard, spend a few bucks on one of those ‘for sale by owner’ internet ads, have a few open houses, accept an offer, and have the attorney & title company handle it from there?

Or am I missing something here…like some kind of hidden jargon that’s going to jump out at me and cost me big bucks at closing. Is doing it this way mean I have to have a large amount of cash up front for costs of some kind or can those be deducted from what monies I would be receiving?

Is it OK to limit perspective buyers to those who have already been approved for a loan…so as to cut down on the ‘looky loos’. Is it a good idea? Better yet…is it legal?

If I get an offer I can live with, should I have the attorney fill out the paperwork or do I do that?

Is the fact that I’m stressing out about this an indication that I should just go with a realtor, pay the commission….and not have the headaches? I just want some honest advice as to which method has the most pro’s and least amount of con’s.

..Karen

[Fort Lauderdale]

Hi Karen:
Absolutely hire a Realtor. If it were that easy by just putting a sign in the yard and running a few ads, there would be no need for Real Estate agents. There is so much more that goes on behind the scenes than you can imagine. Besides, statistic after statistic shows that selling a home by owner usually causes a seller to pocket less than if a Realtor handled the transaction. Save the headaches, hire a professional.

john

[judyo]

I got into real estate after being a For Sale By Owner (fsbo). I had a darling starter home priced under market value. I got lots of showings & excited "buyers." I even got an offer - of 50% less than asking price!

Listed it with a REALTOR friend & got it sold in 3 weeks (I had it up for 6 weeks) for full price which was over $5,000 more than what I was asking for it. That showed me the value of an agent/brokerage.

As I mentioned in the intro forum, the seller's market has ended in most areas. This means that sellers will have a more difficult time finding buyers to even view their properties, let alone make an offer. Buyers realize you're not paying a commission and usually want that savings passed on to them.

Most qualified buyers are already using an agent so you will find yourself dealing with a lot of looky loos that will probably get offended when you ask if they're qualified. Enough nasty remarks from prospects regarding that might be enough to change your mind about going fsbo. Buyers feel that a home owner should not question them about their personal finances. They expect it from a REALTOR.

You would never want to fill out a contract yourself if you don't know the business. Plan on paying your attorney extra to do this for you. One mistake could cost you a lot of money.

You'll have to pay for advertising (can be very costly in local papers and you won't be able to utilize most home magazines). Depending on a For Sale sign to be your only marketing source is not going to be enough.

You'll also need to hold open houses (probably every week until it sells - or until you give up). As an agent I hate open houses. I never feel completely safe and I also feel they really attract nosy neighbors & looky loos. And if you think you're going to be able to only allow people in that are pre-qualified, think again.

If I don't like open houses, why am I telling you to have them? Because you'll need all the exposure possible since you aren't using an agent & won't be listed on the MLS. You're only going to have so many resources available to you, & those will be the least effective ones at that.

As an agent I've held deals together that would have fallen apart if it wasn't for my persistence & follow-up. Neither the other agent nor the attorneys went the extra mile. Those deals would have become null and void if I didn't know how to handle the situations (all different).

Best of luck and keep us posted!

[Karen]

Thank you both very much. I appreciate your honesty on this subject. It appears that enlisting the help of an agent would certainly make my experience a much more pleasant one, but I'm just not convinced that it is the right choice for me.

I'll check back from time to time to let you know how my situation has progressed. If you have any other suggestions, thoughts, or helpful ideas, I'd appreciate hearing back from you.

Thanks again..

..Karen

[Falcon Living]

Hey Karen,
While I agree with the above realtors, I also would like to say, if you are in a big metropolitan area the recognition of an FSBO is a lot harder than a small village or town. The hassle you have to go through is the ultimate deal breaker if you ask me.

[Sam Dodd]

I have a perfect blog post about this. FSBO vs Real Estate Agent

[AaronSOLD]

I have a perfect blog post about this. FSBO vs Real Estate Agent

That's a good article. At the very least you should interview 2-3 REALTORS to have them explain their value to you. If they cannot explain their value, they are not worth it. If they can, and one or more likely will, you will see that the acts of pricing it right and networking it to the largest audience will likely net you the same or potentially more than you would on your own, in addition to helping protect your interests every step of the way.

Think of your home as an item up for auction. The more bidders (buyers) you have the more likely you will get the price you want. Don't you want to get the best price possible?

Also keep in mind that buyers understand you are saving money on the sale of your home and are going to discount some or most of the difference since they feel they deserve to save money too!

[RonnieG]

Just before I got into real estate, I was a FSBO seller. And a successful one.

However, I had owned my own computer software consulting business, so I was familiar with reading and understanding contracts, and not intimidated by anyone I might have to negotiate with. I also did a lot of reading and research before jumping into it. That included consulting with a title company about what they would be able to do for me, and what I would have to do for myself or hire an attorney for. I also researched recent comparable community sales in the local county records, which were online on the internet, and very easy to access. My prior banking software, spreadsheet experience, and financial analysis skills really helped with that. Before we made a final decision, We also had two local real estate agents do CMAs and present their marketing programs. The low-ball CMAs we got were ridiculous, and were the main deciding factor.

Before putting the house on the market, we had a licensed contractor take care of some needed repairs, had the heating and A/C system serviced, had the carpets professionally cleaned, and I did a complete paint job, inside and out. These are things the agents had recommended, and were pretty common sense.

We also hired a FSBO marketing company to produce a professional virtual tour take digital photos, produce a full color brochure, and post our home on their web site. I thought it was expensive, but it was way cheaper than hiring an agent. It also turned out to be the best thing we did. The house sold to an out-of-town buyer who saw it on the web site at full asking price, and $35k over the two Realtor CMAs we got before putting it on the market. It was under contract 10 days after it hit the FSBO web site. We never did one open house. The buyer's attorney prepared the contracts on standard forms, the buyers were well qualified and put down 40% cash, and the closing was a breeze.

Now that is not the normal course of events. We were not only well prepared, but also very lucky. The buyers could have been totally unqualified. Their attorney could have offered a totally wacko and non-standard contract. If I had not been in constant contact with the title company throughout the transaction, several things could have gone wrong. If we had not done such a thorough job preparing and staging the house, the buyers could have found a number of issues in an inspection, but that was not an issue because we took care of them up front.

The rest is history. Since I was between positions anyway, the decision to get my real estate license was an easy one. Ironically, one of the other students in my RE classes was the FSBO marketing company sales rep we worked with, and my first brokerage was one of the same ones we got CMAs from. My first managing broker got a kick out of the whole sequence of events, partly because he told me he got started basically the same way, except as a real estate investor/owner who bought and sold several of his own properties before he got his license!

[Karen]

WOW...thanks everyone!! I did read the blog article offered, and I although I feel I could do it, I basically just don't want to and really don't want to invest what little free time I have into the marketing part of selling my home. Everything you all have said makes perfect sense.

I did forget to mention that I had already interviewed 2 realtors; 1 I knew and 1 I didn't know. They had a $20K difference in the asking price. I just learned of another person to interview so it will be interesting what they recommend.

..Karen

[keenjosh]

if you are in a big metropolitan area the recognition of an FSBO is a lot harder than a small village or town. The hassle you have to go through is the ultimate deal breaker if you ask me.

I have to agree with Mert on this one. I live in a Metro area with over 25000 (no extra "0"s there folks) licensed agents. The mere existence of that many agents working to secure business really hurts a FSBOs efforts of securing an unrepresented Buyer for an unrepresented home. And, as Judyo so eloquently pointed out, the Buyers who do seek out FSBOs are usually on the hunt for a "steal". If anything (and there are thousands who would disagree with what I'm about to say)...price the home competitively, use a flat fee MLS broker (if they have those where you are) and offer 3.5%-4% to the Buyers Agent who brings the buyer. The key being effective pricing...maybe pay a local Realtor a good sum ($1000.00) for a quality, in-depth Comparative Market Analysis on the home so you can price it right (don't use an appraisal...too many sellers mistake appraised "value" for true market value). Pricing right = 1-2% below market to beat out the other homes you will be competing with - homes represented by full time Realtors who have extensive networks of Buyer contacts and professional marketing at their disposal to access segments of the buyer pool that you simply will not be able to access with a flat fee MLS listing. So, for about 6% of the total sale (plus any closing costs you have to contribute after negotiating a contract with a professional who has done this 1000 times over) you can definitely have a shot at doing this on your own. Good Luck!