Considering Selling your Home FSBO (For Sale By Owner)? Think Twice!
A client of my was recently encountered an offer to list their home on the MLS for a flat fee, which they initially perceived as a sexy way to make more money in the sale of their home. The following is a summary of what I collected in terms of 'need to know" information for anyone who are considering selling your home FSBO (For Sale by Onwer). If you're going to do it, at least do so with a clear expectation of what the process may be like:
Yes, you can have your property listed on the MLS, without having a reslationship with an agent. However, is it that simple? Not if you don't understand the process to expect or are not prepared to participate in it!
What your Flat Fee MLS listing is missing:
Normally, a property will receive attention on the MLS from selling agents and also becuase the listing agent invests in listing, marketing, and socializing it with the real estate agent network and buyers. Listing agents analyze recent sales and price properties to sell based sales data and their market experience so that your property quickly sells for the price the market will bear.
Around 50% of the commission paid to a listing is offered via the MLS to buyer's agents (so that they are paid for their work in bringing a buyer). Below average or no commission will likely put the responsibility back on a buyer to pay their agent, which may make your property less attractive, or agents may avoid it as they wish to avoid asking their client buyer to pay a commission directly.
Agents also manage the showing of property and the security of property through having a licensed agent access your home, often via a technology controlled key holder.
With an accepted contract, an agent will negotiate and collaborate with the buyer's agent, inspectors, lawyers, bankers and title companies to keep the deal together. Yes, there is a fee for this work (we all have to make a living!) however typically homes sell faster and for a higher price due to the experience with the process and a market than an agent offers.
FSBOs are often overpriced, and when a property isn't priced appropriately for the market, it takes longer to sell. Once the price has been reduced one or more times (or a contract was accepted and then fell through), buyer perception can be affected resulting in questions about what's wrong with the property - or whether the seller is ready to make a deal
Selling your Home FSBO (For Sale by Owner) Things to know:
Should you at some point choose to use the “Flat Fee” MLS Listing is basically a FSBO with presence in the MLS. If selling this way, the owner or investor should expect to:
- take longer to sell and eventually sell at a lower price
- show your home personally, or allow strangers access to it without you present.
- hear very raw opinions of your home and prici
- pay commission to buyers agents, roughly 3%, force buyers to add commission for their agent, or limit your audience to buyers that are unrepresente
- negotiate and work with agents who are paid to represent the buyer only or negotiate with buyers directly if they are unrepresented.
- negotiate with inspectors (who are paid by the buyer and will always find something wrong) and buyers as a result of the inspection report.
- manage and control the contract through to close, ensuring all timelines are met and the contract stays together.
- work with title companies to smooth out any challenges with titling
- ensure your deal closes, and put in all the hours of work required to keep deals together.
There are tons of opinions and data on this practice, as I am sure there will be lots of thoughts and comments from others - all are welcomed!
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