2011 Mar 20th

The Right Way to Sell Your Condo “For Sale By Owner” – Build a Bridge

What is the Problem with For Sale By Owners?calatrava bridge

“For Sale By Owner” are not the favorite words of the real estate agent.  Yet, to save the commission that they would have to pay an agent, some sellers choose to go “FSBO”, as it’s called.  There are two ways to do a FSBO.  One, is for the owner to do everything on their own.  The other, smarter way is for the owner to pay to have the property listed on the MLS and to be willing to compensate the agent who brings a buyer – a half-FSBO, if you will.  Both present some real challenges but, if done well, may indeed save the seller some dough.

I could list many mistakes I’ve seen sellers make when trying to sell on their own.  For example, the other day, I called a half-FBSO seller to make an afternoon appointment to show her condo to my buyer.  She asked if we could come after 6:30 at night because she works during the day and wouldn’t be home to let us in.  My buyer was meeting me at 1pm in the middle of the week to look at a number of properties.  She was not going to make a special trip to see this one FSBO unit at night when she could see all the others during the day.  Right there – the seller has missed an opportunity because of a lack of access to the property.  As I often tell my sellers – if the buyer can’t see the property they aren’t going to buy it.  That’s just one small example.  There are many others.  I am the first to admit many of the mistakes on this list are made by real estate agents as well as FSBO sellers.  That is a whole ‘nother article.  Of course I realize that not every item on this list applies to every seller but many do.  FSBO sellers:

There are lots of reasons why about 70% of properties that start out as FSBOs end up being listed with an agent when they don’t sell. I’ve read statistics that claim that properties sold with the representation of an agent fetch a higher price than those sold by the owner.  The differential might actually pay for the commission, and then some.

In today’s environment, there are a real number of sellers who bought at the height of the market and even if they were to do absolutely everything 100% right, no matter what, they are going to sell at a loss.  Sometimes it’s a big loss.  It is very understandable that they are going to try to minimize the loss and they often feel that saving the commission is a viable way to do that.  I’ve been involved with some of those sellers personally.  They have spoken with me about listing their property but decided for economic reasons they had to give it a try on their own.  When that is the case and the seller discusses it with me honestly and openly I can completely understand and empathize with their predicament.  In fact, I will do what I can to try to help them avoid some of the pitfalls I listed above.  That is the key, potential sellers – be honest.

If you think you can pick my brain and then try to sell your home on your own without me knowing, that shows how little you know about the Hoboken real estate market.  Hoboken is a small town in many ways.  If you are straight with me, or any other reputable, successful agent, they are going to respect you for it and be more than willing to help you.  Chances are, you may end up listing with them eventually so you shouldn’t be burning bridges, you should be building them.  (Calatrava’s pedestrian bridge in Bilbao is one of my favorites).

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  1. Chris

    Nice job, love this part f you think you can pick my brain and then try to sell your home on your own without me knowing that shows how little you know about the Hoboken real estate market. Hoboken is a small town in many ways. If you are straight with me, or any other reputable, successful agent, they are going to respect you for it and be more than willing to help you.

  2. BP

    Good article(and nice pic).

  3. w

    i personally know a lot of people who got deals done because both sides did not use a broker. maybe because it allowed some sellers to take less of a loss?!? who knows.

  4. jerry

    personally, I think it is crazy try to sell an apt on your own without the help of a broker. The preceived “saving” is often eliminated by lower selling prices paid by the buyer.

    On the hand, however, I don’t see the value of a “buyer agent” for the buyer. All the information is online. I found it easier for me to negociate directly with the listing agent than having a middle man.

  5. jerry

    the concept of a buyer agent is also very American. In the UK (and the rest of the world, for that matter), the concept of a “buyer” agent is for the truely wealthy who does not want to get involved in the buying process at all. In almost all other coutries, buyers contact the listing agent directly.

  6. Lori Turoff

    Any buyer who thinks it is better to negotiate with an agent of the seller must not understand agency relationships. That agent is a fiduciary of the seller and is obligated to put the seller’s interests first. There is no savings with regard to commission as the seller’s agent simply gets both halves. Finally, it is very rare to have a true “buyer’s agency” agreement between a buyer and an agent here in Hoboken. We work with buyers but not in an agency relationship and without a contract. The many reasons why it is beneficial for a buyer to work with realtor are too numerous for me to list here but it would make a good post topic.

  7. jerry

    I respectfully disagree. I always got treated nicer at open houses when I told the listing agents that I don’t have an agent of my own, in Hoboken and elsewhere 😉 How does the rest of the world manage to buy real estate without buyer’s agent? I have lived in overseas for many years in the past. Outside of the US, the term “buyer’s agent” is almost unheard of. A few very rich buyers have buyer agents and the buyer would pay for their service and time, just like doctors and lawyers. The listing agent would do all the work selling the house (showing, advertising, and etc) and they would get paid the entire commission, regardless if the buyer has an agent or not. Only in such system, there would be no conflict of interest. The listing agent’s interest is truely aligned with those of the seller’s. I understand what you said about agent’s fiduciary duty, but the compensation structure that we have now favors the listing agent selling the property to buyers without an agennt of his own. Until that is fixed, the fiduciary duty you mentioned would only remain a theory.

  8. jerry

    come to think of it from the view of a real estate agent, the current compensation system is really unfair. An agent may get paid less even if he/she manages to sell the property for more. Under such compensation structure, I have no expection that my listing agent would work in my best interest. I would like my agent to get rewarded for selling the property for more $$$.

  9. Craig

    On the hand, however, I don’t see the value of a “buyer agent” for the buyer. – Jerry

    You don’t see the value? Dude, a buyer’s agent doesn’t cost a buyer anything. The buyer’s agent’s commission comes out of the proceeds of the sale, i.e., the seller pays for it. So the buyer gets the services of their agent at no cost to the buyer. How do you not see the value of free services?

  10. jerry

    Craig – Dude, where do you think the seller got the money to pay the nice broker of yours? The money is from you, the buyer! That’s right, without buyer’s money, no one is getting paid of anything. Buyer indeed is paying for everything. I can’t believe someone still believes there is such thing as a free lunch.

    The point of dealing directly with the listing agent is not to save the commission. Like Lori had mentioned, if the buyer deals directly with the listing agent, the listing agent would get all the commission. After all their hard work of selling the property, they really earn it. There is no question about that.

    Dealing directly with the listing agent would help buyer to get the property he wants at the lowest price possible though. Because of the compensation structure, it would be hard not to have the listing agent turn against their own seller client to help their buyer client. The agent would actually get paid less even if they manage to sell the property at a higher price. That is why I think the whole real estate compensation structure is unfair and needs fixing.

  11. Andy

    You guys are leaving out an important part. The sellers agent gets to see all the bids and he is only ethically bound to provide all offers to his sellers. Someone correct me if I’m wrong but I don’t know if there is some real estate law that dictates this. If the agent is a lowlife and plenty are, they can cherry pick to pad their commission(why would a sellers agent want to get you to pay the lowest price? X% off of a lower amt means they earn less commission not more). Secondly, the buyer cannot see the current bids so in the case of multiple offers if you are dealing w/ the sellers agent they can very easily influence you as the buyer to bid more than you would normally if you were being guided by a buyers agent who can provide you objective market analysis and comps. Would you trust a sellers agent to have your best interest at heart if you sought out pricing data from them to prepare your bid?

    Just my $0.02.

  12. w

    why trust any agent at all – buyer or seller?

    most (not all) just want to push to get a deal done and earn a commission.

    all of this talk about a “fuduciary” relationship is crazy.

    **YOU MUST EDUCATE YOURSELF**

  13. Lori Turoff

    Something you clearly have failed to do, “w”. Your comments betray your ignorance.

  14. jerry

    Andy – Yes, seller’s agent is required to present the seller with all offers. If they don’t, not only it is unethical, it is also illegal. Except for a few bad applles, I beleive all agents follow the rule. But what if the property has no offer at the moment and some buyer without an agent of his own submit a low offer? In this case, I beleiev at least some agents would try to steer the seller to accept the low offer even thought they beleive if they wait a bit longer, a buyer with a high offer would emerge. You see, for listing agent, though the offer is low, a buyer without an agent of his own means that the listing agent would get the commision in full. The last thing that the listing agent would like to see is for the buyer to walk away, and a few days later another buyer comes with his own agent offers $5K more to the seller. The seller would get the additional $5K but listing agent’s income would get cut in half. If I was an agent, I certainly don’t want this to happen.

    Most agents are good people but our current commission system is very unfair. An agent should get paid more if he/she helps the seller to get more for the property regardless if the buyer has an agent or not. If a buyer needs an agent of his own, he should just pay for their service out of his own pocket, just like how they would pay their lawyer and inspectors. Only then, the incentives for the agent, the seller, and the buyer are aligned. The rest of the world is doing business this way anyway. The US is the only outlier here.

  15. Craig

    “Craig – Dude, where do you think the seller got the money to pay the nice broker of yours? The money is from you, the buyer! That’s right, without buyer’s money, no one is getting paid of anything. Buyer indeed is paying for everything.” – jerry

    This makes no sense. The price the buyer pays is getting them the home in return. So the buyer has simply exchanged money for a piece of real estate of equal value (hopefully). After the home changes hands at closing, the commission is paid. Thus it’s then the seller’s money that the commissions come from. If you cut a buyer’s agent out, all it means is the seller’s agent gets double. So for the same cost, why not get the services of two professionals during the transaction instead of one? There’s your value. Dealing with a listing agent by oneself does not get a buyer the lowest possible price. The listing agent’s goal is quite the opposite.

    The advocacy of a quality real estate professional is a good investment when making the biggest purchase or sale of your life. Some of you people rallying against using professional real estate agents are probably the type that might try to go to court without a lawyer or operate on themselves without a doctor – because you think you know better than them and it’ll save you a buck. In either case, good luck with that.

  16. debra

    about selling my condo on my own

  17. debra

    about selling my condo on my own.

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  19. Frank Nieckard

    I am looking to sell my condo?
    Frank

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