On Tuesday, I did a chat for Boston.com as part of the Fall promotion. Here is a question I would like to discuss more thoroughly:
[Comment From WillWill: ]
Rona - Though I know it's your profession, do you see value in trying to sell by owner, or using services like isoldmyhouse.com, before engaging an agent in order to avoid/save on agent commissions?
I think that some people don't need agents. But they are few and far between. If you know how to market, know how to negotiate, and can think objectively about your own place, go for it! I find it is that last part that defeats most FSBO (for sale by owners/)[sic] The risk is that once you market it yourself, it will be harder for an agent to undo the mistakes you may make.
First, I follow the money:
When a property seller sells a property without an agent, there is no agent fee deducted from the price at closing. This increases the seller’s bottom line. Therefore, houses that are sold by their owners should be cheaper, right? Wrong! Buyers rarely benefit from the seller’s extra efforts to sell on their own. The idea that a buyer can get a better deal from a seller without an agent is just not so in the real world. The seller is doing extra work and expects to benefit from this financially.
I have brought buyers to many a FSBO (for sale by owner) property. The biggest conceptual problem is that sellers are not neutral about their houses. This makes marketing awkward. The biggest tactical mistake is that many FSBO properties are over-priced (not under-priced to share the benefit of not having that agent fee.)
Of those which ended in a deal, most sellers paid my fee and “saved” the other half of the commission. It went into their pocket and was not, consciously, a discount to the buyers.
A large number of FSBO properties find their way onto the MLS through “entry only” listing services. These are licensed agents who act as facilitator and share their MLS subscription by posting listing sheets for a fee. Most of these post commission for buyer’s agents.
Second, I look at the work a for sale by owner does by him/herself: Marketing, showing, negotiating, and paperwork.
Here are the other most common marketing mistakes: The seller doesn’t make the property inviting, it has a more limited showing availability, the seller hangs around, the seller says incorrect (and probably illegal) things about the house. The seller tries to be the buyer’s friend. The seller takes it personally during negotiations. The seller depends on an attorney to do the common paperwork requirements for closing (and pays that fee.)
As I said above, not everyone needs an agent. But, in my opinion, many think they don’t need an agent when they do. Remember, I don’t do the listing business, so I have no horse in this race.
Did you sell your house FSBO? How’d it go? Did you come out ahead?
What advice would you give Will? What should Will be thinking about in order to succeed, if he tries to do this?
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