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I agree with your assessment of why we chose FSBO - it's really quite simple. The money we save we need because we are relocating out of state. We came here for a job - it's retirement time - there's no family here, no friends here - no reason to stay. We just know it's going to cost us money this time; last time the company helped with relocation costs. We also did not get a warm feeling about the realtors we talked with so felt our only option was FSBO. We don't agree either with the facts they try to present (naturally in THEIR favor) that FSBO's would get more for their home if they sold with a realtor. So often the realtors keep telling people to lower their prices - we think they do this so THEY can make a fast sale which equates to more money in THEIR pocket!
This is an interesting article:
For Sale by Owner Center: Do NAR Statistics of “For Sale by Owner†Sales Mislead People? (http://www.forsalebyownercenter.com/blog/2006/10/do-nar-statistics-of-for-sale-by-owner.html - broken link)
Do NAR Statistics of “For Sale by Owner” Sales Mislead People?
You’ve heard it quoted hundreds of times…
"The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200;”
This figure comes from the NAR 2005 Buyer and Seller Profile. This figure is quoted religiously by the real estate and the media.
In fact the National Association of REALTORS even has a TV commercial about it.
"Don't Try This At Home", targets unrepresented sellers (the FSBO market). The commercial features a hard-hitting message: REALTORS® have the experience to price your home effectively, so it can sell for up to 16% more than selling it yourself.
This is a pretty bold claim. 16% is a big number so let’s analyze this a little more using different figures. Here is what a home buyer would be led to believe hearing this statistic.
FSBO $300,000 / REALTOR $348,000 – 16% would be $48,000 more
FSBO $400,000 / REALTOR $464,000 – 16% would be $64,000 more
FSBO $500,000 / REALTOR $575,000 – 16% would be $75,000 more
These numbers would make everyone consider selling with an agent… but how true are they?
Now I’m sure that this claim has caused thousands of FSBO’s to go out and hire a real estate agent to sell their home costing them millions in real estate commissions.
What is interesting to me is that the data set used to make this claim is not available anywhere. I have looked for it and cannot find it. If you have it great, let’s make it public so we can see how the NAR arrived at this statisic.
So, where DO they get their stats? I can't find it either. It might be a trade secret and only available if you pay to join the NAR - ?? Does anyone know the answer to this? I have only copied this article in part; please click on the link in "blue" so you can read the entire article.
Ahh comeon. Real people really can't believe that silliness. If were literally true the RE Agents would simply buy all the FSBOs and resell them at a nice profit. We can generally Buy the house and sell the house all up for under 5% so we would have 11% to play with...Hell I would buy and sell a couple of houses a week and make a nice living. I could even afford to carry them for 6 months or so without much harm.
I believe the numbers are actually true but deal with different value profiles...so you can't really compare them.
Whether or not you make money hiring a RE Agent is a complex matter. I suspect that it is close to a wash. Agents do move properties at higher prices and quicker. Time is money. On the other side it is probably less money than they cost. But you then have the deal where things don't go right. Now the FSBO is in big trouble and out big bucks. And once trapped in one of those scenarios there is no way out...at least none that does not cost a fortune.
I think we are worth it unless you are reasonable expert at the deal. Most who are expert are licensed. It is easier and cheaper that way.
So name your poison. Do it the easy way...or do it the hard way for some good cash...but always remembering if it goes south...there goes the cash and more cash and more cash...well you get the idea.
Gina, if your dh is a RE Attorney, then he just needs to pay for brokers license, and you can sell yourself! Do not need to pay $500 MLS fee, put that towards brokers license and save even more.
I am a Realtor in Charlotte, and was one back in NY. I worked for a full service Realtor getting all the big commissions (4%) about 1.5 years ago in NY! Then I came down here and saw the BIG companies (Allan Tate's, Coldwell Banker, etc...) getting 6%-7%, and I was like "what the f..."
So I hooked up with what the BIG companies (Allan Tate's, Coldwell banker, etc...), call a "Discount Broker". But actually we are a Full-Service company just like them! What we do to attract the agent (let's say (NY652) your Indiana sister-in-law) is offer them the full 3% commission. While we only list your home for 1%, and still doing everything they do - MLS, Realtor.com, various other websites, Print Advertising, Open houses, Just listed postcards, etc...
Now you know what the kicker is, for all you Buyers coming down to Charlotte, is we give a 1% Rebate back to you at closing! (assuming you do some homework, and since "Time is Money!", keep my showing time to under 10 hours!) You won't find that with all the BIG companies! Imagine buying a $500,000 Dream home, and getting a check cut back to you at closing for $5,000! Live in the Charlotte area and have a home to sell, not only will we list it for 1%, but when you buy your next home thru us (in the Charlotte area), we will give you 2% back at closing on the buying side of your new home!
Now how do we keep the cost down? Well we don't have that lavish big office building, that cost X dollars in rent a month. My office is on the road (where you spend most of your time with your realtor!), and in my home. I invest in my website, and unfortunately print advertising (only because some people believe it does something!) We also do not pull up in the latest BMW7 series. We are modest, humble, and truly believe there is a paradigm shift that is going to happen in the RE world. May take 5 - 10 years, but watch out Brick-N-Mortar companies, I got news for you, your BUYER or SELLER does not care if you have an office that looks like the taj-ma-hal (I spelt that wrong, I am sure!) They don't care if you have a $5,000 dollar cherry wood table that you sit at for 10 minutes. They just want to save money, the same way you want to make money!
Anyone read the book Freak-o-Nomics, it talks about how the internet changed the "term-Life" insurance, and drove the price way down! I think the same thing will happen with commisions.
The problem that most FSBO's don't understand is...
Just as they are trying to save money by avoiding the commission, the buyer is trying to save money knowing that buying directly from a buyer will in fact get them a lower price than if it were listed.
A REALTOR knows the market value of a house and knows how to advice their client. Unless a FSBO pays for an appraisal first, they don't know the true market value of their home. They judge most times by listing price, which is not an accurate measurement. So the seller starts high, the buyer comes in low and you would think that they'd meet in the middle, but it doesn't happen. The longer a house sits on the market, the more desperate the seller becomes and the buyer becomes in control of the situation.
Here's another fact to consider as a FSBO. Printed ads lead to sales 2%-4% of the time. REALTORS do it for exposure and to bring in buyers. Therefore with as many listings as a REALTOR has, means they have that many more potential buyers.
For example: If an ad brings in 3 potential buyers and an office has 80 listings, that is 240 potential buyers. While the FSBO who only has ONE listing has 3 buyers. Who is more likely to get a deal completed? Another example of this is, most buyers who call on an ad, don't buy that house, they buy another. If a FSBO only has that one ad, they don't have anything else to show them.
There are just so many things that I really don't think FSBO's consider or understand about the Real Estate market. It's not like selling your car. This is a MAJOR investment in most people's life that they only do once or twice, with exceptions of course. Buyers in general are more comfortable in dealing with a professional who will do most of the work for them. That right there puts FSBO's at a disadvantage. I have found 60 FSBO's in my area in the last 40 days. I have been keeping my eye on them to see if I see any changes in their listings, if they sell or if they just continue to sit there. All 60 have just continued to sit there with a few of them reducing their prices. Now I'll take the few that have reduced their price in my next example. If the average reduction was $15,000, they basically just paid the commission in the reduction off of what they originally thought they'd get.
Gina, if your dh is a RE Attorney, then he just needs to pay for brokers license, and you can sell yourself! Do not need to pay $500 MLS fee, put that towards brokers license and save even more.
I am a Realtor in Charlotte, and was one back in NY. I worked for a full service Realtor getting all the big commissions (4%) about 1.5 years ago in NY! Then I came down here and saw the BIG companies (Allan Tate's, Coldwell Banker, etc...) getting 6%-7%, and I was like "what the f..."
So I hooked up with what the BIG companies (Allan Tate's, Coldwell banker, etc...), call a "Discount Broker". But actually we are a Full-Service company just like them! What we do to attract the agent (let's say (NY652) your Indiana sister-in-law) is offer them the full 3% commission. While we only list your home for 1%, and still doing everything they do - MLS, Realtor.com, various other websites, Print Advertising, Open houses, Just listed postcards, etc...
Now you know what the kicker is, for all you Buyers coming down to Charlotte, is we give a 1% Rebate back to you at closing! (assuming you do some homework, and since "Time is Money!", keep my showing time to under 10 hours!) You won't find that with all the BIG companies! Imagine buying a $500,000 Dream home, and getting a check cut back to you at closing for $5,000! Live in the Charlotte area and have a home to sell, not only will we list it for 1%, but when you buy your next home thru us (in the Charlotte area), we will give you 2% back at closing on the buying side of your new home!
Now how do we keep the cost down? Well we don't have that lavish big office building, that cost X dollars in rent a month. My office is on the road (where you spend most of your time with your realtor!), and in my home. I invest in my website, and unfortunately print advertising (only because some people believe it does something!) We also do not pull up in the latest BMW7 series. We are modest, humble, and truly believe there is a paradigm shift that is going to happen in the RE world. May take 5 - 10 years, but watch out Brick-N-Mortar companies, I got news for you, your BUYER or SELLER does not care if you have an office that looks like the taj-ma-hal (I spelt that wrong, I am sure!) They don't care if you have a $5,000 dollar cherry wood table that you sit at for 10 minutes. They just want to save money, the same way you want to make money!
Anyone read the book Freak-o-Nomics, it talks about how the internet changed the "term-Life" insurance, and drove the price way down! I think the same thing will happen with commisions.
You say 1% but since you are offering 3% to the buyers agent it is really a 4% commission.
You limit your buyers to 10 hours to be able to get the rebate? That doesn't sound like full service.
You also have no one to answer phones if you are on a listing appointment or showing homes. Not full service.
Our office phones are answered 24 hours a day. You answer yours from 9-9 if you are not tied up with something else.
When a buyer calls they don't want to have to wait for a call back. They will end up calling another agent and you have just lost a possible buyer for your listing. If a buyer calls our office and the listing agent is not available another agent gets the call. This ensures that we don't lose the buyer and a possible sale of one of our listings.
There are quite a few little things that a full service brokerage offers that a discount brokerage does not. All the little things put us in contact with more buyers thus giving us a better chance of getting the home sold.
I am not saying there is not a place for discount brokers but to try and say that you are offering the same service is just not true.
You say 1% but since you are offering 3% to the buyers agent it is really a 4% commission.
You limit your buyers to 10 hours to be able to get the rebate? That doesn't sound like full service.
You also have no one to answer phones if you are on a listing appointment or showing homes. Not full service.
Our office phones are answered 24 hours a day. You answer yours from 9-9 if you are not tied up with something else.
When a buyer calls they don't want to have to wait for a call back. They will end up calling another agent and you have just lost a possible buyer for your listing. If a buyer calls our office and the listing agent is not available another agent gets the call. This ensures that we don't lose the buyer and a possible sale of one of our listings.
There are quite a few little things that a full service brokerage offers that a discount brokerage does not. All the little things put us in contact with more buyers thus giving us a better chance of getting the home sold.
I am not saying there is not a place for discount brokers but to try and say that you are offering the same service is just not true.
I agree with you on some points.
We are "Home of the 1% listing", that is my brokers slogan. Unfortunately, it is a drag having to explain every time to a seller, that another 3% goes along with that!
Although I have not yet, but someday plan on getting a phone service that will be available 24/7. Right now we use CSS to showing appt.s I went to your website and saw you are with Weichert, I used to be with them up north, so I know you are not lying when you say the phones are there 24/7. But you are a huge company! The Mom and Pop "full service" will not be open 24/7 either. Plus if they are calling me, it is usually because they want to save some money, so they will call back!
I don't limit my buyers to 10 hours, unless they want to do there Homework, then they deserve a break and get a rebate, again Time is Money! It is either going to be theirs or mine, the choice is up to them! You want me to cart you around for weeks on end, then I should get 3% too! It is a business model, and people are loving it. They can go to open houses on there own.
The discount models have not proven to have long legs. They work well in some markets but crash in others. They are generally much more sensitive to volume than a traditional broker..market goes south...volume goes away...crash goes the discounter. They are hit as well by the hungry agents of the conventional brokers. The heavy referral folk breeze along supporting the brokerage. But the marginal agents cut price down to the discounters. That further erodes the discounter volume.
I would note that the average commission is up a little over last year and will likely be up a little more next year. Buyers markets drive commissions up.
I am somewhat surprised that the 1% rebate to buyers has had so little impact. I think the problem is that no one has found a way to really advertise a buyer practice. It all gets lost in the forest of listings.
I believe we have seen the impact of the internet on the business. It changed it a lot but did not undermine the basic economic structure. I believe it is all over by now. The internet revolution, such as it is, has done finished...and it did not change much.
Gina, if your dh is a RE Attorney, then he just needs to pay for brokers license, and you can sell yourself! Do not need to pay $500 MLS fee, put that towards brokers license and save even more.
I am a Realtor in Charlotte, and was one back in NY. I worked for a full service Realtor getting all the big commissions (4%) about 1.5 years ago in NY! Then I came down here and saw the BIG companies (Allan Tate's, Coldwell Banker, etc...) getting 6%-7%, and I was like "what the f..."
So I hooked up with what the BIG companies (Allan Tate's, Coldwell banker, etc...), call a "Discount Broker". But actually we are a Full-Service company just like them! What we do to attract the agent (let's say (NY652) your Indiana sister-in-law) is offer them the full 3% commission. While we only list your home for 1%, and still doing everything they do - MLS, Realtor.com, various other websites, Print Advertising, Open houses, Just listed postcards, etc...
Now you know what the kicker is, for all you Buyers coming down to Charlotte, is we give a 1% Rebate back to you at closing! (assuming you do some homework, and since "Time is Money!", keep my showing time to under 10 hours!) You won't find that with all the BIG companies! Imagine buying a $500,000 Dream home, and getting a check cut back to you at closing for $5,000! Live in the Charlotte area and have a home to sell, not only will we list it for 1%, but when you buy your next home thru us (in the Charlotte area), we will give you 2% back at closing on the buying side of your new home!
Now how do we keep the cost down? Well we don't have that lavish big office building, that cost X dollars in rent a month. My office is on the road (where you spend most of your time with your realtor!), and in my home. I invest in my website, and unfortunately print advertising (only because some people believe it does something!) We also do not pull up in the latest BMW7 series. We are modest, humble, and truly believe there is a paradigm shift that is going to happen in the RE world. May take 5 - 10 years, but watch out Brick-N-Mortar companies, I got news for you, your BUYER or SELLER does not care if you have an office that looks like the taj-ma-hal (I spelt that wrong, I am sure!) They don't care if you have a $5,000 dollar cherry wood table that you sit at for 10 minutes. They just want to save money, the same way you want to make money!
Anyone read the book Freak-o-Nomics, it talks about how the internet changed the "term-Life" insurance, and drove the price way down! I think the same thing will happen with commisions.
That is a good deal! I would use you if you were here. I like that the buyers get a little bonus. That seems fair to me. It's like when we bought this house. We found this house on REALTOR.com - Real Estate Listings & Homes For Sale and we didn't waste anybody's time. We were already pre-approved and all and this wasn't our first real estate transaction. So, for people that know what they want and how to get it they should get a little break.
Also, I watched all these little "bubba & sissy" real estate ofices around here go from being located in small older buildings to brand new big fancy places with all the best of this and that. And now they say they can't afford them. Who's fault is that? I stay away from them.
you're asserting that an agent has an exclusive best grasp of the crystal ball of real estate pricing and turnover? just from doing a CMA?
all you're saying is that a FSBO needs to be a knowledgeable seller to be a competitive one.
how much does an appraisal cost the FSBO? $350-500-700? That's a fraction of the cost of an agent at 6%.
I can be totally ignorant about a marketplace, but I can pick up the phone and get a professional appraisal anywhere for very little money ... which I would do anytime I'm SELLING or BUYING before spending any more money and effort on a deal. You try to make it sound like this is a big deal benefit of using a pro realtor ... whose skills and opinions here still pale in comparison to a licensed appraiser (unless you're a SRPA or MAI, or similar credentials).
All I'm pointing out is that something you regard as a highly valuable aspect of your professional services is readily available at modest cost to a FSBO. Who can then use that appraisal to justify their price point to a qualified buyer. That's no different than what you'd do as an agent, is it? It's a sales job to convince a buyer that the price point asked is "fair and reasonable" to get them to put in an offer at that price. What do you use to make that justification? a CMA? an APPRAISAL? what's different here between an agent's tools and a FSBO's tools?
You do not understand apprasal. You cannot get market value from an appraisal. Just does not work that way. Helped a client buy a condo which closed last Thursday. She paid $203,000 for it. The appraisal was $225,000.
That is typical. Appraisals generally trail reality by some months. It is rare that they are "on market".
An appraisal is to form a judgement on value to certain legally specific rules. It really does not claim to be a market price.
Note that in this case the buyer gained well over what was paid to the buyers agent.
I understand "appraisal" very well. You can call it a "gut feeling" based on "knowing" the recent sales, a CMA, an SRPA or MAI evaluation, or a professional appraisal.
All I have to do is to tell the appraiser the purpose of my inquiry. If I'm a seller, I need to know what the properties around me have been selling for and derive an "adjusted" price point for my property. I can also research the county sold reports in my area myself and derive a reasonable figure for the property. Even if I get the figure from your CMA, it's still only a professional "guess".
Let's look a little more closely at your example, olecapt ...
The buyer got a property bought for back of the appraisal figure, which may have been for a lender's purposes. No doubt your buyer was happy to know that they bought a place for 10% back of the appraisal.
But that also means that the seller sold for 10% LESS than the appraised figure. Now that takes salesmanship on the part of the listing agent to get the seller to accept 10% LESS for their property than it may have been worth. How happy was your SELLER to leave $20,000 minus a 6% commission on the table (that's $18,800 they walked away from by using your agent services, right?)?
What you've left out of the equation here is the other factors that entered into the sellers and buyers positions; motivations to sell, personal timelines, adjustments, closing help, need to close by a date certain, etc. ... that induced the seller to accept so much less money than their place was worth.
After all, the data used to determine the appraised valuation was from the actual sold comp's in the area, which include all of those factors in each sale. Not the listing/asking prices. The SOLD prices from the ACTUAL completed/closed deals in the area. And the data you work from for a CMA is no more current than the data that a professional appraiser has working from in a reporting state.
In a rising market, the appraiser will see the trend. In a declining market, the appraiser will also see the trend .... just as quickly as you can. The information game simply isn't something held as a deep dark tribal secret in the back room of a real estate agency office under lock and key by the broker who is sworn to secrecy by the devil incarnate. I'd bet there's appraisers in your market who know the trends and price points better than the agents who are out in that marketplace .... because they're only working that side of the street full time.
I'll give you a hint about why some agents don't have the greatest reputation in a lot of markets ... treating everybody here like they have no intelligence compared to the soaring skills and mystic knowledge of agents like yourself who need to validate the worth of your services.
I'd be pretty po'd if you were my agent and talked me into selling my property for 10% less than it was worth ... come to think of it, that's exactly the situation I had that convinced me to get my own RE ticket many years ago ... and then gave me an opportunity to find out just how scummy a few certain brokers in Denver really were (nice people, just scummy to do business with).
If you'd said that you made a great deal for both the buyer and the seller, then I'd have a different take on this. But your explanation focused on the financial benefit to the buyer only ....
Last edited by sunsprit; 07-15-2007 at 05:03 PM..
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