Not so long ago, an out of town buyer I was helping asked me to preview a home she spotted on Zillow. I quickly discovered that this home was posted directly by the sellers themselves. She was sending me to a FSBO.
I’m not wary when it comes to situations such as this. They’ve got a home for sale. I sell houses. Perfect , right? So of course, I called on them and as expected some of the first words from the seller’s mouth were, “We’re not paying a commission.” Out of courtesy I didn’t state the obvious (If you wanted to pay commissions you would have listed with a broker). What I did say is that my client and I have discussed this scenario at length, and that she is willing to compensate me herself if the deal is that attractive. I have found the promise of free real estate services to be very alluring to most FSBO sellers, they invited me right over to see their home.
My impression was that the house was cute but perhaps a bit over-furnished and optimistically priced. I asked how they came up with their value. They said “Zillow and we have a friend with access to the Multiple Listing Service. We’re not in a hurry and we have some wiggle room in the price.” I then asked about their buyer traffic and whether they’ve received offers. The sellers admitted that they had several showing appointments plus two well attended open house events but no offers. “Everyone seems to LOVE our house, but nobody has come back to look a second time” they reported.
My buyer and I did ultimately see this home together and the sellers were more than happy to give us a room-by-room tour. “And this is the kitchen” they proudly announced as my buyer rolled her eyes behind their backs. The two of us then headed back to my office to crunch some numbers. Considering that the buyer would be compensating me directly and that the seller was paying no fees at all, this house wasn’t priced a bit high, it was 7 – 10% over-market. She took a pass, proving that a well-informed buyer is simply not going to line a seller’s pockets with compensation for professional real estate services that have not been provided. This house did eventually appear on MLS, well after my buyer purchased another home , and it did finally sell within the range that my buyer and I anticipated. Perhaps the sellers didn’t lose a bunch of money, but they certainly wasted a lot of time. More importantly, these sellers missed the “parade of buyers” that almost always arrives when a well-priced, professionally-marketed and properly staged home hits the Multiple Listing Service.
Here are a few more lessons to be learned from the National Association of Realtors 2018 Profile of Buyers and Sellers:
- 7% of sellers sold their home without an agent which is the lowest market share ever recorded since they began the survey in 1981.
- FSBO’s sold at a median price of $200,000 while houses sold on MLS at a median price of $264,000.
- Of the sellers that were happy with the results of marketing and negotiating for themselves, 72% personally knew or were related to the buyer(s).
In some cases, it may make perfect sense to sell a home yourself. Perhaps you have a tenant or neighbor that wants to buy your rental (although you should seek professional advice when it comes to the paperwork). If you choose to enter the market as a FSBO, with no leads, consider offering a commission to buyer’s brokers. Given the opportunity, the top people in my industry don’t just justify their fees, they earn every penny they make.
Photo Courtesy of Flckr commons. For Sale By Owner / Lee Coursey