In a hot sellers market, there are many homeowners who are successful selling their homes on their own. The advantages are that they do not need to pay real estate commissions and they cut out the middle man. If you do not know what you are doing, however, this experience can be very costly.
It is important to know the difference between being a true FSBO (For Sale by Owner) and hiring a discount brokerage that makes you think you are selling on your own. There are real estate brokerages that advertise for a flat fee they will list your home on multiple listing. The flat fee broker will also recommend you pay a small commission to the cooperating realtor who brings in the buyer to sell your home. If you find your own buyer, then you just pay the flat fee up front.
The problem with hiring a flat fee broker is that you are really signing a listing agreement with a real estate broker for a period of time for a non-refundable flat fee. That broker gets paid immediately whether or not your home sells. By the time the seller realizes they are not getting services commensurate with what they paid, it is too late. Companies like YHD Foxtons and Purple Bricks were examples of discount brokerages that went out of business because they failed to provide any services. If you are still determined to be a FSBO then you should know the right way to do this. Do not sign any agreements with any real estate brokerages. If you do sign something, ask the company if they are a real estate brokerage and if this is a listing agreement. If you decide to hire them, know what services you are paying for and what you can expect from them. You need to understand that during this listing period you might be prohibited from listing with another broker until the current listing expires.
If you want to be a true FSBO, you should promote the home on all the popular real estate websites, such as Zillow, that allows FSBOs to list their homes without an agent. Zillow also allows agents to promote themselves on all listings on their site, however. You should also promote your home on all social media platforms.
When FSBOs refuse to work with agents, savvy buyers who know this will make lower offers believing they have no competition. Most first time homebuyers prefer to use Realtors. It would be a mistake to refuse working with agents who want to sell your home. Make a verbal agreement with the buyer’s agent what fee you would pay them should they sell your home.
When the agent presents an offer they should include what their fee is in writing. This allows you to get more offers because you will have Realtors helping you to sell your home. Some Realtors have written agreements with their buyers to pay the commissions. Let these realtors know if the price is right, you will work with them to get your home sold. Remember, the more agents you have selling your home the more likely you are to get higher offers.
Statistically, most FSBOs end up listing their homes with a Realtor. If this happens and you believe that a past buyer might make an offer you can create a buyer exclusion list with your listing agent. This agreement would exclude the Realtor from getting a commission if a buyer who saw your home while you were a FSBO should make an offer and go into contract within a specified period of time.
Hector Gavilla is a New York State Real Estate Broker and Licensed Real Estate Instructor, with nearly 20 years in the field. A Suffolk County resident, Hector is currently office manager at a local real estate brokerage. For any real estate questions or column ideas, please email [email protected]
