Selling your Home

by john on October 20, 2003

Kelsey takes the For Sale By Owner model of home selling to task in FSBO vs. Realtors and concludes that unless you are in real estate yourself you should not be trying to sell your home without a Realtor.

Rubbish.

I won’t comment on the FSBOSystems company he mentions in his article because it wouldn’t surprise me at all if that is a total scam, but there is no reason at all why anyone shouldn’t be able to price, market and sell their house completely on their own and pocket more of the profit than they would had the gone with a so called professional.

We sold our last house completely on our own with no help from a Realtor and the experience was so pain-free and profitable that I simply can’t avoid decrying this call to use a professional.

First of all, pricing. While Kelsey dismisses the use of an appraisal as a means to price a house the fact is it works and combined with a quick search at the City records will be able to give you a solid price at which to start. Discussions with neighbors and knowing your neighborhood far better than any stranger will help you come up with a good price. So what if you are wrong? Well consider this – in my case I was selling a house that had recently appraised at $230,000. Based on a comparison to another similar house that had been priced by a Realtor I came up with an asking price of $240,000, which was several thousand dollars below the asking price of the other home.

“Why, you idiot, you are pricing your house for thousands less, you are getting ripped off.” Well, not exactly. That guy selling his house for $245,000 through a Realtor is paying around $15,000 for the privilege, meaning he pockets $230,000. I pocket the whole $240,000 and my house sells first. You can pay for a lot of wiggle room for a 6% Realtor commission. Perhaps when the housing data was not so readily available it paid to have a professional price your home but these days of cookie cutter suburbs where it is easy to find comparables and frequent refinancings which offer up built in appraisals it makes no sense to me to pay a professional to price your home, especially considering how much they have to upcharge to cover their own commission.

Secondly, marketing. Anyone who is computer literate can fashion a brochure ten times better than 95% of the Realtors out there. I know because I went around to many, many houses put on the market by professionals and their brochures were mostly crap. I’m no Ad man but it is amazing how much better something comes out when it is your own and you care about it.

Finally, most people are unaware of how little the Realtor actually does when it comes to the paperwork of selling your house. In fact, they do nothing. That’s what you pay a lawyer for. Ours cost $400, which was a joy to pay.

Look, I’ll be the first to admit my experience is limited – I’ve sold one house this way. And while it was at the end of a sellers market it still was a sellers market, right before 9/11. One of the risks you assume is that you will lose some possible buyers who don’t understand what FSBO means and they don’t want to deal with you – you will lesson your prospective buyers some, but I suspect as more and more people deal with FSBO that fear will abate. It does take a little work and you should plan on spending a few weekends doing open houses having complete strangers walk through your home, half of whom are other home owners looking to price their homes.

But the bottom line is you can put up with a lot of crap for the 4-7% it is going to cost you to list your home. I for one can find a good use for that cash.

{ 5 comments }

Don Junkin November 22, 2003 at 11:15 pm

In an effort to not discourage the consumer from using sites like ours and getting involved in the sale of their own home, I felt the need to counter a cheap shot. I have been interviewed several times this past year as CEO of FSBOsystems, and real estate expert on San Francisco’s KRON channel 4. My standing in the industry is strong and my statements come from extensive domain expertise. Over the past 20 years I have bought and sold many FSBO properties, owned 2 real estate brokerages and 2 mortgage companies.

I am not an extremist, but am certainly against convetionalizm when technology and consumer sophistication have exceeded the convention in any industry. To that, I must say, and I am not alone, that the comparisons to eTrade and Schwab are quite appropriate. Rob Black was the first to make this analogy on the air this past summer. When you consider the function and real value added of the realtor you’ll agree. Regardless, with systems like our, the consumer wins. The winning comes from balance. When to use a professional and when to make the personal effort. Real Estate is not as complicated as the realtors would like you to think.

This perception is what the realtor banks on, and banks big. The stats of the FSBO market representing 25% of all sales and the estimation that this be 40% by 2005 are taken from the NAR (National Association of Realtors). Yes, the percieved “other side”. The NAR has also stated recently that billions are being wasted by the consumer in commissions, due to the high price of real estate, and the same effort needed to facilitate. For years consumers have been frustrated seeing a million dollar sale earning 10 times the commission of a $100,000 sale. The NAR went on that the dilution of quality of the agent/broker was also a concern. Becoming a realtor has a very low educational requirement, and they site the abundance of new licensees coming in from the unempoyment market. With minimum requirements (you can home study for 18 days and qualify to take the DRE test) desire is the only real difference between the realtor and the consumer. Of all things, real esatte experience is not a requirement to becoming a realtor.

How insulting to the consumer when they are told by a realtor trying to get a listing that they can’t handle the marketing, pricing, paperwork, etc. Today we see an increasing number of consumers who desire to take part in their transaction and save thousands of dollars. Wouldn’t most consumers like to educate themselves for a week or so, seeksome advice from experienced people, and save 20, 40, 60 thousand dollars. Thanks to efforts like ours this is made increasingly possible. This is not to discount the value of the seasoned professional. I have said this before on TV and in seminars. the consumer needs to be aware though that only about 10% of the realtors are the real professionals and producers in mine and many others opinion. Most realtors will agree that 20% of their own do 80% of the business. There will most certainly always be the need for a professional in real estate transactions. The consumer just needs to be able to use them where appropriate and be prudent about the fee structure. Non conventional forward thinking individuals and companies such as our and Barry Diller, who have the consumer interests at heart, historically have been attacked. When there is no intelligent argument, some even stoop to infer a scam. Some mock what they do n ot understand. This is simply a bi-product of the distruptive nature of our efforts, but does not change reality. These attacks end up in vain though and the consumer ultimately wins. They win with tools and services like our $395 MLS which includes marketing materials and signs, and our flat fee broker services for those who feel need them for only $995. Free listings on our website, marketing and merchandising options, comparitive market analysis (CMA’s)neighborhood info, real estate consultant services, and related professional services such as mortgage, insurance, inpections and moving, etc., all geared toward effective consumer savings.

If those invloved in the real estate industry make statements and given information and opinions based on knowledge and consumer interests, rather than the special interests of associations and organizations, they would be less confusing to the consumer and not conatin so much drama, just useful information and direction. We encourage consumers and professionals alike to take advantage of what we are bringing to the market and be part of and support this evolution. Check us out onMonday.com

Glenn Roberts February 4, 2005 at 11:28 am

Hello, John. I am a real estate reporter for Inman News and I’m looking for consumers who have recently sold a home.

Specifically, I’m hoping to profile homeowners who have:

1) Sold their home themselves (For Sale By Owner);

2) Sold their home using the services of a discounter/flat-rate/limited-service real estate agent (for example: ZipRealty or Help-U-Sell);

3) Sold their home using a more traditional real estate agent (for example: Coldwell Banker, Prudential, Re/Max or Century 21).

I’m working with a deadline early next week. Please let me know if there is a good time to talk or feel free to send e-mail.

Thank you for any help.

Sincerely,

-Glenn

_____________________
Glenn Roberts Jr.
Reporter
Inman News
(800) 775-4662 x137
(510) 658-9252 x137
fax (510) 658-9317
glenn@inman.com
http://www.inman.com
———————–

bharat July 10, 2005 at 9:00 pm

I am planning to sell my house on my own. I am familiar and confident about pricing, ad, and other things; however I am not sure about paperwork. What king of paper work do I need? How do I accept offers in writting? Once I like offer, what legal paperwork do I need to sale the house?

Please provide your input.

Brandon October 2, 2005 at 3:16 pm

The last posting just gives us an example of why realtors come in handy. While in some states the requirements are low to get into real estate, there are some, as Texas that do require much more as well as ongoing education to keep up with all of the laws and such. You are not just paying for marketing. ALthough marketing is a big part of it. 50% of the population may have used a computer before but far far fewer know how to cut and paste. And where are you marketing this home? In the newspaper? How about the local real estate books? With a client base already established a realtor listing with an MLS can market your home to people actually looking for houses, not some shot in the dark I hope someone will see it option of a sign in the yard or a 3 line ad amongst thousands in the local paper.

In addition you are paying for experience. When you look for experience. You want to grab someone that jut past their test and will discount the commission, or do you want someone with 15 years experience that has seen just about everything there is in a real estate transaction.

What does the average seller know about attachement? (hint: it isn’t how close you are to your home) or the laws governing lead based paint disclosures, or what to do if there is a cloud on the title.

In the average sale there maybe little chance of anything going wrong but even before I became a realtor and still today I would want someone with the knowledge and experience when something did present a problem. The thing is you get what you pay for in most cases. What kind of trouble are you leaving behind for future sellers if you as a FSBO do something wrong. A lot of legal headache and a lot more cost, just so you could pocket your 6%.

By the way most realtors are willing to work with you on the commission rate some going so far as to match the Discount houses prices. Another point a realtor does not get 6% of every sale. (something discount houses want you to think) They get what is laid out in the listing contract. Usually 3% for the sellers broker and 3% for the buyers broker, but everythihng in real estate is negotiable even the commission. In reality you could get a commission for as low as 1% if you know what you are doing and you get the backing of someone with the knowledge and experience as well as the insurance to back up anything that goes wrong. Are you insured for making a mistake…. ? NOT!

Cheryl Romans October 6, 2005 at 9:19 am

I will be selling my fathers house privately. I understanding the pricing, etc. but what are all the forms that I need in order to do this. Could you please advise me as soon as you can.

Sincerely,

Cheryl

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