Profile picture for gillenfore

Pros/Cons of FSBO using a listing service on Realtor.com, MLS Trend with 3% buyers agent fee?

I'd like to economize on the commission being paid and am willing to do open houses and showings, brochures etc.. I'm wondering whether to consider using a service that charges a flat fee, ie: $395, to get my house listed on realtor.com, MLS Trend and to get the necessary listing, disclosure, and buyers broker commission forms. I'd protect the buyers broker with a standard 3% commission but since so many buyers search houses on the internet it seems like a reasonable way to get my house in front of buyers while saving on the commission since the economy is so tight. Does anyone have any experience/suggestions with this?
  • August 21 2011 - South Philadelphia
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Answers (13)

Profile picture for bbelack
I'm a Philly guy selling houses in LA.  Trust me when I say the following:
1.  You're focused on the 3% instead of the other 97%.
2.  Pay out 2.5% to the buyer's agent.  Makes no difference to a realtor, especially in a low inventory market.
3.  A realtor's value is not in brochures and holding opens.  It's negotiation and most importantly holding a deal together throughout the life of the escrow. 
4.  Further, a realtor [should be] spending countless hours positioning your property for an intentional and deliberate launch, getting buzz inside their office and local market, door knocking your hood, etc etc. 
5.  A realtor protects a seller by guiding disclosures, written interactions, etc etc.  The realm of real estate is sue-happy, and a realtor protects their client from legal vulnerability.

Forget the 3%.  Find the best realtor in your market, and you'll thank me. 
  • November 07 2013
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Profile picture for wetdawgs
@user69067324:

Good luck.  Even as a strong supporter of FSBO, i'm confused with your math.  How will you save $17k offering 3% to the buyer's agent?  
  • November 06 2013
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Profile picture for user69067324
The way I see it, I can do anything an agent can do and than some. The title co will help you along the way and most will advise and give valuable assistance. If I get lost along the way a real estate att. can be retained for a song. They will draw up the contract, and for a few bucks more represent you at closing, My house is up for sale for 284k, I have let all the agents who are fighting to tie up my home do the leg work for me. I have 5 market analysis to price my house by. All the agents want to price my house 10k more. At 299k  it will never sell. I can do an MLS 3%buyers fee for 99.00 in my county in Texas I can get a local and national listing on Realtor.com. The internet is your oyster, and I learn more from websites like this one every day.
I look forward to the challenge, and plan to save myself and the buyer what the agents would make, 17K.
  • November 06 2013
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Totally agree, Michael.

Options are important.

TG
  • August 22 2011
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Profile picture for Michael Helton
Tim, actually I agree with your statement of  "...I am a firm believer that a majority of the time an agent can sell a home better than an inexperienced home owner".

I do believe that the agents will usually get a better sales price and sell the home quicker.  But this is because most sales are by agents, not necessarily because FSBO is an inferior method.

However, the most valuable question is whether or not the NET will be higher with an agent.   With an everage listing price in Philly being approx $240k, the sellers agent commission of approx $7500 is a steep hole to get out of.

Don't get me wrong; some agents are worth every penny.  But it is better for a consumer to know their options.
  • August 22 2011
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I agree with some of what Michael said, but not all of it.

I personally don't feel that you will always sell for a higher price using an agent (as opposed to going FSBO), nor do I feel that an agent will always be the solution to the selling problem; but I am a firm believer that a majority of the time an agent can sell a home better than an inexperienced home owner.

I used my example below to prove a point, because as an agent, I see it frequently. Since all agents are independent contractors, each one will provide a different level of service. My service may be better (or worse) than another agent, and vice-versa.

Sometimes, you have to spend money to make money. Just one man's opinion.

TG
  • August 22 2011
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Profile picture for Michael Helton
One other thing; location matters.  In some markets FSBO is a slam dunk and in others it may be a nightmare.  It depends on the buyers and a variety of different factors, so what works well in one place may not work well in another.
  • August 22 2011
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Profile picture for Michael Helton
gillenfore,  I agree with MikeE that you should look at both options because in some situations it makes sense to use an agent.  Some people may not have the time, energy or intellectual capacity to sell a house.  I have successfully used agents as well as done FSBO a few times. 

The last house I sold by using a $499 flat fee listing and received enough offers on the first day to accept one that met all my needs and was actually above what I would have accepted.  Honestly, it is not that hard if you spend some time to educate yourself on the process.

The main argument I see agents use for not going FSBO is that you make more money with an agent because you will get a higher sales price.  This is bogus.  It may have been true many years ago before the internet where information is readily accessible and anyone could go on and do a quick search for a home; but it does not hold true today.

Many agents only look at stats from NAR (The National Association of Realtors) which have been shown on many occassions to be completely wrong, manipulated, or just based on invalid methodologies.

Here is a study done in a city where FSBO makes more money for the seller than using an agent  Study 

If you do go FSBO you will need to spend more of your time educating yourself and making sure the process is done correctly.  If you do spend the ~3% and go with an agent then please take the time to pick one who is going to represent you well and earn their pay. 

If they ever say, "You will make more money using me", turn around and walk away.
  • August 22 2011
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Profile picture for Dunes....
Have you looked over this information from the Department of Justice...

Consumers can save thousands of dollars in commissions

Home prices and commissions over time
and there is more..check it out

Remember 2010 was the lowest amount of Sales in 13 years and 2011 is headed for being the worst in 14 years...

There are a lot of Hungry Agents and an RE Industry desperate for your Business so be prepared for the Sales Pitches, Prospecting and  the
"You are being Foolish" lectures
  • August 22 2011
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Hi, gillenfore.

Good question.

In my personal opinion, when you try save money on real estate commissions, you get what you pay for.

Since we are still in an extreme buyer's market, price reductions and closing cost credits happen on almost every single deal. But the longer a property sits, the more inclined sellers are to lower their price.

For example, if you had a $100,000 property and were willing to pay the standard 6% real estate commission ($6,000), your house may sell in a reasonable time period for $95,000. Your net would be $89,300.

Now if you wanted to save money on commissions, you are now representing yourself (which means both the workload and legal responsibility are now on you). On your $100,000 property you will only pay a 3% real estate commission (buyer's agent). Since you are not a licensed agent, and you are not an expert at selling real estate, your house may now only sell for $90,000 (i.e. it sat for too long, failed negotiations, etc.). Your net would now be $87,300.

I know this may seem like a basic example, but it happens all of the time. You had to put in all of that work yourself (i.e. marketing, phone calls/emails, negotiating, etc.), and assume all of the legal responsibility that goes along with real estate. In today's market, experienced agents are needed to make deals happen. Not only because of what and who they know, but because there are so many more things that can go wrong in this tight market (i.e. mortgage financing, inspection contingencies, etc.).

Almost every deal these days is a co-op transaction (where 2 different agents are involved), and it still takes a lot of work from both of them just to make it to the closing table. Buyers want extra protection in their contracts these days because if it doesn't work out the way they want, they will just go buy another home; there are enough homes for sale today to do that.

Take my advice, spend the extra money, sell your house for what it's worth, and let the experts handle what they know best; their own business.

TG
  • August 22 2011
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Profile picture for Sharon Lewis
I am not a fan, not saying this because I am an agent. Its from seeing it over and over again in this market where the FSBO owner sits and sits and sits on the market and when they eventually go with an agent they have lost market dollars. You are not in my area, there is nothing to be gained for me by saying this. We find that over 90% of FSBO sellers go with an agent after they have sat on the market. On the other side, as an agent who has negotiated with them occasionally, its a nightmare for us as we wind up doing both agents jobs. I will always show a FSBO because my client is the top priority, I am not sure whether all agents will show.
Are you going to work with a buyers agent and pay them their fee?
  • August 22 2011
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Before signing the contract, talk the discount broker and ask what is expected of you while the property is listed. Will you need to set up showing appointments, do the marketing, etc. And when you do have an offer, will they assist you with reviewing the offer, setting up escrow, etc.

Ask them if their fee is inclusive or whether some of what I mentioned is 'A La Carte'. Some agencies will get you on MLS for a flat fee and then charge you additional fees for anything past that service.

I'm not being critical of their service as there is certainly a place for them in the current real estate market. But I want you to be an informed seller and not be surprised or disappointed because they weren't able to do all that you expected for their modest flat fee.
  • August 21 2011
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Profile picture for wetdawgs
If you have the time, energy and persistence.   FSBO is certainly quite possible.   One frequent poster has a couple of useful (and non-commercial) blogs. The first is if you are thinking about FSBO.  The second is using Zillow most effectively for FSBO.
  • August 21 2011
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