So you want to save the commission?

Reblogger Barbara Martino-Sliva, Top Producer
Real Estate Agent with Dale Sorensen Real Estate Inc.

Original content by Elite Team

One comment we often hear as real estate professionals is "I'm selling my home myself to save the commission." That is fine so long as you don't think that your potential buyers don't know that.

In fact, did you know that there are only 4 kinds of buyers out there? That's right, 4. And they are either working with a Realtor or they, too, will want to save the commission. If you have a "For Sale By Owner" sign in your yard, everyone knows that you are not paying a commission to a professional.Home for sale

1. First time home buyers: They are the most likely to seek the help of a professional because they do not know all the ins and outs of the home buying process. Even if they come across your home and like it, they will want their agent involved. Being open to working with a buyer's agent and paying at least some commission might help you get your home sold.

2. Relocating buyer: They, too, usually work with a real estate agent because they are not in town, yet. Again, if you are willing to pay a buyer's agent commission, you may be able to work with one of these buyers and sell your home, that is, if you are available to show it when this buyer is in town house shopping. If not, they might just buy your neighbor's house because it's listed and on a lockbox and they were actually able to view it.

3. Moving up (or moving down) buyers: They tend to feel more confident about the process because they have been there before. However, if they choose to work on their own, they'll negotiate you down on your price to save some of the commission themselves. Since 2 out of 3 FSBO that go under contract do not close when no Realtor is involved, it might not matter if you split the would-have-been commission with this buyer. The question is: can you get them to the closing table?

4. Investors: Probably the most savvy buyer out there and you can bet that they will not pay you a commission to work the sale of your home for you. Unless you are an investor yourself and you've sold many homes in the past, this buyer knows more about the process than you do and he/she knows that they will have to do all the work. And, unless you are an awesome negotiator, you will not save money if your buyer is an investor. Not a penny.

There you have it! These are the only 4 kinds of buyers out there, no more, no less.

Here's another way to look at it: appraisers do not care about the commission. Your house is worth what it is worth, whether or not there is a commission involved. For example, if you live in a neighborhood where homes of similar age and sizes sell for 150K, then your home is worth 150K.

With a 6% listing commission, you would have to pay 9K in commission, usually split between the listing and the selling brokers (if two agents are involved). If you sell on your own, you are not going to save the full 9K. Buyers will want to split those savings with you and might only offer you 145K for your home. If this is acceptable to you, all is good, but your savings are now down to 4K. If you calculate 2 or 3 months extra on the market (and 2-3 months of extra house payments), the advertising and signs costs, and the time involved in showing your home numerous times to buyers who may or may not qualify to buy it, is it really worth the aggravation? Besides, getting an offer/contract on your home is the easy part. Do you know what to do if you ever get that far?

I know what my time is worth, do you?



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Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

Commissions are negotiable and we can ask what is fair in the market but most agents give up commissions that they truely earn.

Oct 24, 2009 06:03 AM #1
Jerry Murphy, CRS, SRES
Long Realty West Valley - Anthem, AZ
Anthem, Phoenix, and Scottsdale AZ Real Estate

Way to tell it like it T-I-Is Barbara.  In this do-it-yourself world we've created, there are still some things that are best left to the professionals. The $5k reduction in price you noted above is very generous. I've read statistics that show that F.S.B.O. on average sell for 14% less than homes listed with an agent.  So in your example that would be roughly $21k less than their list price of $150k.  Penny wise, pound foolish if you ask me.  Good post and best of luck to you.

Oct 24, 2009 06:08 AM #2
Lynn Afton
Greenridge Realty Oakmont - Big Rapids, MI
REALTORĀ® Near Big Rapids, MI, Mecosta County

You have brought up some very good points that homeowners may not realize.  If they only knew the potential problems that can ensue when they enter a contract holding their breath and diving into unknown waters,  they would understand why real estate professionals are there to help them.

Oct 24, 2009 06:13 AM #3
Richard & Janet OBrian
Home Based Realty - Palmdale, CA
Listing Specialist Palmdale, Lancaster CA

Dr. we must agree with you and Jerry... We will approach FSOB anytime with a soft helping hand.  Yes they believe they are going to save big on the commission but as we know that is not the case.  What we do is find out how much they want to net and shot for that target. We get the listing about 70% of the time and close it within 45days in out market...

Great post...


Oct 24, 2009 06:22 AM #4
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Barbara Martino-Sliva, Top Producer

Vero Beach Real Estate Vero Beach Homes for Sale
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