to FSBO or not to FSBA

[Jay J.]

Hello all!  I'm looking for input and general recommendations...

I plan on putting my personal residence on the market in the next week or two. I've met with two different agents to kind of get a feel for what they would say (in terms of asking price, what they offer as an agent, any changes to the house, other recommendations, etc..)  They both offer pretty much the same thing in terms of agent % (5/6), asking price, selling methods, etc...  the one thing I did notice is that they both rely heavily on the 'internet', as they said..  basically meaning facebook, craiglist, etc..

...So, feeling that I'm pretty good with fb/craigslist, etc.. should I try and sell my house FSBO and work with whatever buyer I can find? I mean, I can do 90% of the same 'advertising' they can, and any listing service could too.. the house is in a pretty good neighborhood, good schools, and the market is still decent.. its a nice house (for a family, not an investor)..

So I guess I'm looking for some BP'rs that have sold a house FSBO to provide some input.. good/ bad stories.. etc..

..and any Cincinnati specific realtors have any thoughts they'd like to share would be appreciated too!!

[Derrick E.]

YES try to sell it yourself first. If you can't sell it then try going with an agent if you want.

You can also list the house on Zillow don't forget about that. My brother put the house on Zillow, then when he put it on facebook he asked people to share the post and offered $200 to anyone who referred the buyer. There were hundreds of shares, people tagging people etc. He sold the house and it was worth the $200.

[Jay J.]

Here are a few pics of the house...

[Russell Brazil]

Are there any specific weird laws that could cause you to end up with a huge financial liability if you do or dont do X?

I will give you an example. In the state of Maryland if you do not disclose that there is a private water/sewer utility charge, and the amount of it, the seller then becomes liable for the full amount owed to the company that manages it, or the full amount owed to the bond if it is in a bond. The average amount of these in Maryland where they exist is $900 a year for 30 years. Twice I have been on the buy side where this amount was not disclosed, and I knew it, and as soon as we closed we filed the appropriate paper work to get my buyers in each instance about $20k from the seller. Once was a FSBO, once it was listed by an agent who simply wasnt aware of the law. Sucked for those seller, but I was hired to protect the fiduciary interests of my clients.

Now that is a more extreme example of things that can go wrong, both with a FSBO or just hiring a bad agent.

[Jay J.]

Originally posted by @Russell Brazil:

Are there any specific weird laws that could cause you to end up with a huge financial liability if you do or dont do X?

Oh man..  that would be horrible..  but no, I don't think there are any 'special law's' like that.. 
well, I guess I don't really know if there are ...   {insert a timely comment from a Cincinnati Realtor.. lol}

Great Idea !!!  anything to get the ad 'seen', right..??

[Cara Lonsdale]

Full disclosure, I am a Realtor, so I may provide some bias in answering, but I will try my best to give you an objective opinion.

Anyone can market a house for sale. It is not rocket science. Sure, Realtors have tools that FSBOs don't, primarily the MLS, which is syndicated to over 100K websites (no kidding - that may be a conservative #) through a platform called IDX. That is how Trulia, Zillow, Realtor.com, Redfin and EVERY other website gets ahold of it, not to mention EVERY Realtor's website that provides MLS searches for their clients are also populated by IDX. So, you get the idea. It's NOT just FB and CL. It's global.

HOWEVER, Realtors provide you more than marketing.  As your representative, they negotiate your terms with the Buyer's representative, and advise you of any disclosures, timelines, and issues that will need to be addressed throughout the process.  They also coordinate the showings, inspections, and appraisal.  They set up the escrow, and make sure that everything runs smoothly, including keeping the Buyer, and the Buyer's lender accountable to their deadlines.  They also draft Cure notices when the Buyer and/or the Buyer's lender is in breach, or misses these deadlines.  They will guide you all the way to finish line.

Can these things be done without a Realtor?  OF COURSE they can.  Just like in ANYTHING in life.  If YOU put in the time and effort, YOU can earn the commission that you would otherwise pay a Realtor.  So, no, Realtors are not required for the sale of a property.  However, they do alot, and provide alot for you.  So, you just need to figure out what your comfort level is with the paperwork and activities that they would do on your behalf, and the time it will take to do them.  

Keep in mind, just because you list as a FSBO doesn't mean that won't have a Buyer that comes along with their Realtor who will expect to be paid the co-broke. So, you may be paying a Realtor fee in the end anyway...AND not be able to have the representation for yourself.

Many people find that between coordinating showings and open houses to the paperwork, to the transactional process, it is worth the expense to have someone else do it for you.

If you are in a hot market where just putting a sign in the yard will lead to a Buyer, then maybe it is worth it to you to go it on your own.

Whichever option you choose, I wish you the best of luck!

[Charlie MacPherson]

@Jay J. There are so many reasons NOT to FSBO that it would take me an hour to write them all out.

Here are a few - from a brochure that I send to FSBOs:

Top 6 mistakes homeowners make when selling their home.

1. Mis-pricing. Set the price to high and you’ll ultimately sell for less - after a painful series of price cuts. To low and you leave money on the table. Online estimates just don’t cut it. Zillow claims that they price 90% of homes in this area within 20% of the home’s true value.

2. Failure to understand liability. We use all sorts of forms and disclosures to keep our clients out of legal trouble. Do you know which you should use - and which you shouldn’t?

3. Vetting. Do you know how to vet your buyer - and more important, their lender? Put your home under contract with the wrong lender and the sale will likely fail. You lose weeks of marketing time and your home is then stigmatized when it goes back on the market.

4. Negotiating. Are you a super sharp negotiator? You’ll be up against one who represents the buyer. This is not the time to go it alone.

5. Strategizing. Do you know how to orchestrate a bidding war? We do. We recently sold a home for a seller at $59,600 OVER the asking price - and we got the buyer to waive the home inspection contingency.

6. Showings. Are you available to show your home to buyers all day, every day? We are.

PS - even the founder of ForSaleByOwner.com sold his home through a real estate agent after his own attempts to sell FSBO failed. (BUSINESS.TIME.COM, August 17, 2011.)

[Cara Lonsdale]

Also, I would suggest taking some different pictures.  That fisheye lens or panoram you are using distorts the room sizes.  Potential Buyers will come through and be disappointed to find that the rooms are smaller than they appeared in your pictures.  You'd rather have them be pleasantly surprised, than disappointed.  Just an observation... :)

[Kyle Burnett]

@Jay J.,

Full disclosure, I'm a licensed agent. If you want to save money but get maximum exposure, I would suggest going with a limited service listing, which could help you with.. This is basically a FSBO but for $500 we'll list your house on the MLS, put a sign in the yard and put a lock box on the house, then you handle everything else. Most buyers are still using agents and going through the MLS so I think it's definitely worth the money.

[Joseph Cornwell]

@Jay J.

As a licensed agent, I would recommend listing with an agent for a few reasons. The studies do show you will net a higher profit with a full service listing brokerage to negotiate on your behalf, even after deducting commissions. Even if you are skeptical of those statistics, if you are unwilling to pay a 3% buyers agent commissions the amount of leads coming to your property will be massively reduced. Unless you get lucky with your social media marketing and find a competent unrepresented buyer and you both can figure out how to complete all of the state required and legally required residential documents, which are not difficult, but it would take time and trial and error to complete correctly. Or you would have to pay a real estate attorney to complete the documents for both sides of the transaction, which may save you some money but they will not represent you throughout the transaction like an agent, they would simply fill out a contract after you have both agreed to all terms. 

So assuming you are paying a 3% buyers agent commission to get legitimate leads to your property, you are still not listed on the MLS further massively reducing your incoming leads. Lets say you go the cheap route and do a limited service as suggested above, you are still paying 400-1200 dollars for an MLS posting, and you still better pay a 3% buyer commission if you want to sell quickly or near asking price.

So really we are talking about the difference of 1-2% on most listings, which would grant you in the case of my brokerage (free professional photographer, staging advice, a full walkthrough and feedback on every aspect of your home, full representation from pre-listing until closing, you do not take phone calls, emails, scheduling, negotiating, arguing, etc with buyers, or buyers agents, you are not responsible for corresponding with the lender and title company, sometimes daily.) With a good agent, you should be listed competitively at market price, to get the most leads which leads to more showings, and more offers, often times which leads to a bidding war, and selling within days of listing in today's market. It is very common to sell well over list price when you price correctly, and have a home that shows well in a good location. Additionally, at least with my brokerage, you not only get MLS listed, but it syndicates to 28 other online marketing platforms.

I could go on all night, but I will close in summary saying brass tax you are talking about saving at most a few thousand dollars, but more often than not you are really losing 5-15% net gain, and causing a massive liability and headache at the same time. Of course I am biased because this is my profession, and of course if you were to list with a local agent, I would strongly recommend myself! :) Best of luck anyway you proceed!

[Jay J.]

Originally posted by @Joseph Cornwell:

@Jay J.

...if you are unwilling to pay a 3% buyers agent commissions the amount of leads coming to your property will be massively reduced.  ..find a competent unrepresented buyer and you both can figure out how to complete all of the state required and legally required residential documents...  pay a real estate attorney to complete the documents for both sides of the transaction...

..Lets say you go the cheap route and do a limited service as suggested above, you are still paying 400-1200 dollars for an MLS posting, and you still better pay a 3% buyer commission if you want to sell quickly or near asking price. So really we are talking about the difference of 1-2% on most listings...

...in summary saying brass tax you are talking about saving at most a few thousand dollars, but more often than not you are really losing 5-15% net gain, and causing a massive liability and headache at the same time.

You've given me some things to consider for sure..  But, honestly, to me, its almost worth the money just to know the paperwork is done right..  and I think you and Cara make really good points about the level of 'professionalism' that comes with having an agent..

Originally posted by @Cara Lonsdale:...

As your representative, they negotiate your terms with the Buyer's representative, and advise you of any disclosures, timelines, and issues that will need to be addressed throughout the process. They also coordinate the showings, inspections, and appraisal. They set up the escrow, and make sure that everything runs smoothly, including keeping the Buyer, and the Buyer's lender accountable to their deadlines. They also draft Cure notices when the Buyer and/or the Buyer's lender is in breach, or misses these deadlines....

Same as above.. all good points. You both have definitely made me start to reconsider.. I guess there is more that goes in to the 'realtor' side of the equation. I mean, I've never sold a house before so I really have no idea what's involved.

yeah..  sh!tty old samsung galaxy. If I took the pictures, I'd use my good camera.. lol

[Colleen F.]

Note that most of the people posting are agents. A couple of points, yes it is work to sell it yourself, you need to be prepared for that. Get a good lawyer for the contract. Every showing is on you but that is true with a relators involvement. You have to straighten up, get out of the house etc so that isnt a huge advantage of a relator. No one wants to sell your house like you do ( this is an advantage and a disadvantage). You will be motivated to show but you need a thick skin listening to potential buyers, you also need to listen and keep your mouth shut. How much it costs for a relator depends on the price point of your house. There are situations where it definitely makes sense to sell yourself. (e.g. you have a buyer, the house is too cheap to get any attention from a relator, the house sells itself). If you have the time and inclination to sell it dont let scare tactics push you to a relator. If you get a relator choose well and sign the shortest contract you can. It isnt worth it to be locked in with someone you cant work with. Also dont be fooled by the relator that says it is worth more because they may be asking you to drop the price in the future. Relators are sales people and they will use those tactics on you to so keep your eyes open.