OT: For sale by owner ?
- Thread starter Plum Street
- Start date
No. 1 is unethical, no? You are asking professionals to provide services for you with no intention of paying them. It is OK to have three in and select one, that is the way it goes, but if you are using them with no intention of signing with one well let your conscience be your guide.
Lol, now you KNOW there are a few in this thread. How do you think this will go?
Obviously they don’t do “absolutely nothing”. You may not believe that their fee is commensurate to what they do, but that is a different point.
And as someone that has done it, FSBO includes some personal overhead. That was not “absolutely nothing”.
I think MCY just provided some good reality. From my experience and knowing a realtor here are some things to consider.
1. When someone comes to look at a FSBO, they think they are entitled to some or all of the commission savings, and will bid accordingly. If not they can go to the 99% of MLS listed properties.
2. Many times prospective buyers are loyal to their agents and will require they get a fee, 2 to 2.5 %.
3. People have no idea how many deals fall through and how much ******** is involved.
4. When multiple listing you cast very wide net. The market price of a house is what one person is willing to pay. Say an agent got you 500K, maybe there were two others in the 480K range, and a bunch at 460. If the limited marketing of FSBO you don't bring in the first three, you get 460 no commission but would have net more with an agent. When people say they saved X by FSBO they never really know.
5. Like any profession there is expertise like local knowledge of the town and its future, building issues, EPA issues.
6. If you want to FSBO you should have good temperment and an ability to sell. Not everyone can sell. You should also have a property with very few issues as local agents are happy to highlight negatives on FSBO's.
Years ago we tried a FSBO. Did open houses and advertising, dealt with offers, eventually had one in and began inspections. Their inspector asked me about fresh tar on an attic vent pipe through the roof. I said we have been here six and we have not had anyone due tar work nor have I. He said it is fresh. I said it is not, no one has done tar work in at least six years, it is not exposed to elements so maybe it shows no weathering. He looked at me like I was lying and eventually the deal fell through. We then went with a realtor, in two weeks had an offer for 15K more, handled any issues that came up, netting the same in the end.
1. When someone comes to look at a FSBO, they think they are entitled to some or all of the commission savings, and will bid accordingly. If not they can go to the 99% of MLS listed properties.
2. Many times prospective buyers are loyal to their agents and will require they get a fee, 2 to 2.5 %.
3. People have no idea how many deals fall through and how much ******** is involved.
4. When multiple listing you cast very wide net. The market price of a house is what one person is willing to pay. Say an agent got you 500K, maybe there were two others in the 480K range, and a bunch at 460. If the limited marketing of FSBO you don't bring in the first three, you get 460 no commission but would have net more with an agent. When people say they saved X by FSBO they never really know.
5. Like any profession there is expertise like local knowledge of the town and its future, building issues, EPA issues.
6. If you want to FSBO you should have good temperment and an ability to sell. Not everyone can sell. You should also have a property with very few issues as local agents are happy to highlight negatives on FSBO's.
Years ago we tried a FSBO. Did open houses and advertising, dealt with offers, eventually had one in and began inspections. Their inspector asked me about fresh tar on an attic vent pipe through the roof. I said we have been here six and we have not had anyone due tar work nor have I. He said it is fresh. I said it is not, no one has done tar work in at least six years, it is not exposed to elements so maybe it shows no weathering. He looked at me like I was lying and eventually the deal fell through. We then went with a realtor, in two weeks had an offer for 15K more, handled any issues that came up, netting the same in the end.
Interesting thread.
Handful of years back, I sold a co-op in NYC using a realtor. Was a fantastic nearly hands-off experience for me. She handled everything, from getting in workers to take care of stuff that needed updating, getting rid of stuff in the co-op I didn't want to keep, ordering new appliances, painting, etc.
I did nothing more than send checks to some of the workers, show up at closing, sign some paperwork and grab the checks. Even my lawyer found her to be awesome to work with. A realtor like that, for me at least, is worth every penny.
OTOH, under certain circumstances (mentioned by some in the thread), I see nothing at all wrong with doing a FSBO either. All depends on the specific details. Also depends on how lazy one is. I'm pretty lazy and would rather be doing a hundred other things than dealing with the details of a real-estate sale. For me, my time is worth more than the cost of the commissions.
The folks who say realtors do nothing (in NJ or anywhere else) are either trolling or greatly overstating things. They aren't absolutely necessary. But they definitely aren't worthless.
Handful of years back, I sold a co-op in NYC using a realtor. Was a fantastic nearly hands-off experience for me. She handled everything, from getting in workers to take care of stuff that needed updating, getting rid of stuff in the co-op I didn't want to keep, ordering new appliances, painting, etc.
I did nothing more than send checks to some of the workers, show up at closing, sign some paperwork and grab the checks. Even my lawyer found her to be awesome to work with. A realtor like that, for me at least, is worth every penny.
OTOH, under certain circumstances (mentioned by some in the thread), I see nothing at all wrong with doing a FSBO either. All depends on the specific details. Also depends on how lazy one is. I'm pretty lazy and would rather be doing a hundred other things than dealing with the details of a real-estate sale. For me, my time is worth more than the cost of the commissions.
The folks who say realtors do nothing (in NJ or anywhere else) are either trolling or greatly overstating things. They aren't absolutely necessary. But they definitely aren't worthless.
1) That’s just flat-out sleazy (to do, purposely, as well as tell others to do) and it doesn’t take a realtor to understand this…wow…scum.
2) Zillow estimates are one of the worst things you can use, for a rental, purchase or a listing, so that’s flat-out awful advice.. Typically you’re going to shortchange yourself in a big way on a listing.
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Realtors are worth every penny only if a buyer or seller is really uninformed. I have always liked the realtors I've worked with, but personally find it offensive that they get 5-6% of the value of my largest asset with no risk on the table.
No risk? They work 100% on commission. They bring buyers to house after house after house. They work evenings, weekends and holidays because that is when their clients are not working. When listing, they should be staging, comping, doing open houses, baby sitting the sellers and or buyers etc...and there is a good chance that deals fall through for many reasons and they have done this all for free...
No risk???
While I don’t doubt that brokers “hustle” and deals do fall apart resulting in risk, they operate in a different world than 20 years ago pre-MLS. When you look at home price appreciation over the past X years vs. the fact that commissions largely remained the same it simply doesn’t make sense. In 1990 when the average home price was $150K a 5% Commission was $7500. Nowadays, the average home price is $450K so a 5% commission is $22,500. How does this make sense when tech (MLS, scheduling apps, Bluetooth key boxes, etc) has done nothing but reduce the amount of time realtors spend servicing clients?
My wife and I sold a house without an agent; it's a ton of work, and we hired a VERY good lawyer to hold our hands through the entire process. If you don't mind holding your own open houses for a few weekends in a row, make sure you get all of the visitors to sign-in with contact info. We eventually hired a realtor with a rider in the contract (as advised by said lawyer) that if any of the potential buyers who visited during our open houses made offers, those sales would be commission-free and realtor-independent. The realtor pressured us to accept a low offer that he generated, which we eventually beat with one of the original visitors a couple of weeks later. We did save on the commission, but I have loads of respect for the grinding work that most realtors accomplish.
Just curious - based on what you described, and fully recognizing the work FSBOs take on, does a 5% commission seem worth it?
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anon_0k9zlfz6lz9oy
Guest
Full disclosure, I say this as a realtor. You should use a realtor.
I’ve sold my own properties and have always opted to still list them and pay a commission for a couple reasons.
First, majority of buyers work with realtors and rely alot on their opinion.
Second, most importantly in this market there are buyers out the whazooooo and therefore itd be so foolish to sell FSBO because where you might “save” $25,000 in commission you may net effective lose $75,000 by not having a realtor drum up a bidding war where prices get out of control.
ive had properties sell for $200,000 above asking. Seller wouldve accepted $699K but we got $875K for them. So if they went fsbo $699K they “save” $35K but they actually lose $141K net effective.
this is not to convince you one way or another just sharing my honest view on this. Imo its very foolish right now to not use a realtor
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anon_0k9zlfz6lz9oy
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Anyone can sell fsbo. The stats dont lie though. Fsbo’s on average sell for 17% less therefore netting you 12% less. Selling a house requires minimal to no skill, selling it and marketing for top dollar does. Net is more important than what you pay out in commission imo. Were selling one of our properties this spring and while yes, I’m a top realtor, I will be listing it and paying out commission. Id be a complete buffoon not to
I literally said neither party used nor had any need for one during my last transaction in Bucks County, due to Pennsylvania not making "attorney review" an obligatory part of the process.
lol @ “no risk.” Have you ever worked straight commission? Put in 40~80 hours for a client then never see a red cent because, for some reason, out of your control, a deal they finally offer gets blown up? Because a pandemic hits? Because someone gets a new job? Because they simply change their mind about something?
Once again another unbelievably ignorant comment.
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anon_0k9zlfz6lz9oy
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2.5%. The sell side I am not paying myself. If i was not a realtor i would pay 5% though. The data doesnt lie
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anon_0k9zlfz6lz9oy
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Just curious but what do you do for a living and how do you and your company make money?
That is by far the dumbest thing I have ever heard. What did gas, milk, rent, a car etc cost in 1990...You do realize that realtors have had inflation on their cost of living too? And they have stayed pretty steady on their %...that si the fairest way to do it. Your argument is kind of- I sold my house in 1990 for 150k and only had to pay 7500 commission. But in 2021 my has is worth 450k...why does an agent expect more than they did in 1990? The answer is...they don't- they expect the same...4-5% pretty simple math.
Now, don't get me wrong- I would love to have sold my house last year and not have to pay the almost 80k in commission. We all look at realtors and grimace at what we lose off our bottom line. But, a good agent will get you more, make your life easier and move it faster. If they don't- you have a bad agent or you may just be the problem. But to compare 1990 to 2021 and the $$$ amount when it is the same exact commission...that makes no sense.
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You are talking apples and oranges. 20 years ago an agent would spend an entire weekend driving clients all over Earth and probably spent more time hosting open houses than they spent at their own houses. I experienced it - been there, done that. Now, agents typically put clients on an auto-MLS email list and will text clients links to houses that might check the right boxes. I’m not suggesting agents don’t work anymore and aren’t deserving of making a living. What I’m suggesting is that agents spend less time servicing individual clients today than they did in the past thanks to tech yet the 5% still remains standard. Just look at the financial industry as the most obvious example of what I’m talking about. Transaction fees and broker/advisor commissions have plummeted from the old days when a full service broker would charge upwards of $100 or more for a basic trade. Thank you tech! Those brokers/advisors didn’t/don’t buy gas and milk? It’s not an inflation issue.
Here you go re: your inflation contention. Interesting read regardless of whether you believe tech should make real estate transactions cheaper and more efficient.
Yes understands sales. You can look at the widget salesman say his $15,000 commission he got at Factory X Thurs afternoon was excessive, but he struck out Mon, Tues, Wed and Thurs morning, so not really. Such is the nature of sales. And the salesmen has expenses, and needs medical coverage, etc. Also agents don't get the whole fee, most times there is a buyer and seller agent, so the fee is split four ways between agents and agent's offices. Top agents will get a higher percentage split than their office though. Of course after that there is the agent's own expenses and Uncle Sam.
This was a foolish agent, should have only signed if you agreed to the agent getting the sell side of a deal from someone you had previously brought in. This agent left themselves open for you to play your buyers against his/her by reaching out and telling your people what you were getting through the realtor and how you would take a little less but net more, which maybe you did.
From what I understand, the only scenario that you should not use a realtor is if you have a buyer lined up, who is also not using a realtor , and you know the value of the property?
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anon_0k9zlfz6lz9oy
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Ive been in the business for 11 years. Theres been no tougher time than being a buyers agent than there is today. Being a sellers agent isnt all that tough in this market however you need to know who to properly handle a bidding war which is the reason if i was a seller id be foolish to not list with an agent
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anon_0k9zlfz6lz9oy
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The thing is you dont know the value of the property in this market. I could pretend I do but none of us do. Im in north jersey burbs, I may believe the comps show $850K and list it for that, we may get legitimately 25 offers and someone bids $999K. The house aint worth that but someone was willing to pay that in a bidding war. To proceed they have to waive appraisal, waive inspection, etc to have their offer be selected
also full disclosure im just sharing my opinion based on data and facts but obviously anyone is free to do as they please. But i practice what i preach. I sell properties of my own annually, I was named to the national association of realtors 30 under 30 so I am very good at selling homes, marketing them and obviously know what im doing but I will always list the house on the MLS and gladly pay commission because it pays for itself and then some
Generally speaking, that dynamic is always shifting and entirely driven by whether it’s a buyers or sellers market. In a strong market it’s great to be seller agent. In a weak market it’s great to be a buyer agent. Don’t get me wrong - I think agents play a valuable role depending on the circumstances/transaction. I have personally used agents plenty of times. I’m just taking issue with the 5% commission that has stood the test of time notwithstanding all of the tech advances in the real estate industry that should have pushed it lower.
I’ll also mention that the 5% is a tribute to the power of the NAR. The NAR basically crushed Foxtons back in the 2000s because they apparently told agents not to show their clients any homes listed by Foxtons. Not sure how ethical that was or how it aligns with professional conduct, but it certainly worked - the 3% commission Foxtons went bankrupt.
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anon_0k9zlfz6lz9oy
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Realistically 6% was the standard and now its 5% and sometimes 4% so it has moved down with tech
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anon_0k9zlfz6lz9oy
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This is factually untrue. Companies like foxtons pop up every year. Most recently was “purple bricks”. They all fail horribly. Not a sustainable model.
here is the truth tho, itd be naive to think agents dont prefer to show homes that pay more. The facts? The 8 main towns that I sell in, during 2018? Listings offer 2.5% or more to buyers agent? Sold for 98% of list price. Listings paying buyers agents 2% or less? 83% of list price. If your boss told you, you could do your same exact job and the end result be the same for the client for $125,000/yr or $100,000/yr which would you take?
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anon_0k9zlfz6lz9oy
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Lol this is so off.
1) if it takes you more than 7 days to sell a house in todays market, youve completely fvcked yourself and lost deep into the 5-figures.
2) price reduction in this market? How many dead bodies are visibly in the house (not hidden). Great way to lose a ton of money.
3) trying to “save” 2.5% ultimately will lose you 10%+ net. Net is more important than what you pay out.
again, i personally have no problem if people want to sell fsbo, be my guest. Im just stepping in here to share the data, facts, logic and anecdotes so people are armed with the proper info before they proceed fsbo and leaves tons and tons of money one the table. If theres ever been a time to go fsbo, i am telling you it is certainly not now. U want to pipe up those bidding wars and get astronomical numbers.
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anon_0k9zlfz6lz9oy
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So heres an example. I used to sell about $20,000,000 worth of homes annually. I now sell like 5-7.5 mill annually as i dedicate alot of time to buying apartment complexes in TX and AZ and i spend alot of time there.
I listed this house for $699K last spring-ish. Frankly, I thought $699K was on the upper limit of what wed get. We wound up with around 20 offers and 5 of them came in over $800K. In fact two offers came in right around the final sales price of $851K and we went with them because of their terms regarding appraisal and inspection. Did I misread the market? I guess so but the most recent comps on that street were upper 600’s but the buyers had appetite well into the $800’s. Had they met with me and taken @Morrischiano advice maybe they sell off market for $699K and leave $152K on the table. https://www.realtor.com/realestateandhomes-detail/20-Birdseye-Gln_Verona_NJ_07044_M59935-55033
So again, everyone feel free to do as you please but the facts and data are just overwhelming and it is my opinion that not listing with an agent in this current market WILL cost you well into the 5-figures and perhaps as much as 6-figures. And @Plum Street im not just posting this because im trying to get business from you, I have no idea where you even live but i dont wanna see you and others be mislead and leave SERIOUS $ on the table
also turns out the market continued to rip in that neighborhood and multiple homes of similar stature wound up selling in the 800’s thereafter so win-win for both buyer and seller
I listed this house for $699K last spring-ish. Frankly, I thought $699K was on the upper limit of what wed get. We wound up with around 20 offers and 5 of them came in over $800K. In fact two offers came in right around the final sales price of $851K and we went with them because of their terms regarding appraisal and inspection. Did I misread the market? I guess so but the most recent comps on that street were upper 600’s but the buyers had appetite well into the $800’s. Had they met with me and taken @Morrischiano advice maybe they sell off market for $699K and leave $152K on the table. https://www.realtor.com/realestateandhomes-detail/20-Birdseye-Gln_Verona_NJ_07044_M59935-55033
So again, everyone feel free to do as you please but the facts and data are just overwhelming and it is my opinion that not listing with an agent in this current market WILL cost you well into the 5-figures and perhaps as much as 6-figures. And @Plum Street im not just posting this because im trying to get business from you, I have no idea where you even live but i dont wanna see you and others be mislead and leave SERIOUS $ on the table
also turns out the market continued to rip in that neighborhood and multiple homes of similar stature wound up selling in the 800’s thereafter so win-win for both buyer and seller
Agree 100%…but JUST for the sake of argument, agents should be doing whatever’s in the best interest of their clients and not themselves…right?
FWIW, I do think the Foxton model and similar outfits would succeed if not for agents. But without acceptance from agents the model is not sustainable.
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anon_0k9zlfz6lz9oy
Guest
Ill also say this. The real estate brokerage world is about to be really shaken up. Theres what I would call a populist movement by agents recognizing that the name of their brokerage means **** as owners list with the agents not the name of the brokerage.
exp has shaken things up by offering agents an 80/20 split then a $16,000 cap. Meaning if I do $3 million in sales at 2.5% per side that is $75,000 in gross commission income. At 80/20 I would get $60,000 and the broker $15,000. So basically if i joined on August 1 2021 and I get them $16,000 by October 1 2021 from october 1 2022 to august 1 2022, id get 100% commission on every deal I do. I personally believe another company will soon come about even lowering that to perhaps a $10K cap, 80/20 split and it will eventually become monopolistic as a brokerage seeks a volume game. It is interesting times in this industry, its being shaken up and power going to the producers
exp has shaken things up by offering agents an 80/20 split then a $16,000 cap. Meaning if I do $3 million in sales at 2.5% per side that is $75,000 in gross commission income. At 80/20 I would get $60,000 and the broker $15,000. So basically if i joined on August 1 2021 and I get them $16,000 by October 1 2021 from october 1 2022 to august 1 2022, id get 100% commission on every deal I do. I personally believe another company will soon come about even lowering that to perhaps a $10K cap, 80/20 split and it will eventually become monopolistic as a brokerage seeks a volume game. It is interesting times in this industry, its being shaken up and power going to the producers
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anon_0k9zlfz6lz9oy
Guest
Sure you have a fiduciary obligation to your client but the client doesnt know the commission offerings. Nothing says An agent cant point the things wrong with houses paying 2% and point out whats right about those paying 2.5%+. Its human nature
I personally find that problematic but I’d be a fool not to recognize human behavior. I wonder how a fee structure similar to a lawyer billing would work in the real estate industry.
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