IS YOUR LISTING A FSBO?

By Dan Homan

Real Estate Agent with Coldwell Banker Ellison Realty, Inc

June 17, 2007 05:17 PM

Let's define FSBO. For sale by owner, or should we say for sale without the assistance of a listing agent is what happens when the seller controls the whole transaction.

A FSBO seller determines his own selling price. Did you prepare a CMA, and tell your seller what price you will list for or did you list for whatever your seller wanted even though the home is more than 25% over the highest comp?

A FSBO determines what if anything he will pay an agent who finds a buyer. Did your seller negotiate your personal normal fee down to where they wanted it or did you set and hold firm on your fee?

A FSBO plans his own marketing plan. Did you set a marketing plan for your listing and tell the seller "this is what I do" or did your seller tell you when and where to advertise, when to hold open houses, etc..

Are you making the decisions on managing your listings, or are they really FSBO?

If it looks like a FSBO, acts like a FSBO and smells like a FSBO it is a FSBO.

Or am I the only one that thinks that way?

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Gita Bantwal

RE/MAX Centre Realtors - Warwick, PA

REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

good points. There are agents who just enter the listing in mls and the seller is more like a fsbo.

Jun 18, 2007 03:08 AM

Anonymous

Liz Provo, Editor/Publisher

As the publisher of a regional For Sale By Owner magazine, we speak frequently with sellers who have used agents in the past but who have chosen to sell on their own this time around. I think that real estate agents have made the home selling process sound mysterious and complicated to protect their way of life. They have routinely underestimated the intelligence of home sellers through the use of NAR advertising campaigns like "for sale by owner, but not this owner", where home sellers are supposedly incapable of understanding words like contingency. The know-it-all attitude of the NAR membership is perhaps to blame for their undoing. Sellers are learning that selling a house is not as complicated as they have been led to believe. They taking matters into their own capable hands, either by negotiating contracts, advertising and other services by agents, and adding even changing the terms of listing contracts and how they wish to pay a commission. For many sellers, the decision to bypass the agent altogether leads them to become more knowledgeable and vested in the outcome of the sale of their property. Hence, they choose to sell "by owner". Once sellers learn that commissions are negotiable, attorneys handle legal matters and they can price their homes effectively by paying for a professional appraisal, they scratch their heads and say, "Wow, why didn't I do this earlier?"

Jun 18, 2007 04:56 AM

#11

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

This is a great post and you are correct, it is all about who is in control of the listing. I cancelled a listing last year, when after the signing they started to try to take control. I said "I can sell your home, but when we listed you agreed to do certain things, that have not been done and in the last 10 days you have done nothing but question my opinions and marketing." I canceled them and 1 year later 2 price hikes (YES HIKES) and two agents later, it still hasn't sold. Imagine that!

I had interested buyers, but when they re-listed with another agent and the higher price, I put them into another home, since the price they were asking was now way out of line for the market.

It is best to let a FSBO that once to remain a FSBO to be exactly that! A FSBO.

Jun 30, 2007 05:20 PM

Anonymous

Judith Lambert

Has anyone had experience with a realtor who is demanding 3 percent to an FSBO seller when he did not bring the buyers to the house? There is a couple interested in my FSBO home. They found out about it by driving down my street and picking up a flyer in front of the house. The following day they came to my open house. Three days later they called me and came through again for a second look and said they would like to make an offer.

They had previously been working with an agent who had shown them several properties. Now they are working with this agent to do the paperwork in buying my house. The agent is asking me for 3 percent commission. Since the buyers came to me on their own, I don't think I should pay him a penny. Any thoughts?

Jul 09, 2007 09:32 AM

#13

Rick Beal

Coldwell Banker Residential Brokerage - Portland, ME

Hello Judith,

It depends what the buyer agency contract says. In mine, the buyers are responsible for any home that they put under contract while the contract is in place. I always tell my buyers to have me show them all of the homes that they are interested in - whether they be listed on MLS or private sale like yours. Do they always listen? Of course not and then we get into the predicament that you are in today. Remember, finding the home is the easy part, negotiating the offer, inspection contingencies, financing, walk through, etc. I hope that helps!

Jul 10, 2007 09:56 AM

Jim Ludes

RE/MAX Top Properties - Coal City, IL

Grundy/Will County, IL REALTOR

Great post Dan- nice thoughts to ponder!

Liz said, "and they can price their homes effectively by paying for a professional appraisal"....So FSBOs are supposed to pay $300 to a professional to appraise their home but not speak with a Realtor for FREE to find out what its market value is?!?! Sounds like a great way to jump-start the ol' selling process.....pay out of pocket, up front, to find out how much to overprice my home (since an appraisal is NOT an indicator of how much a buyer will pay for a house on the open market).

Jul 10, 2007 10:42 AM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Liz - This post was about raising the level of service among state licensed professionals. My point is if a seller wants to over price the home, use me to advertise it at my expense and ask me to dishonor the other clients I represent by having me charge them less (how do you feel when you establish a relationship with a business only to find other customers are paying less than you?) isn't it wrong to pretend to be doing a job for them that I am not really doing?

Judith - thanks for visiting, I guess my point is if you are going to pay a doctor shouldn't you let him diagnose, and treat you? In your case you haven't engages the services of an agent to sell your home, but that does not preclude a buyer from engaging services to represent their interests. By the way this involves more than just doing some paperwork. A buyer can ask for a seller concession for any closing related costs. Remember the agent is not representing you but the buyer.

Jim- excellent point about value. appraisals have nothing to do with market value. For my money, I would pay for a quality CMA or BPO before I would pay for an appraisal.

Jul 10, 2007 06:00 PM

Jim Ludes

RE/MAX Top Properties - Coal City, IL

Grundy/Will County, IL REALTOR

Appraisals are awesome for getting loans through and hiking up taxes- but have absolutely ZERO to do with pricing a home for sale. In fact, on many a listing appointment, I've had to talk potential sellers off the ledge when they find out that they're not going to sell their home for its appraised price. Early in my career I listed a house of a former professor....she and her husband insisted that their home be listed at 285k to reflect their recent 283k appraisal....I said that the market dictated 270k and she should sell quickly- like the comps had....making a long story short(er)---I priced at their price and they ended up on the market for a year with one contingent buyer (that fell through) and sold it FSBO for 240k after that.

Dan- You think there's any chance of me doing quality CMAs for FSBOs, maybe at $200 a pop?!?! Heck, doing a bunch of those would be more financially profitable than actually listing one!

Jul 11, 2007 04:05 AM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Jim-

I think charging for CMAs is a great idea. I have long thought about it. Perhaps if sellers had to pay for a CMA, they would wait until they really had to sell.

Thanks for the thoughts

Jul 13, 2007 03:16 AM

Jim Ludes

RE/MAX Top Properties - Coal City, IL

Grundy/Will County, IL REALTOR

Dan- unfortunately, sellers won't pay for a cma. Say you and I were clearly the best in our individual markets at pricing...no comparison....Don't you think any seller would rather call over the next best 3 or 4 Realtors, for free, and base their price off those professionals?!?!

However, the alternative that was mistakenly stated above (to pay for an appraisal) IS ludicrous and sellers would be better off paying a Realtor for the same.

What about charging for a CMA upfront- then if you list the property, you subtract that for the total commission, like earnest money?!?!

Jul 13, 2007 03:53 AM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Jim

That was my thoughts exactly. If nothing else it would help qualify the serious buyers.

Jul 13, 2007 04:18 AM

Pat Hommel

Annapolis Plaza CB Residential and Commercial - Annapolis, MD

Annapolis, AA Co., Md. Real Estate Sales

Dan, I just printed your blog and will keep it with me when preparing to meet with sellers. You made excellent points here to remind us that we are the professionals and we know the market and how to properly price, market and facilitate through the selling process better than the average owner. Thank you!

Aug 28, 2007 10:54 AM

Pat Hommel

Annapolis Plaza CB Residential and Commercial - Annapolis, MD

Annapolis, AA Co., Md. Real Estate Sales

Aug 28, 2007 10:54 AM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Pat - Thanks for your comment.

Aug 28, 2007 05:49 PM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Dana -

The biggest expense an agent has is the cost to an expired listing. In this market dollars to donuts a controlling seller will run a listing that will expire. You want to run with them? Go ahead its your nickle.

Aug 30, 2007 07:37 PM

Don Diltz

Coldwell Banker - Menlo Park, CA

DRE:01204965

That is an interesting perspective. What you say has some truth to it.

Aug 31, 2007 07:54 PM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Don -

Thanks for the comment.

Sep 02, 2007 09:20 AM

Vicente A. Martinez

Prudential Douglas Elliman Licensed Real Estate Salesperson - Woodhaven, NY

Realtor, Brooklyn - Long Island - Queens Homes

I agree with you. Allowing a FSBO to control the sale is a disaster waiting to happen. They're aren't aware of the paperwork involved and even if they were they're not aware of the complexities of putting the entire transaction together. They don't realize that buyers that are looking for a bargain look at FSBO's first. So if the buyer is looking for a bargain (by low balling the owner) and the seller is looking to save himself money (by not paying a professional to the job) then what kind of offers are going to be brought to the table, probably not very good ones.

Sep 02, 2007 10:07 AM

Renee L. Norton

Birmingham, AL

You are so right. If the seller is going to manage the listing and not take our advise, they probably should be a FSBO.

Sep 02, 2007 04:26 PM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

Vincent -in our market - Ocala FL, there is a big slide in prices right now fair market - CMA and appraisal certified prices are considered low ball by most sellers. Here listed sellers are getting bad offers, FSBO sellers are getting nothing. Thanks for the comments.

Renee - Thanks for the input.

Sep 02, 2007 04:33 PM

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