FSBO vs. Agent (feedback, documents, appraisal, 2%)

[readymade]

I'm planning to sell my house (in CA) and I'm thinking of doing it as a FSBO, using a real-estate attorney (for the forms) and showing the house myself. Both my husband & I work from home so we are almost always there. Also, we can pay a flat fee and have our house listed on the MLS and Realtor.com.

Almost everyone I mention this to has said "Be careful!" and "You should use an agent!" but doesn't really say why.

Can someone please tell me what to expect selling the house myself? Why SHOULD I use an agent? What, exactly, does a seller's agent do to earn $17,000+?

Also, what if I offered 4% to the buyer's agent? Would that "sweeten" the deal and make agents want to show their clients my house that much more?

One other question: can I contact and pay an agent directly to do a "flat fee" MLS listing? Or is that something I have to do online?

Thanks!

[Northwoods Voyager]

Hmmm. Good question. Why should you use an agent over selling yourself? I am a Realtor, so of course my response will be in favor of using an agent, Realtor or not...

You will put your property up for sale by advertising in your local paper?
You will buy pre-made signs or have them made to your specifications.
Your real estate attorney will have these forms for you at his/her fees.
You will have an appraisal to hopefully come up with a price that will be close to what a buyer will be willing to pay.
You will have access to comparables of sold property in your area.

You will be available to answer the door at unusual hours to the public/strangers.
You will answer your telephone for all incoming queries.
You will also contact mortgage brokers/lenders/ banks to assist potential buyer.
You will be sure to only show your home to qualified potential buyers, by asking for their letter of pre approval for financing if needed.

You also be aware that some buyers will need to sell their property before they can 'close'.

You will take many pictures of your property.
You will conduct an Open House for Agents
You will conduct an Open House for the public, providing refreshments.

You will send flyers, post cards, other print material to real estate companies
You will send post cards to your neighbors, friends, acquaintances.
You will leave flyers at grocery stores, etc.
You will make telephone calls to the number of interested buyers that you have dealt with in the past.

You will have your real estate attorney 'draw up' all of the required documents for the offer/acceptance/counter offers, and final contract.
Your attorney will then earn his/her fee by preparing for the pending closing and transfer of ownership of your property. Title insurance will be requested.
Your lender, if there is one, will be contacted for the 'pay-off amount, again by your R.E. attorney. Your attorney will be earning his/her fee.

You are professional and dispassionate in all of this.
Many have sold their home/property w/o an agent. It can and is accomplished many times. It is up to you what effort and how much you are willing and able to put into this transaction. Call a respected company in your area and question them about the procedure they would develop in marketing your property. Should give you a basic idea.

Good luck to you on whatever you do decide.

[jimj]

In a hot market I would say give it a try, it can't hurt. In todays slower market where there's a glut of houses I would have to say don't waste your time. Get a good agent... OBTW, I'm not a realtor or banker.

[shellytc]

Northwoods just told you what you need to do and need to know. Jimj who is definately NOT a REA just gave you valuable advice about the market.

I will let you know that there are way more houses than buyers currently. and they have no reason to come and buy from you without represerntation, unless your home is priced rock bottom, below market. And if they have representation, the agents don't know you exist and don't care. They have enough homes to last the next 10 months!! (if nothing new came on the market.)

It is going to be extremely difficult to get attention on your home. If you engage a flat fee provider, they will ask for your money up front. they don't care if you sell your home or not, they have no stake in the transaction. Whereas a good REA does have a stake in it, they don't get paid if you don't sell. So, after you pay all that money for your flat fee listing, and money for your signs and money for your brochures and pictures and on and on... The chances are that you will then engage a REA and still pay the commission. Only difference is, you will also have paid quite a bit up front. So, in the effort to *save* money, you end up paying more.

There are plenty of folks that have tried recently that are on this board. I'm sure they will tell you their experiences. there are also plenty that have sold FSBO, but check when they did. Big difference between a sellers market and a buyers market.

Shelly

[kristin1]

We are doing a FSBO right now, and are contemplating using a realtor now that we have been on the market almost 60 days with lots of showings but no offers. So here's my two cents:

Agents in my area are OPENLY HOSTILE to FSBO, even though we are offering a 2.5% commission to a buyers agent. Many get confused when they see you listed on the mls and then make an appt to see the house and then see a FSBO sign. Most won't even show their clients the home. I think this is why we have many "no shows" from realtors - and they graciously don't even call to cancel.

The realtors that do show our home seem to be trying to convince their clients from the moment they step into my home why they shouldn't buy it. We've had a few outright lie to their clients. For example, we live a few blocks from a recycling center. Two realtors insisted to their clients that they would get the smell of burning leaves all fall if they purchased our home. They don't even burn leaves at the recycling center. Also, another agent insisted we must have had water damage in our basement because we have newer looking carpet. The carpet is 3 years old but we've never had any damage. When I explained this the realtor rolled her eyes and made it clear to her client she didn't believe me. Nice.

I've been told by some realtors that due to this "blackballing" so to speak, even if we do go with a realtor now alot of damage has been done, because everyone who has been looking in our price range has already been talked out of it by their realtor.

I think you need to talk to someone who is "in the know" in real estate in your area to find out if agents would be willing to show your home as a FSBO. Many won't show it sheerly on principal.

As far as the work it entails - it's fairly easy to figure out where to advertise and where to put signs. The open houses are easy - we just give people a brief tour of things they might miss and then let them wander around (we've ovbiously removed all valuables). The hard part is keeping your home show ready every day - esp if you have children, it's nearly impossible. And make sure you are always home on Saturdays - we get many drive bys and invite them in to take a look.

Just my experience.

Good Luck!

[chaz longue]

Originally Posted by readymade

I'm planning to sell my house (in CA) and I'm thinking of doing it as a FSBO, using a real-estate attorney (for the forms) and showing the house myself. Both my husband & I work from home so we are almost always there. Also, we can pay a flat fee and have our house listed on the MLS and Realtor.com.

Almost everyone I mention this to has said "Be careful!" and "You should use an agent!" but doesn't really say why.

Can someone please tell me what to expect selling the house myself? Why SHOULD I use an agent? What, exactly, does a seller's agent do to earn $17,000+?

Also, what if I offered 4% to the buyer's agent? Would that "sweeten" the deal and make agents want to show their clients my house that much more?

One other question: can I contact and pay an agent directly to do a "flat fee" MLS listing? Or is that something I have to do online?
Thanks!

Your questions are excellent! Don't be sore at me - but I'm going to try to begin to answer them...

First - Let's see if I understand what you're proposing: you'd entertain an offer which included 4% of your proceeds being paid to an agent representing the other party. That seems like saying you'd forgo professional marketing, and the skills of a listing Realtor (who among other things negotiates, and solves problems for a living) ...for 2% of proceeds. Is that right?

First - I'd be foolish to tell you you can't do it. Sellers do this every day - some with great success, and some with great frustration. But here's something to keep in mind: If sellers came out ahead (more than not) doing this, we Realtors would be rare indeed. None of us would be worth our fee. But in fact, the transactions involving a listing agent outnumber fsbo transactions by a very wide margin. That's because using a good Realtor (who you can communicate well with and who you trust) should put more in your pocket, not less.

Here's what you seem to be giving up for the 2 %.

1) A professional marketing plan (the last one I wrote and followed had 14 seperate points, ....we close 10/18).
2) A trained negotiator - who works nights and weekends.
3) The skills of a professional who uses the MLS day in and day out, and looks at that as only a small part of the picture. The only flat fee MLS services I've had any dealings with state clearly they only put the listing in and don't provide other services.
4) A Broker. That's to say, somebody who acts at your direction on your behalf.

Now - You're going to show the home yourself, right?
How will you decide who to show the house to? Although not every agent gets this one right, I believe it's important NOT to show houses they can't afford to unqualified prospective buyers.

I also try to make it convenient for the sellers NOT to be home when I show a home. Why? People (couples, particularly) like to talk out loud, and it's easy to feel that's not appropriate when the seller is there.
I can't tell you how many times prospective buyers have left a property just because they wished they'd been able to walk through in silence rather than having the home shown to them by the seller.

I'll always ask the listing agent if this is possible. If it's not, I'll show the home anyway. But it's amazing how often a home we can see without any distraction seems to sell itself.

Best of luck to you!

David Beckett

[readymade]

Thanks Northwoods Voyager, that's exactly the info I was looking for. Yeah, it's a lot of work and I would rather not do it. But to me it's not worth the incredibly huge amount of $18K (assuming we sell the house for $600K). That just seems insane to me.

I've never had a seller's agent actually show a house I was looking at. It was always done by a lock-box. So, I sorta had to wonder... what do they actually DO to earn all that money? Most people work, like, six months full-time (8 hours a day, 5 days a week) to make that much.

Also, what I don't really get is: don't agents do the same amount of work for, say, a $200K house a $700K house? And yet they make so much more on the $700K one. Why does it work as a percentage and not a flat fee?

[DanielChang]

Originally Posted by readymade

Thanks Northwoods Voyager, that's exactly the info I was looking for. Yeah, it's a lot of work and I would rather not do it. But to me it's not worth the incredibly huge amount of $18K (assuming we sell the house for $600K). That just seems insane to me.

I've never had a seller's agent actually show a house I was looking at. It was always done by a lock-box. So, I sorta had to wonder... what do they actually DO to earn all that money? Most people work, like, six months full-time (8 hours a day, 5 days a week) to make that much.

Also, what I don't really get is: don't agents do the same amount of work for, say, a $200K house a $700K house? And yet they make so much more on the $700K one. Why does it work as a percentage and not a flat fee?

There are flat-fee listing agents in many markets.

A full service listing agent does more than show houses (as the above post stated) ... the listing agent actively markets the house and has the expertise and contacts in the business to make the transaction as smooth as possible.

$18k might seem like a lot, but I believe it's hardly six months salary (3k a month??). For a $600k house, 7% interest and 20% down, the monthly payment (principle + interest) is over $3100. You'd probably need at least $5k or $6k to qualify for a house like that. And $18k may not go straight to the listing agent either--a portion of that goes to the agent's broker, etc.

[shellytc]

Readymade, if your home is in the 600k range, there are less buyers able to buy that home than the home at 200k... so the REA has to work a little harder, more advertising, more expensive advertising. For instance, the newspaper skews in its demographics to the more affluent, more educated, usually a little older consumer. It is also expensive.. your home may be just right for that type of advertising. the 200k home is typically (in my area) the starter home, younger profile buyer and they tend to use craigslist.. craigslist is free.

Your home may also take longer to sell (less buyers, more time to sell) so the REA will have to invest in advertising for a longer period of time.


shelly

[readymade]

Sorry, I hadn't read the other replies when I wrote my above comment.

I appreciate all your feedback. It's definitely something to think about. What I don't get is... if it's in the MLS and Realtor.com and the paper, and people wanted to look at it, why wouldn't an agent show it? Especially if we offer 3% or 4% to them.

One thing I WAS worried about is being there or showing the house to people because I hate looking at houses with the owners there. But... like I said, we work from home so I don't know if there's much we could do about it.

Personally, in the past, I've had nothing but bad experiences with seller's agents. One time I was renting a 1 bedroom apartment in a house that was being sold. Everyone who came in kept asking where the second bedroom was. The agent lied and told everyone that there were two bedrooms (he'd decided that the outer room that you had to walk through to get to the rest of the apartment was a 2nd bedroom). The potential buyers were PISSED! Another time I was selling a house and I overheard our agent pointing out flaws in the house to a potential buyer.

I get that a good agent works hard to sell a house (I don't want to insult any agents), but again $18K worth?!

I could do the flat fee MLS thing for $400. Put an ad in the paper for, what? $500 for a few weeks. $1000 to the attorney to look over the forms. I already look at the MLS several times a day because I'm curious about the market. I've done the comps. I've looked at other houses in the neighborhood. So, that's about $2000.

That 2% that I would save? That's $12K. That's really nothing to sneeze that!