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rmattman

11-22-2005, 01:42 PM

My wife and I are considering trying to sell our house by owner. We have read The For Sale By Owner Kit by Robert Irwin and have done some on-line research on the subject as well. We've gotten three realtor's opinions as to the potential asking price also. There are relatively few houses (<10) in our price range in our community so there is not that much competition for buyers. The community was recently listed by Money as one of the top ten places to live in the U.S. as well so visibility of the community is currently at a high level.

I would like to hear any particularly bad experiences you've had with FSBO to help us decide if it's worth the hassle just to avoid paying someone > $40,000 in commission. Any stories, comments, advice are appreciated.

Thanks

tek

11-22-2005, 01:46 PM

Use a good lawyer and title company, make sure you have no unpaid assessments, have an up-to-date appraisal (if needed), and don't let buyers have too long or have too many loopholes to back out.

miajag81

11-22-2005, 01:47 PM

I don't understand why more people don't do this. I just have a big problem with paying a person like $50K to show people my house and then sign a few papers. I swear, realtors (oh, I'm sorry, Realtors) are the biggest scam artists in the world.

Patrick del Poker Grande

11-22-2005, 02:01 PM

The only thing I've heard is that some realtors simply won't show people your house if you go the FSBO route or especially if you go with the discount companies. They're looking out for each other. Even if there are only 10 total houses in your category, a lot of people will only know there are 9.

I guess the rest you already probably know - it seems like a huge pain in the ass to handle all the paper/legal work on your own.

11-22-2005, 02:15 PM

[ QUOTE ]
The only thing I've heard is that some realtors simply won't show people your house if you go the FSBO route or especially if you go with the discount companies. They're looking out for each other.

[/ QUOTE ]

They are looking out for themselves. Realtors show other houses because they have a agreement that they will get a certain percent of the commission if they bring the buyer to the deal. If the commission on a sale is say 6%, the buyer's realtor might get 2.5%. If an owner is not offering any commission, there is no reason for a realtor to show the house, unless he has an agreement with the buyer to pay him in such a situation.

When I sold my house, I used a flat-rate realtor. They did not list in the MLS, so there were no other realtor interest. But they ran full page color ads in the Sunday paper, and the agents referred buyers to each other. I did all the showings and open-houses, using the signs they provided. They handled all the paperwork, which is a major pain. The whole thing cost me a little over $2000.

turnipmonster

11-22-2005, 02:15 PM

why would a realtor show a house they weren't selling?

Shajen

11-22-2005, 02:19 PM

[ QUOTE ]
why would a realtor show a house they weren't selling?

[/ QUOTE ]

because they have buyers interested in buying. They still get a commision off of that.

4_2_it

11-22-2005, 02:20 PM

[ QUOTE ]

I guess the rest you already probably know - it seems like a huge pain in the ass to handle all the paper/legal work on your own.

[/ QUOTE ]

The paperwork isn't bad. Just hire a lawyer for about $1,500 to handle the closing (much cheaper than 7% commission).

OP - Your biggest issue is competing with houses listed with realtors in the Mulit-Listing database. Just make sure you post your home in the local newspapers and on the Buy Owner website. Have an Open House on a couple of weekends. Signs and balloons are good. Make sure your yard is nicely landscaped as the first impression from the street is key. Also, bake cookies during the open house. Everyone loves to smell home baked cookies and it makes a positive impression (I have seen this tactic used at model homes for a while and home builders would not do it if it wasn't profitable).

Also, beware of realtors trying to come in for a half-commission to bring you buyers. If you live in a hot area, you are in good shape.

4_2_it

11-22-2005, 02:22 PM

[ QUOTE ]
[ QUOTE ]
why would a realtor show a house they weren't selling?

[/ QUOTE ]

because they have buyers interested in buying. They still get a commision off of that.

[/ QUOTE ]

They only get a commission if the seller (or buyer) agrees to it. Most buyers will not paid a commission on top of the home purchase price and if you are selling Buy Owner, why would you agree to pay the commission that you were trying to avoid in the first place?

BoogerFace

11-22-2005, 02:31 PM

[ QUOTE ]

I guess the rest you already probably know - it seems like a huge pain in the ass to handle all the paper/legal work on your own.

[/ QUOTE ]

I think it's even worse then that. Houses don't sell themselves - it takes a lot of handholding/ass-smootching to close the deal.

M2d

11-22-2005, 02:33 PM

make sure you realize that an offer is just an offer, and the house is still on the market until you accept.

not exactly a fsbo situation and it worked out for me, but our current house was purchased from a family that was using the wife's brother as an agent. apparently, he was a part timer agent and didn't know what the hell he was doing. we put in an offer the day it was listed (about 10K below asking). they promptly cancelled the open house scheduled for that weekend, ensuring that we had zero compteition for the house. houses in the area were going for 20K+ above asking at the time.

turnipmonster

11-22-2005, 02:34 PM

from who? the buyer?

turnipmonster

11-22-2005, 02:37 PM

my parents did this and it went fine, get a good lawyer. they were approached by lots of realtors after they put their sign up, and my dad just told them how much he wanted for it (after whatever their commission is of course). he ended up selling it himself, although a few realtors did show it.

--turnipmonster

jaydub

11-22-2005, 02:37 PM

[ QUOTE ]
My wife and I are considering trying to sell our house by owner. We have read The For Sale By Owner Kit by Robert Irwin and have done some on-line research on the subject as well. We've gotten three realtor's opinions as to the potential asking price also. There are relatively few houses (<10) in our price range in our community so there is not that much competition for buyers. The community was recently listed by Money as one of the top ten places to live in the U.S. as well so visibility of the community is currently at a high level.

I would like to hear any particularly bad experiences you've had with FSBO to help us decide if it's worth the hassle just to avoid paying someone > $40,000 in commission. Any stories, comments, advice are appreciated.

Thanks

[/ QUOTE ]

I did it. It took more effort than when using a realtor but I was paying myself about $500-1000 per hour to be a part time realtor so it was worth the effort.

When dealing with buyers with agents, I made it clear to the agents that although I was willing to do business with them, the buyer paid the agent's commission. Some feigned shock, outrage, etc but no one took their buyer away.

I am very comfortable negotiating contracts and was selling a hot house in a hotter market so ymmv.

jaydub

11-22-2005, 02:41 PM

[ QUOTE ]
make sure you realize that an offer is just an offer, and the house is still on the market until you accept.

not exactly a fsbo situation and it worked out for me, but our current house was purchased from a family that was using the wife's brother as an agent. apparently, he was a part timer agent and didn't know what the hell he was doing. we put in an offer the day it was listed (about 10K below asking). they promptly cancelled the open house scheduled for that weekend, ensuring that we had zero compteition for the house. houses in the area were going for 20K+ above asking at the time.

[/ QUOTE ]

Once contract is signed and deposit is received, the house goes under contract and no other offers can be taken. Anything else is a no no.

Sounds like the brother did a bad job of pricing it but cancelling an open house after deposit received is the right move.

M2d

11-22-2005, 02:45 PM

deposit wasn't recieved. just a verbal offer

jaydub

11-22-2005, 02:48 PM

[ QUOTE ]
deposit wasn't recieved. just a verbal offer

[/ QUOTE ]

ye gods that's dumb.

James Boston

11-22-2005, 02:51 PM

[ QUOTE ]
why would a realtor show a house they weren't selling?

[/ QUOTE ]

They would get half the commission. There's buyer's agents and seller's agents. The seller's agent lists the house, and if they sell it themselves, get the full commission. Buyer's agents help the buyer find a house and get part of the commission for selling it for the other realtor.

When I moved, I called the number on the sign of the first house I liked- in that case, the seller's agent. I decided I didn't want the house, but the agent kept sending me info on other houses, thereby becoming the buyer's (me) agent. When I found a house I liked, it wasn't one she was listing, but she got half the commission for selling it.

nyc999

11-22-2005, 02:53 PM

[ QUOTE ]
[ QUOTE ]
make sure you realize that an offer is just an offer, and the house is still on the market until you accept.

not exactly a fsbo situation and it worked out for me, but our current house was purchased from a family that was using the wife's brother as an agent. apparently, he was a part timer agent and didn't know what the hell he was doing. we put in an offer the day it was listed (about 10K below asking). they promptly cancelled the open house scheduled for that weekend, ensuring that we had zero compteition for the house. houses in the area were going for 20K+ above asking at the time.

[/ QUOTE ]

Once contract is signed and deposit is received, the house goes under contract and no other offers can be taken. Anything else is a no no.

Sounds like the brother did a bad job of pricing it but cancelling an open house after deposit received is the right move.

[/ QUOTE ]

This depends on the state - in NJ you can accept offers, have open houses, etc. for up to 3 days after both sides have signed the contract.

jaydub

11-22-2005, 02:56 PM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
make sure you realize that an offer is just an offer, and the house is still on the market until you accept.

not exactly a fsbo situation and it worked out for me, but our current house was purchased from a family that was using the wife's brother as an agent. apparently, he was a part timer agent and didn't know what the hell he was doing. we put in an offer the day it was listed (about 10K below asking). they promptly cancelled the open house scheduled for that weekend, ensuring that we had zero compteition for the house. houses in the area were going for 20K+ above asking at the time.

[/ QUOTE ]

Once contract is signed and deposit is received, the house goes under contract and no other offers can be taken. Anything else is a no no.

Sounds like the brother did a bad job of pricing it but cancelling an open house after deposit received is the right move.

[/ QUOTE ]

This depends on the state - in NJ you can accept offers, have open houses, etc. for up to 3 days after both sides have signed the contract.

[/ QUOTE ]

I'm guessing NJ has a back out for free within 3 days clause in their contracts?

JohnnyHumongous

11-22-2005, 02:59 PM

[ QUOTE ]
I don't understand why more people don't do this. I just have a big problem with paying a person like $50K to show people my house and then sign a few papers. I swear, realtors (oh, I'm sorry, Realtors) are the biggest scam artists in the world.

[/ QUOTE ]

Most Realtors (like 90+%) make a very paltry sum of money at the end of the day.

James Boston

11-22-2005, 03:03 PM

[ QUOTE ]
paying a person like $50K to show people my house

[/ QUOTE ]

You must have a REALLY nice house.

diebitter

11-22-2005, 03:13 PM

I opened this, thinking someone was selling horror stories! DOH!

david050173

11-22-2005, 03:18 PM

[ QUOTE ]
[ QUOTE ]
paying a person like $50K to show people my house

[/ QUOTE ]

You must have a REALLY nice house.

[/ QUOTE ]

Or a 2 bedroom condo in SF or NYC. /images/graemlins/grin.gif

rmattman

11-22-2005, 07:53 PM

I appreciate all the rapid replies and advice.

The attorney who officiated the closing when we bought the house has a realtor who works in his office and will assist with the purchase agreement, providing proper paperwork, etc if we use him to close this sale. These costs would be part of closing costs which are usually paid by the buyer. We're also looking into local realtors who for a flat fee would list our home in the MLS.

The open house sounds like a good idea since there is some new construction in our neighborhood and that usually increases the visibility of all houses in the area.

I will need to look into the state laws regarding the ability of potential buyers to back out of the deal within a particular timeframe.

Thanks for the assistance.

11-22-2005, 08:41 PM

I'm not sure about your area but there is a place in mine that does do it for a flat fee. I think it's $800 and they show you how to do a open house, show you the paper work and put you on MLS. But you have to give the selling agent 2.5%. It still saves you 3.5%.
And like alot of people here has said 6% is way to much. Real estate agents have had it very good for to long.

M2d

11-22-2005, 08:54 PM

his full time job was as a pig (cop), but he was 100% moooooron

youtalkfunny

11-23-2005, 06:27 AM

[ QUOTE ]
When I moved, I called the number on the sign of the first house I liked- in that case, the seller's agent. I decided I didn't want the house, but the agent kept sending me info on other houses, thereby becoming the buyer's (me) agent.

[/ QUOTE ]

WARNING! THAT AGENT WAS NOT A "BUYER'S AGENT". This is a common misperception. That agent, whenever given a choice, would act in the SELLER's interest. The more the house goes for, the bigger the commission, and that commission only gets paid if the deal gets done.

There are "buyer's agents" in this world, but their allegiance is given 100% to the buyer's best interests. A buyer's agent will tell you something like, "This is a bad deal, you should walk away." I'll bet the agent you mentioned never said anything like that, at any time.

ChipWrecked

11-23-2005, 08:33 AM

[ QUOTE ]
[ QUOTE ]
When I moved, I called the number on the sign of the first house I liked- in that case, the seller's agent. I decided I didn't want the house, but the agent kept sending me info on other houses, thereby becoming the buyer's (me) agent.

[/ QUOTE ]

WARNING! THAT AGENT WAS NOT A "BUYER'S AGENT". This is a common misperception. That agent, whenever given a choice, would act in the SELLER's interest. The more the house goes for, the bigger the commission, and that commission only gets paid if the deal gets done.

There are "buyer's agents" in this world, but their allegiance is given 100% to the buyer's best interests. A buyer's agent will tell you something like, "This is a bad deal, you should walk away."

[/ QUOTE ]

The only way this is true is if you pay the "buyer' agent" a flat fee.

If he/she is getting a cut of the sale, he/she has no reason to negotiate a better sale price, and is still on the side of the seller.

SossMan

11-23-2005, 12:45 PM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
When I moved, I called the number on the sign of the first house I liked- in that case, the seller's agent. I decided I didn't want the house, but the agent kept sending me info on other houses, thereby becoming the buyer's (me) agent.

[/ QUOTE ]

WARNING! THAT AGENT WAS NOT A "BUYER'S AGENT". This is a common misperception. That agent, whenever given a choice, would act in the SELLER's interest. The more the house goes for, the bigger the commission, and that commission only gets paid if the deal gets done.

There are "buyer's agents" in this world, but their allegiance is given 100% to the buyer's best interests. A buyer's agent will tell you something like, "This is a bad deal, you should walk away."

[/ QUOTE ]

The only way this is true is if you pay the "buyer' agent" a flat fee.

If he/she is getting a cut of the sale, he/she has no reason to negotiate a better sale price, and is still on the side of the seller.

[/ QUOTE ]

wrong.

they (both agents) have one concern in mind. closing the transaction. if that means that they come down on the price a bit, so be it. What they don't want is for the place to go back out on the market (especially w/ the way prices have been going recently).

Here's a fine example from my recent home purchase:

The sellers were listing for $715,000. We offered full price and were accepted, but then another home down the street went up for $700k. We hadn't removed contingencies yet, so we could still back out. Agents got together, and we ammended the contract to $705k. A good compromise. How much did the agents each lose with the reduced price? 6% of 10k is $600.
Split between both agents is $300. If they have a 60-40 split w/ their broker, they lost .6 * 300 = $180. After taxes it's like $100. I'm pretty sure that it's worth it to negotiate a proper price in order to make all sides satisfied.

Much more important than price considerations are typically flexibility in contingency removal and payment of fees. This is where you want to have you own buyer's agent or at least work out a deal w/ the selling agent that if they are going to represent you, you get some sort of discount towards closing costs since they are doing the same amount of work for twice the fee.

As far as FSBO, my opinion is that if you are going to go that route, use a discount flat fee broker like HelpUSell. At least you won't fcuk up the paperwork, but you will still save a ton compared to a 5% realtor.

When I sold my house, I went w/ a realtor because I've seen too many horror stories w/ FSBO's and the discount places.

MrMon

11-23-2005, 02:33 PM

PanchoVilla

11-23-2005, 06:29 PM

I was just about to post something similar to MrMon above. I am a newer agent and still have a 9-5 job as well. The answer to should you sell it yourself or use an agent is "it depends". Obviously I am biased but make sure you realize what happens as a result of your decision.

There are lots of agents out there. A good agent is definitely worth talking to and negotiating with. A bad agent is probably worse than FSBO. Good agents make sure you maximize your return. They will advise you on what are smart things to spend money on that will give you a good return when you sell. They will get your property more exposure than you will get yourself. A good agent will pay for staging and possibly some cleaning to get your place in top condition when it goes on the market. A good agent helps keep your from getting sued. The argument above about your agent working against you because he gets more if the price is higher isn't usually correct anyway. A good agent cares far more about you being happy with their service and using them in the future and referring you to their friends/fmaily than they do about making an extra $150 by making you pay an extra 10k for the house. I have told my clients that I don't think a house is worth what they are asking. My last buyer client was looking at a lot of different places and the comission offered varies. Did I tell her that I didn't like a particular place because they only offered 2% instead of 3%? No, she looked and decided based on what house met her needs and that happened to be the one offering 2%. You need to make sure you find a good agent. That really is insterested in building a business thtough serving his clients and getting referral business. The poster that says Realtors are a scam and make too much should look more at the business. The amount of time spent representing a buyer or seller is a lot more than you think. Realize too that the business is structured as independant contractors so while it looks like a lot, they don't get any benefits they pay those. They also pay several thousand a year in training, fees, equipment, etc.

If you are going to go the FSBO. The most important things you need to try to do are.

Get your legal ducks in a row. Good lawyer, title co, etc.
Get your house in the MLS.*
Maximize your exposure.

Offer something comission to a cooperating agent who brings you a buyer. Some agents don't deal with FSBO even if the offered a comission, because in reality they will end up doing far more work. Just because you aren't using an agent doesn't mean they don't have to make sure all the things required still get done. If you don't do it, they have to. Realize to that any buyer who an agent does come in is going to offer you less money since they are likely going to have to pay their agent since you aren't.

*When I hold an open house over 75% of the traffic I get is from the local MLS website. (in reality though open houses don't typically sell the house. It is usually someone brought in by an agent, agent hold open houses to market the house, but there is a much higher chance that they will get a new buyer client than that they will sell your house to someone from the open house)

If all the Realtors went away tomorrow would real estate transactions get cheaper? No way, all the money saved in comissions would be eaten up plus a lot more in lawyer fees. Especially in such a sue happy society that we live in. I figure that working as an agent even if I never did anything negligent in a 10 year stretch there is probably an 80% chance I will get sued at least once. I may not lose, but even winning still sucks up a lot of money.

Here is a specific example. I live what has been a very hot market. Bay Area in California. While the market has cooled in the last 3 months, for the first 8 months it was quite hot. In the time before I got my license I noticed work being done on an empty house a few blocks from mine. After they finished it they put it on the market as a FSBO. It was empty the whole time, so it was likely someone flipping it. They put the house on the market when the average # of days on market was 22-26 days. That house sat there for almost 6 months. I saw the open house signed out almost every weekend. Two factors at work there. The house didn't get the same exposure as if they had used and agent, and if a house sits on the market that long it is almost always overpriced. Now that seller paid an extra ~125 days of interest so depending on his financing it was at least 10k, likely a lot more. The fact that the house increased in value would be negated by the fact that whatever new house you would have bought would have increased in value as well. So selling the place on his own cost them about 130 hours of time for open houses as well as at least 8-10k in interest. If he was a flipper it was even worse because his money was tied up for an extra 4-5 months and he couldn't start his next flip. If he was moving an upgrading he probably lost more because the x% in increase of his current place was less then the x% increase in the price of his new and bigger house.

PanchoVilla