For Sale by Owner or Real Estate Agent?

Question

What strategy saves more money (on average)?

For Sale by Owner

or

For Sale by Real Estate Agent

Bill Patterson · Answer

Hi Christopher,
The short answer is.....For sale by owner saves an average of about 6% of the sales price.  That being said, there are a lot of factors that determine the amount of money saved, if any.  
â€¢	Do you have the expertise and time to market the property?
â€¢	Do you have the ability and time to get current comps to make sure you know where to price the property and what is a good offer to accept?
â€¢	There is a common expectation that a FSBO will sell for less because there is no real estate agent to pay.  If you are not on top of your comps, you can accept too low of an offer.
â€¢	Do you have all of the contracts, disclosures, etc. that are needed for a real estate transaction or will you be getting these from an attorney?
â€¢	How much do you value your time, since you will be doing the work of the agent?

As you can see, the long answer is not quite so clear!  If you are comfortable that you can address the above factors, than a FSBO can save you money.  If not, listing with a broker may just net you more than if you did it yourself.  Itâ€™s like any other service that you may consider, stock broker, lawn service, plumber, you name it.  You can do most anything yourself, but you need the right tools and knowledge as well as the time to do it.  I value my time at a pretty good rate, too! 
Bill

Bryan Hancock · Answer

"Saving" money shouldn't be your goal.  Your goal should be to maximize your after-tax and after-commission profit.  If you market the property poorly there is a chance you will fetch a lower price than a Realtor could.  With all of the tools available today I think FSBO listings along with Postlets, Craigslist, etc. will get you some decent exposure.

Account Closed · Answer

sorry mat, buti disagree.  i think you may be an agent though??  the person that sells the home is the BUYERS AGENT..  all the listing agent does is put it on the mls.  i can do that for 200 bucks thru flat fee.  i've never had a buyer's agent complain about this 'stigma' since i take the commission i save and give 1000 to the buyer's agent as a bonus.  this is what gets buyers thru the door--speaking to the buyer's agents' pockets in my opinion...if i was selling my personal residence, i may treat it differently, but buying and selling properties is my business.  that being said, i look for ways to save money any way i can in my business and the flat fee has become an incredible tool for just that.

Mat Lewczenko · Answer

Here's my .02

Marketing and Liability Coverage is what an agent can bring to the table. Along with a zero hastle.

Go to work, do what you do best, let other agents shlep their buyers through your property. More eyes through the door, means more opportunities. In this market most agents are only working with qualified buyers anyway.

Word of advice on flat fee MLS, many agents don't even put them on the list to show thier buyers, there is an unofficial stigma with discount listings.

Another thing to consider, even if you price competitively with other listings in your area, the person knows you are making 6% vs a listing so you already start off with a 10% or lower offer anyway.

I'm assuming since you are on bigger pockets you also invest in real estate, well who are the first individuals most investors target? Fizbos. So you have investors asking you what you would take if "They could pay cash and close on Friday(i.e. ARV less 30% less repairs less wholesale fee)." tire kickers, and hopefully the neighbor walking your block.

Meanwhile those buyers who CAN buy, and are prequalified, well, they are all working with agents, and they just drove by your home.

If this is not your business let someone sell your home for you.

Here is a link with some more info:
http://activerain.com/blogsview/820933/for-sale-by-owner-vs-realtor-the-age-old-question

Account Closed · Answer

true, 1k may not be an incentive, but having the nicest house at the best price gets the agent excited enough.  hey, they're just excited they may finally get a commission bc i realistically price the house and their buyer is finally happy.  that 1 or 2k bonus seals the deal!!

Account Closed · Answer

when selling a property to a retail buyer, it's an absolute must to get it on the mls.  so, at minimum, pay the 300 bucks for a flat fee agent and do the legwork yourself.  i was out looking for properties this weekend and the fsbo's were too busy to call back, let me see their house, etc.  so i wouldn't recommend that for most people.  however, i do that bc it's my business and i'm confident enough in my neogiating and knowledge.  also, i am available throughout the day if need be, when many fsbo's aren't.

J Scott · Answer

If that were actually the case in practice, agents would be scouring FSBO listings for their clients as well, despite the fact that it would earn them $0 in commissions...

I don't know any agents who do this...

Account Closed · Answer

could be wrong, but i thikn the OP is referring to business, not his personal residence.  again, not sure on that one.  at any rate, i agree with you that most homeowners try to go FSBO and end up shooting themselves in the foot.  you assume the properties i sell are 100,000 if you say i'm saving 2 points when paying a 1,000 bonus.  if i sell a 500,000 house.  i save all 3 points minus the 1,000 bonus.  that's 14k i just saved on a 500k house.

Bill Patterson · Answer

Bryan, I think it is closer to being called "economics"!  Bryan A. has the right idea.  Add a bonus to the buyer's agent's contracted 3% with his client and you have "economics" on your side! 
Bill

Mat Lewczenko · Answer

ahh, you are correct on the points.
Most of my properties are in that pricerange, so my bad on the assumption.

Yes, at half a mil an extra 14k would be a good savings. But and extra 1k for the other side would not be much of an incentive either.

Po-tay-to - Po-tah-to

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