FSBO vs Listing Agent (Phoenix: short sale, real estate, foreclosure)

[dbean]

Planning to sell our house (regular sale, no foreclosure/short sale) in Mountain Park Ranch (Ahwatukee). Had a listing agent do a walk through and she was impressed with the house, layout, and all of the upgrades; said it would sell relatively quick.

Looked at a few recent sales in our neighborhood, and they all took less than 2-3 weeks to sell. The prices were all over the board though, from 225K (november) to 280K (march). The listing agent said 280K would be a good number to start with.

The listing agent kept saying how low inventory was in Phoenix, and Ahwatukee and how fast houses were selling.

This got us thinking...Why would we pay a listing agent 3% given the assumingly quick sale?

The only way we'd considder FSBO is to have a real estate attorney review all offers and prepare all forms we have to sign, assist with transfer of title, ect...

So, a 2K attorney vs 6K-8K listing agent???

anyone have any UNBIASED advice?

[S. Chris Webb]

Granted, my opinion is biased, and I apologize for butting in here. However, I must say real estate agents do a lot more than opening the doors for buyers and writing up a contract. They work through the entire transaction to ensure it goes smoothly.

I started writing the many things a listing agent will do, but soon realized the list is far too long, varied, and complex to do so in a forum such as this. I will say this - a sale typically involves hundreds of phone calls and emails, and dozens of documents to be saved on file. Good agents will make it look easy, but it's not a cakewalk. A real estate agent actually writes, reviews, and helps you understand the contracts for free. It is all the other things from listing to close of escrow that will make her earn her commission. When you say "quick sale" it seems you are assuming that you are paying an agent to find a buyer, and that is it. There's a lot more to it than that. There are hundreds of things that can cause a sale to go bad during escrow, especially if your buyer is obtaining financing, and a good agent will be working diligently, as will the title company, to try to protect you from this and have a successful sale. What will your lawyer do besides looking at the contracts for their $2K?

Commissions are not set in stone. If an agent truly thinks your escrow will be a "quick sale", then they may be negotiated at a lower rate. Keep in mind they will likely need to pay a buyer's agent out of their commission. My advice is this - interview a few different agents and work with one that you have a great rapport with, shows they understand everything they need to do, and can demonstrate they will work hard for you. Ask them for previous listings and ask how they marketed them. Ask them what typical escrow challenges there are, and how they've dealt with them in the past. All listing agents are not created equal.

Best of luck with your sale!

[ReadyFreddy]

I'm cheap. I'd sell it FSBO without an attorney even. I've done it before with no problems. Maybe I've been lucky. My smoothest, easiest R.E. transaction had no agent on either side.

[MN-Born-n-Raised]

Originally Posted by S. Chris Webb

I will say this - a sale typically involves hundreds of phone calls and emails, and dozens of documents to be saved on file.

A typical sale involves "hundreds" of calls and emails? In this market at his price point? Really?

I've sold several homes myself. I've also hired RE agents more than 10 times. It isn't rocket science. It really depends on the market conditions and price point.

If I had a home to sell in Phoenix right now and it was priced around $150K, I'd give it a try myself. At $250K-$280K, that has a smaller about of buyers but I might try to market it myself.

Please note. I am not saying that being a RE agent is an easy job. Additionally, there are a lot of skills that need to be had in your profession.

Currently in THIS market and in certain price points, a quality home more or less sells itself. That might change quickly.

[MN-Born-n-Raised]

Originally Posted by ReadyFreddy

I'm cheap. I'd sell it FSBO without an attorney even. I've done it before with no problems. Maybe I've been lucky. My smoothest, easiest R.E. transaction had no agent on either side.

Same here. I sold my 1st home at age 26 by myself. I put a sign in my yard. It took 2 months. Total cost, a FSBO sign. I used a standard real estate contract. In hind site, I probably would have hired a lawyer.

[Captain Bill]

Originally Posted by dbean

...Why would we pay a listing agent 3% given the assumingly quick sale?

The only way we'd considder FSBO is to have a real estate attorney review all offers and prepare all forms we have to sign, assist with transfer of title, ect...

So, a 2K attorney vs 6K-8K listing agent???

anyone have any UNBIASED advice?

I don't do listings in Ahwatukee, so I have no pony in the race. You can consider my information BIASED or UNBIASED, that's up to you, but I'm going to tell it like it is.

What you should do is ask the Realtor who already has time invested in your property what s/he would do for you that would warrant the fee, and if s/he feels that you could NET more by working with him or doing it yourself.

If you know a lot about real estate transactions and have the ability to market the home, show it and negotiate with buyers, and can NET more money, then there is no reason why you shouldn't do it yourself.

It seems unnecessary to me to have an attorney draft any contract documents because the AAR has all the forms that have been modified over the years to provide equal protection to buyers and sellers. Also, the escrow officer at the title companies take care of all the escrow documents, title insurance, title transfer, etc.

Also, if the buyer you find is working with a Realtor, and you present the Realtor with contract documents written by an attorney in lieu of the AAR documents, the Realtor will probably tell the client that s/he is not an attorney, has not studied that contract in any Real Estate class, and cannot interpret that contract language. If it were me, I would give that guidance to my client in writing for my protection, and advise them to have an attorney interpret the contract for them. Unfortunately, that could be a deal killer for the buyer.

Marketing is a huge part of getting buyers to see a home, and something to consider is that most home searches are done by buyers on the internet; and the source of those homes in the searches are from the local MLS. So your home won't be on any of those searches.

However, you can market on Craig's List, and some other FSBO type sites.

Because I mostly work with buyers, I can tell you that the perception among buyers I've worked with is that a seller sells FSBO usually because they want more for the house than the current market value, and the buyers don't want to do the negotiating with a seller. That's part of why they work with a Realtor.

Many buyers who would consider a FSBO house are looking to save the same Realtor commission that you're trying to save. Therefore, their offer is most likely going to be at least 3% below what they feel the house is worth to them.

Another consideration is that Realtors working with a buyer will not offer to show a FSBO to a buyer because they don't like working with unrepresented buyers, and they would first have to negotiate with the seller for their commission. Of course if a buyer wants to see a FSBO, then the agent is obligated to ask the seller to show the home to the client.

In a fast market like this, the FSBO has a greater chance of selling the home than in a slow market. So if you elect to go FSBO, I suggest looking for some material on the internet that will provide you with some guidance. Good luck to you.

[Captain Bill]

Originally Posted by MN-Born-n-Raised

Same here. I sold my 1st home at age 26 by myself. I put a sign in my yard. It took 2 months. Total cost, a FSBO sign. I used a standard real estate contract. In hind site, I probably would have hired a lawyer.

At that time a contract was probably 1-page long .

[dbean]

thanks for the advice everyone.

good point about the # of buyers @ various price points.

I read how to's, fsbo steps to follow, ect... for several hours the last few days; this is where I came up with the real estate attorney idea.

All the articles pretty much say the same thing, market, time, effort, phone calls, showing the house, hosting open houses, ect... Maybe I'm delusional, but I honestly don't think we'd have to host an open house or excessively market.?.?

Regardless, we'll have to make sure the house is in top shape, wrangle our dogs, and generally, prepare for showings. Something about a lock box on our front door, ready for our agent to show the house is creepy to me; maybe i'm just a control freak.

Since I've never done this before, I figured having an attorney will make me feel more at ease; at least in dealing with the paperwork.

capt bill: I spoke with a title company and they said the escrow officer will review the offer we accept, but would be unable to provide any advice, could you explain more about this?

We receive offer from buyer, accept it, then meet at title company; could it really be this easy?

[khuntrevor]

I just let the EO write the contract for us based on a verbal agreement, which they do anyway. You are protected from E & O by the Title Company.

Give it a try, you will know pretty quick what the deal is. Maybe offer 3% to buyer's agent and do the 99 dollar mls listing.

[S. Chris Webb]

"A typical sale involves "hundreds" of calls and emails? In this market at his price point? Really?"

It's not finding a buyer that's the part where the agent earns their fees. If you put a FSBO sign in your yard it might have a buyer in a week. A listing agent should have offers within hours , IF it's priced at fair market value - in fact they may have offers over list price. The hundreds of calls and emails transpire through the course of escrow. Don't forget there's buyers' lenders to correspond with, buyer's agents, flaky buyers, home inspectors, contractor bids and consultations, inspection responses, repairmen, escrow officers, loan officers, HOA management companies, legal hotline, etc. etc. Yes, the emails, phone calls, and paperwork can add up.

Of course, if you have a FSBO seller and a cash buyer who buys "As-Is", who just want a one page contract, forego inspections and title searches and record their own deed for 9 bucks, there won't be all that correspondence & paperwork... but caveat emptor and venditor.