FSBO, 3% Agent Commission? (buyers agent, seller, fees, broker)

[desibear]

I'm not a realtor but I really do question the need for one for an experienced home buyer who is buying into a neighborhood he understands and has been "following the market" in the real estate section of the newspaper for months on end. It would seem having a good real estate attorney is a better way to spend the money to protect and to guide you in the nuances of selling/buying real estate. Here's my take on why you don't really need an RE these days, when buying:

1. Search on the internet yourself. That's what we did and found our place only to bring it up to the attention of the realtor.
2. Get pre-approved for the mortgage.
2. Get a good real estate attorney. yes, they are expensive but they so worth it. In general you don't need them for more than 2-4 hours of their time as well.
3. Get a good home inspector.
4. Know the market well or pay couple hundred bucks to a fixed-fee agency to do a CMA for you. This isn't some rocket science either. Most MLS interfaces basically ask the realtor to input some basic criteria (beds/bath/garage/patio/etc..) and the basic location, and out comes the houses sold recently. If you know your market, you shouldn't really be surprised from the CMA's results.
5. Make the offer and play the requisite 2-3 times back/forth with offer/counter-offer.
6. Make the offer contingent upon something, anything (have to sell my old place, my parents/dog/1-year old must approve this sale, etc.), so you always have an out in case you change your mind.
7. Put that home inspector to good use.
8. Notify the attorney and buy an hour of his time so he can guide you through any legalese.

When selling, you unfortunately are going to have to deal with the buyer's real estate agent but you don't really need a listing agent (there are some exceptions like when you just don't have the time, etc..).
0. Know the market or pay for the CMA to aid in pricing.
1. Pay a fixed-cost agency to list your house on the MLS. This is a must. Going full-monty on the FSBO, while commendable, isn't recommended. GET ON THE MLS. Pay what you need to to get that done! It can't be said too often. The realtors have a monopoly on that one critical resource unfortunately, so pay what you need to (still be chump change compared to saving 2-3% on your house) to get on the MLS. Write your own copy. Read couple of Sunday's worth of newspapers to get a feel for what you need to say and what you shouldn't. (E.g. "vintage" is usually code word for old; "cozy" is usually code word for cramped; "charming" is usually code word for crap, etc..)
2. Offer a co-op of 2.5% to 3% on your house. Make sure that co-op shows up in the all important co-op column in the MLS.
3. Market your house by advertising on couple of paid internet (realtor.com, etc..) and free internet (craigslist, etc.) sites.
4. Put a sign in the front of your lawn.
5. Advertise open houses in real estate section of the newspaper. Nobody buys from a newspaper anymore but many may get their only notification of an open house from a newspaper.
6. Be ready to sign any agreement with the buyer's agent to put their mind at ease about the co-op. Be respectful of their time and their client's time.
7. Pack away at least a 1/3 of your s*ht in boxes to open up your place. Put the boxes in storage, preferably away from your garage.
8. Clean your house thoroughly and try to maintain. The key is to open up the rooms by removing clutter as much as possible. Paint where needed.
9. Negotitate the offers, read every last word on the contract sent to you by the buyer's agent and don't sign it until either you are satisfied or your attorney (buy another hour) as looked at it
10. Show up at closing to collect the dough )

My prediction is that in the next 10-20 years, RE agents are going to go the way of travel agents; only to be used in emergencies or extenuating circumstances but not really needed for the day to day.

[johnrex62]

Originally Posted by desibear

I'm not a realtor but I really do question the need for one for an experienced home buyer who is buying into a neighborhood he understands and has been "following the market" in the real estate section of the newspaper for months on end. It would seem having a good real estate attorney is a better way to spend the money to protect and to guide you in the nuances of selling/buying real estate.
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My prediction is that in the next 10-20 years, RE agents are going to go the way of travel agents; only to be used in emergencies or extenuating circumstances but not really needed for the day to day.

LOL Great ideas, and I would agree with you regarding this approach for persons such as yourself who are intelligent enough, motivated enough, and want to spend the time required to do all of that. There are a good number of people who are not versed in the economics or basic legalities enough to recognize when they are about to put themselves in harms way. For those people we have real estate professionals. Not always realtors, sometimes leasing agents, developers, etc....but usually realtors.

I can't agree with your prediction, however, for much the same reasons as I mentioned before as to why some people need help with real estate transactions. I do not think our populace will become so much better educated, motivated and disciplined in the next 50 years to permit realtors to become an exceptional requirement.

Add in possible societal shifts such as a move toward communalism, or a super affluent trend for the mainstream population, or even a trend toward super regulation of the industry. All these are less than likely in their extremes, but consider the extreme as a fun example. In a communal economy there is no private ownership so ergo no realtors at all. In a super affluent population there is less time or inclination toward private research and more emphasis on convience such as personal shoppers etc. That would make realtors more of a mandate than presently. Lastly the shift toward super regulation would make the realty world so complex as to preclude the casual participate from concluding a sale without personal jeapordy.

[desibear]

Thanks John. However, I disagree with your assumption. You know the chairman of IBM once said that the world doesn't need more than 5 computers. Turns out he was slightly wrong in estimating how much things would change. If you had asked someone at the turn of the century about how to get faster from one place to another, they probably would have mentioned adding more/bigger horses to your carriage. Turns out they would have been slightly wrong in estimating how much things would change. If you had asked an agent even 20 years ago about the role Expedia/Travelocity would play in our lives, my guess is that they would have said that the populace will never become so technically literate and computers so prevalent that they could ever be replaced. Turns out that would have been slightly wrong...You see where I'm going with this?

I'm not sure what to make of your communal economy example, so no comment there. On the mainstreaming of affluence trend, keep in mind that due to that trend, more people own homes now than have ever owned homes before. Ergo, they have had experiences in buying homes and selling homes; these experiences in the long run will marginalize the value of a realtor in a day to day transaction. The super-rich will always want realtors but I would contend that most mid-to-upper middle class people would rather save the ~$10K (assuming a $300K) house instead. Lastly, the shift to extreme regulation will be more beneficial to RE attorneys than to realtors.

[SouthFloridaNative]

Originally Posted by donsabi

I had my house listed with a realtor and the results were terrible. Now I am going FSBO. I actually got a letter from another real estate agency that stated it would be impossible to sell my house because all RE agents would boycott it.
I certainly don't understand this because there is no cost to any realtors. I am offering 3% payable at closing. They are not listing it in the MLS, Realtor.com, or anywhere else. Realtors have "0" dollars invested into the sale of my home. 3% for a quick showing and that sounds pretty good to me. So what's the problem?
Don

You can get your home on the MLS, Realtor.com, etc. for free through Iggys House: Welcome. We are FSBO and are using their website to advertise. Sometimes you don't even need that. My uncle recently sold his house in SW FL where the market is horrible right now. Nothing is selling. Doom and Gloom. All he did was put up a sign he made and before months end he had a contract and closed 2 weeks later. Another person living in the same area had seen his sign in the yard and had been looking for a house close by for a family member to buy. Word of mouth is great advertising. He got off not paying any realtor commission!

[olecapt]

Originally Posted by SouthFloridaNative

You can get your home on the MLS, Realtor.com, etc. for free through Iggys House: Welcome. We are FSBO and are using their website to advertise. Sometimes you don't even need that. My uncle recently sold his house in SW FL where the market is horrible right now. Nothing is selling. Doom and Gloom. All he did was put up a sign he made and before months end he had a contract and closed 2 weeks later. Another person living in the same area had seen his sign in the yard and had been looking for a house close by for a family member to buy. Word of mouth is great advertising. He got off not paying any realtor commission!

That is wonderful. Such a lucky guy should simply have gone down to the corner store and bet a buck on the lottery. He would now have 2 million dollars or more. Hey if you are lucky flaunt it. You can get rich in no time.

[shellytc]

He might have been lucky. Or he might have underpriced his home. Makes you wonder.

shelly

[palmcoasting]

Good for him! And yes, word of mouth is a great tool. And so are those relatives.

[SouthFloridaNative]

Originally Posted by shellytc

He might have been lucky. Or he might have underpriced his home. Makes you wonder.

shelly

Not luck. The buyers wanted to live in that particular neighborhood and they just happened to like his house. It was not priced any lower than the other homes in that neighborhhod. It's all about who is looking for what. I am not saying that will happen for everyone that is selling a home.

[CMack]

Real estate is one purchase that generally results in a large financial return. Sellers are constantly complaining about the money they lose during the sale of their home, but I personally think they should be grateful for getting money at all. Consider the alternative, renting, when renting all the money you invested goes to someone else, when you are finished living there you have nothing financially to show for it.

However, when you purchase a home, yes it is expensive, but you have received the benefits of having a nice place to live and all the tax benefits that accompany home ownership. Property appreciation as I see it is basically free money, a gift. Possibly I am too optimistic, but I think home sellers need to be thankful that they had the ability to make money at all, instead of complain how much they don't get.

[emilybh]

Originally Posted by julieb

I am a Realtor. That letter sounds rude. The problem with FSBO is the Realtor ends up doing all the work. It is great you are offering 3% buyers agent comm. I am sure your house will get shown.

The problem is most FSBO do not know current laws and what is acceptable and not, what forms need to be signed and when. ie. Lead Disclosure, Property Disclosure Forms. We then negotiate the contract for all parties, handle all repair requests/disasters. A realtor ends up doing twice the work.

However, a good Realtor will show any house to their clients that they want to see, no matter the commission.

Hope that helps.

This is NOT always the case. I did all the work you metnioned above DESPITE having a listing agent that was supposed to do it FOR me. So when I closed I paid TWO BROKERS commissions even though I, the seller, did 99% of the work I was responsible for. THIS time I have an MLS listing and I'm saving myself the commission I'd pay a listing agent,(consideringhow little I got out of the investment the last time).