Best plan to sell home sans realtor commissions?

What is the most effective FSBO strategy?  Willing to pay buyer's agent 3% commission if necessary.  With all the online tools it seems someone willing to put in the time/money can sell their house more effectively than a realtor.

Looking for detailed information on strategies that have been successfully used before.  Information about house pricing, marketing, showing, repricing, comps, and closing without a realtor greatly appreciated.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010 - College Park
We think we've answered this question for you!
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
 
 

Answers (11)

The study does not disagree with my claims.  I believe both the NAR study and the Kellogg study to be correct.  How?

This study is similar to the NAR study in that is uses average sale price for each of the categories FSBO and MLS.  The NAR study uses the entire US and is done every year.  This study, done in 2005, used one city over a 7 year period. 

I am sure the study was correct for the area and time studied that FSBO sales are "roughly equal" (see paragraph below), but the OP asked "Does this hold for other markets" and I think it is clear that is doesn't.  If it did the NAR study would confirm it for the US as a whole, instead it shows that consistantly  FSBO sales are for 12%-18% less depending on the year.

"Homes sold on FSBOMadison.com, the for-sale-by-owner Web site, fetched an average price of $175,068 during the years examined. Those sold on the multiple listing service brought an average price of $173,205, roughly equal when taking into account the study's margin of error. "

The NAR study in the year this Kellogg study was done showed:

"In a 2005 survey of home buyers, it reported that FSBO houses sold for a median price of $198,200 and those sold through an agent went for a median price of $230,000, or 16 percent more." 

The authors of the study said that the conclusions could not be extrapolated to any other city and that the results may have been different over a different timeframe.  They also said that FSBOMadison.com is one of the biggest FSBO web sites in the country.

"That scale, along with the cooperation of the site's owners and of the local Realtor group, made the economists' study possible. "We don't have national data," Mr. Nevo, one of the authors, said. "FSBOMadison is unique"

Pasted from the Study you quoted

Patience Is Key

Nevo chalks up this premium to the self-selecting nature of homeowners who were willing to sell their homes themselves. "Those who sell their own homes are probably better at bargaining," says Nevo. "They would get a higher price even if they used a Realtor. In fact, that's part of what we find."

In a variety of ways, Nevo and his colleagues controlled for the self-selecting nature of those who were bold enough to sell their homes themselves. One of the ways they controlled for the difference between seller types exploited the fact that some home sellers show up in the data twice—once when selling their home via a Realtor, and another time when selling a home themselves. Sellers who used FSBOMadison.com to sell a second home after they sold their first home via a Realtor were notably different from homeowners who only sold their homes through a Realtor. Specifically, they tended to get a higher than expected price when they sold their first home via a Realtor. This suggests that they were special in some way—more confident or more patient, perhaps—and that these traits would allow them to get a higher price for their home no matter what means they were using to sell it. It further suggests that sellers who used FSBOMadison.com were more likely to be able to command a higher price for their homes. Once the fact that FSBOMadison.com users were a special breed is taken into account, the premium accorded by FSBOMadison.com is not statistically significant.

"One idea is that people who use this for-sale-by-owner platform are the ones who are more patient," says Nevo.

That scale, along with the cooperation of the site's owners and of the local Realtor group, made the economists' study possible. "We don't have national data," Mr. Nevo, one of the authors, said. "FSBOMadison is unique

  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 10 2010
Profile picture for SteadyState
Jim,
You said:
"Most FSBO sellers think a home will sell for the same price no matter how it is marketed, advertised, shown, staged and negotiated. This simply isn't the case as a rule.  Generally a qualified professional listing agent will easily save more than what they charge."

A recent study done by one of the best business schools in the world disagrees with your claims. The Kellog (Northwestern) study found that REA  do NOT offset the cost of commission. I point you to this study please point be to facts supporting your case and not questionable anecdotal evidence from the NAR.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 10 2010
Actually, I would pay a lot of attention to the NAR FSBO statistics, they are the largest survey done with buyers and sellers and the study is done every year.  It covers all sales, not just FHA or HUD.  I have not seen them shown ficticious by anyone, but I have seen FSBO websites show different ones than Realtors normally post, but they are in the NAR stats.

For example, I have seen a FSBO site say that FSBO's sell faster that Realtor assisted sales.  This is correct, but what is not said is that approximately half of FSBO sellers knew the buyer before the sale reducing the time to sell to 1 week (the time frame is shown in weeks, not days). 

Many statistics (from any study) are quoted out of context.

The "talking points" about homes always going up...  below is missing  "in the long term" after the ...

Check out the US housing graph and make your own decision.  Like any market the housing market is cyclical, but look at the overall trend in the long term.  It's UP.   Housing Index over time

The fallacy in the FSBO discussion is that most people use the thought process that if you have say a  $100,000 home you save say 6% or $6,000.  The false assumption is that the home will sell at the same price no matter who sells it.  This error is also made but sellers wanting to use a agent with a discounted commission.

It is difficult to prove either way because the same home does not sell at the same time, by both an owner and an agent.  The next best thing is to use average sales in an area, like indexes use for charting prices in an area.

Average sales prices are dropping and we all know that.  One could make the arguement that "only the lower end houses are selling now compared to mainly the higher end homes that were selling last year" therefore the stats are incorrect and house prices are not really dropping.  A small amount of this variation is in the stats, but not enough to make that conclusion.

The median selling price for agent sales only was $217,000, FSBO sales only was $172,000 and tried FSBO first then agent $143,000. 

The agents who see the actual sold comps know that FSBO and discounted commission homes sell for less.  Think about it, is it the successful agent who gives a discount or the agent who isn't good enough to get business WITHOUT offering a discount.  If there is a difference between agents, could there possibly be a difference between FSBO's and agents?

Selling yourself is possible, but usually not in the sellers best interest.  I have seen FSBO signs in all price ranges, most of them change to agent signs and then sell.  I wonder why that is?

 
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 09 2010
Profile picture for Pasadenan
I wouldn't pay much attention to NAR statistics about FSBO.  They have been shown time and time again to be completely fictitious, just like their talking points, such as "housing prices always go up"...

Instead, pay more attention to HUD studies since the data has to be included on the HUD-1 form regardless if the agent or owner wants the data included or not.

The 2008 study by HUD of FHA financed home purchases indicates 19% of the transactions were made without any agent compensation of any kind.

And this is not at all what most people mean when they say "For Sale By Owner", as a typical FSBO means "no listing agent", rather than no agents at all.  And even the "no listing agent" does not mean $0 for listing agent service to most people, but rather fees for a MULTIPLE LISTING ONLY would still be considered "For Sale By owner" to most people.  So, agent fees can be as high as 4% or more and still the listing can be "For Sale By Owner", with none of the NAR propaganda about the FSBO becoming regular listings.  If the NAR propaganda statistical lies were "true" then 130% of all listings started out as "FSBO", which is pure nonsense!

So, for FHA financed transactions, figure close to 24% of the transactions are FSBO.

Yes, some of those are known parties, but that doesn't account for the majority.

According to the study, there are two major factors in the $0 fee group...
1) They are primarily white neighborhoods and white sellers, not Latino nor Black.

2) The are not "high income" neighborhoods, thus the sellers would not be making more money spending that time going to work instead of showing the house.  Those in higher income brackets simply don't want to be bothered with all that extra stress and work.

An agent does not bring in more money to the seller, they only take more money away from the total sales amount, and do some of the work that needs to be done to make the sale.  That "work" is worth paying for for some people, and is simply worth about 10 times more to have the agent just stay away for others.

As already mentioned Rockinblu covers most of the issues in deciding if you want to pay an agent to represent the sale of the property or not.

To me, the biggest issues are time, security, and whether you enjoy people interaction, sales and negotiation.  If you don't have the time and hate interacting with people and don't have a means to deal with the security, then it may be worth paying an agent.  But if you have plenty of time, love negotiating, are an excellent people person, and have ways to deal with the security issues (Rockin posts some good pointers for lock boxes for non-agents), there is no reason to pay a listing agent (other than $400 for inclusion in the local multiples), but rather you get a better market edge by passing most of that "savings" on to your buyer.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 02 2010
Profile picture for hpvanc
One more thing, that I do not believe Rockinblu covers in his blog.  It would probably pay you to get a professional appraisal done before you actually list it.  I think Rocking recommends getting several CMA's instead, which is a way to go if you are capable of evaluating them yourself.  He does cover the attorney portion of the FSBO. 

Also, and this will be a complete departure from Rockinblu's advice. Since you are going without representation, is to spring for the pre-listing inspection, to give you an idea what issues may come up on the inspection.  You will most likely be required to disclose the issues that are found, and/or provide documentation if you have corrected them depending on the laws in your state.  It seems to me it will prevent unpleasant surprises and you can factor anything that will drop your price up front.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 01 2010
If you are careful to price your property right and you use all that marketing at your disposal, you may be able to successfully sell your property yourself. You can utilize Craigslist, Postlets, and other online marketing sites. However, remember that the MLS is the best way to get exposure for your home, and the only way to do that is via a realtor.

When you do put your sign up, make sure that you indicate 3% co-broke. If not, realtors will not want to show your home.

Do remember that the entire real estate transaction is laden with unforeseen hurdles these days, especially when it comes to the financing side. A realtor can help to keep you apprised of any potential issues that can arise. But by all means, give it a try! Good luck to you.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
November 01 2010
Mr. Moss, 

I do believe there is ample advice here, but no one has yet to suggest finding an attorney to ensure you are adequately advised to protect your interest. 

Your interest should also include your valuables, your safety as well as your earnings. Your choice to give it an attempt without the assistance of an agent is your choice to make, but at the very least, please speak to an attorney who could likely handle the paperwork at closing. If you need a reference for a good attorney I will be more than happy to suggest one or two in the Orlando area. Many years ago prior to becoming a full time agent I did sell my house as an owner, and I did offer commission to agents that brought their buyers by. Make sure agents register themselves and their buyer. 

I see you are in College Park, I just closed on a new property on Yale in September and hope to complete major renovations by the end of February. I sold my previous College Park home in February on Reading. I would be curious to know more about your property. No huge or high pressure sales pitch here, just curious. I would even be more than happy to drop off recent sales and current competition for your home if you wish. After all I am in the neighborhood and it may help with making sure you are priced right.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010
There is nothing unethical about choosing and showing homes to the buyers that are priced correctly, match their needs and have the best chance of actually closing. It is in the buyers best interest to do just that.  If a buyer asks to see a FSBO or other listing, any agent would show it and explain the pros and cons just like any other type of listing.

There really are no unrepresented buyers, unless they choose to be unrepresented (not unescorted), which in no way affects whether they can see the home or not.  They are either represented by another buyers agent or by the listing agent of the listing they want to see.  The seller gets their home shown to any qualified buyer who wants to see it.

I am presenting facts to help Wesley make a wise decision.  The facts can't really be refuted, they are what this study showed (which I believe if the largest study done every year).

The conclusions and opinions can be challenged and I have clearly stated where my opinions and conclusions are. While there are successful FSBO sales, they are the exception rather than the rule and anyone asking questions about it deserves to know.

Another consideration for FSBO sellers expecting to save money is that many FSBO buyers are there so THEY can save the commission and get a good deal. 

Most FSBO sellers think a home will sell for the same price no matter how it is marketed, advertised, shown, staged and negotiated. This simply isn't the case as a rule.  Generally a qualified professional listing agent will easily save more than what they charge.  This is why you need to choose an agent carefully as they are not all the same either.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010
The most effective FSBO strategy? ...get lucky! Having a lot of tools is not enough. Does having a calculator make you good at math? Does buying a musical instrument assures you could play music?. Do surgical instruments make you a surgeon? I suggest, if real estate is not what you do for a living, hire a professional agent! There is a lot more than meets the eye when it comes to making a sale of a home, especially in today's market conditions. Get real and hire an experienced agent, who knows how to attract prospective buyers, qualify them to make sure they are able to purchase a home, invite offers, negotiate, assist buyers in working through a process (inspection, contract, mortgage,...) and through many possible bumps on the road to Closing... so don't get fooled by seemingly easy process, it isn't!
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010
Profile picture for hpvanc
I would suggest that you look into the posts by rockinblu.  He has refuted the stats in the talking points that Jim is quoting in many posts.  He also has an excellent blog on the subject here

Unfortunately there are Realtors that are highly unethical in trying to sustain the traditional agent model, that will refuse to assist buyers with FSBO or non-traditional agent arrangement listings.  However if that is the case, how can you know that they are being fully ethical and showing your listing to unrepresented buyers if they get your listing, if they put so much effort into defending the traditional model. 

Good luck.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010
It does seem that way, but the statistics don't support it.

Statistically, they do not. The number of FSBO sellers has declined every year for the last decade and for good reason - as a group, they are not successful.

The vast majority of FSBO homes are eventally listed with an agent (I could not find the statistic, but I believe it was between 80%-90%)

Surprisingly, only 49% of FSBO sellers are choosing FSBO to avoid paying a commission. The majority of the other 51% are doing so because they already know the buyer.

Not so surprising, is that this is the reason FSBO homes that do sell, sell much faster is because they don't need to find a buyer, they already have one. Most of these sellers were in rural areas and sold for asking price.

This is also the issue with FSBO choose flat fee "MLS only agents" where the seller sets up the showings and receive the contract and negotiate. The sellers think they have equal MLS exposure and they don't.


The median selling price for agent sales only was $217,000, FSBO sales only was $172,000 and tried FSBO first then agent $143,000. 

People often forget that aside from marketing a home, the agent will do the negotiation for you.  That alone can save you the entire commission.
 
These are national statistics for 2009.

My opinion as to why, is that FSBO sellers do not have the tools or expertise to price their homes correctly and do not have the most used (by buyers) websites available to them, lack the expertise and have to negotiate for themselves (which is very difficult even for experienced negotiators). Buyers would rather but from a professional agent unless there is a huge price advantage in their favor when buying FSBO. As a result the buyers on the FSBO websites are bargain hunters and are expecting to pay less.

If you already have a buyer, I think it is worthwhile, otherwise, I think you end up with less money after all expenses that if you had paid a commission to a good agent.

Concerning the 3% buyers agent commission, I would offer it, but I am not sure it will do a lot of good.

I get calls all the time from FSBO's letting me know they have their home for sale in case I have a buyer and letting me know that they will pay 3% buyers commission, which is essentially what a buyer's agent would get from a home listed by another agent. I am always polite and listen, but I do not show their home to a buyer.

This is also the issue with FSBO choose flat fee "MLS only agents" where the seller sets up the showings and receive the contract and negotiate. The sellers think they have equal MLS exposure and they don't.


Why? It's not about the money, it's because buyer's are scarce and quite honestly, I do not want to risk having a buyer lose a home they want because the seller is an amateur (not experienced).

Enough transactions fail or become too stressful for buyers even when working with another agent. Agents with some experience know what needs to be done, how to treat buyers and can usually keep the transaction together. Sellers without representation are too close, too emotional to the situation and don't really know what needs to be done. If I get a buyer involved in that and it fails to close, they have had enough and usually take months off before looking again. It's not worth the risk.

If you do choose to use an agent, pick a good one.  This article will show you what to look for.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
October 31 2010
 
Related Questions
My home is for sale, but Zillow does not show it.
Profile picture for Hamza Sloussi
Latest answer by Hamza Sloussi
February 02 | 3 answers
Why Short Sale?
Profile picture for Jose De Leon
Latest answer by Jose De Leon
August 26 2013 | 5 answers
  • Asked by Fred Price
  • In Pricing
  • June 12 2011
fix your site
Profile picture for sunnyview
Latest answer by sunnyview
February 22 2011 | 3 answers
Best plan to sell home sans realtor commissions?
Profile picture for Jim Basquette CRS, CNE
Latest answer by Jim Basquette CRS, CNE
November 10 2010 | 11 answers
What do I include in determining the sqare footage of my home?
Profile picture for Sergio Hernandez
Latest answer by Sergio Hernandez
September 23 2010 | 7 answers
  • Asked by wadcad
  • In Pricing
  • February 22 2010
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 1 W King St, Orlando, FL Home For Sale
    1 W King St, Orlando, FL 32804

     For Sale: $374,900

    • Beds: 3
    • Sqft: 1857
    • Baths: 2.5
    • Lot: --
  2. 2319 Amherst Ave, Orlando, FL Home For Sale
    2319 Amherst Ave, Orlando, FL 32804

     For Sale: $325,000

    • Beds: 3
    • Sqft: 2005
    • Baths: 2.5
    • Lot: 6969
  3. 3600 Midiron Dr, Winter Park, FL Home For Sale
    3600 Midiron Dr, Winter Park, FL 32789

     For Sale: $395,000

    • Beds: 3
    • Sqft: 1958
    • Baths: 2.5
    • Lot: 7405
 
 
 
Sign in with Google