Dean Graziosi Real Estate Blog

Whenever someone decides to sell their home, the first thing they typically do is sit down with a calculator and factor in the price of hiring a Realtor. Fees for real estate brokers can be hefty and cut into our equity or profit margin, especially during challenging times like a recessionary cycle.  Many sellers ponder the idea of attempting to do a For Sale By Owner – nicknamed FSBO (pronounced “fizz-bo”) by real estate pros – as a cost-cutting alternative. Of course there are pros and cons to be weighed before deciding, and a variety of factors to consider so that you can make an informed choice.

Whether you go it alone or avail yourself of the services of a professional broker will depend on your particular circumstances as well as your own level of experience. But before choosing which way to go, it always helps to consider these 5 main points:

#1

Pricing & Co-op Fees

When crunching the numbers regarding brokerage commissions, keep in mind that most sales involve both a listing agent and a buyer’s agent – in other words, the Realtor whose sign is in the yard plus another Realtor who brings a buyer. In exchange for finding a qualified buyer a standardized finder’s fee or “co-op commission” is usually paid to the second real estate agent.

As a FSBO, if a Realtor brings a qualified buyer and a successful purchase offer you will still need to pay a finder’s fee. So even selling your home on your own will typically involve paying some kind of brokerage commission. The cost could be approximately 3 percent of the sales price, and that should be figured into your preliminary calculations before you decide whether to do a FSBO or hire a pro. Of course you can refuse to work with Realtors, but you may be handicapping your marketing efforts since they have access to most of the qualified and eager homebuyers.

#2

Inclusion in the MLS

The Multiple Listing Service (MLS) is the definitive source for buyers within the residential real estate business in the USA. If you decide to market and sell your home by yourself – without including it in the MLS – you will eliminate the majority of potential buyers.

There are other options, however, because some Realtors offer flat-fee, fixed rate price plans that provide a limited menu of services but do include a listing, photo, and property description in the MLS. The cost of inclusion in the MLS is well worth the added expense and can be easily added to the final sales so that it pays for itself in the end.

#3

Negotiations

Many sellers – especially first timers – fail to recognize the value of paying for expert professional negotiations, but this is one of the most compelling reasons to hire a Realtor. The value of a professional negotiator is underscored by the fact that many experienced and highly trained real estate professionals still hire other Realtors to represent them when they sell their own homes.

That may sound rather peculiar and ironic on the surface, but third party negotiations are generally more successful, more objective, and more readily accepted by buyers – which means they accomplish better results in terms of higher prices and more favorable terms. Plus, if you have a paid professional doing your selling it will be his or her responsibility to iron out wrinkles or solve unforeseen problems that may arise before the sale is successfully completed.

#4

Time is Money

Those buyers who are on a serious house hunting expedition expect to tour property on their schedule, not yours. And if they schedule an appointment and then fail to show up, it is your loss, not theirs, even if you had to jump through hoops and hire a housecleaner on short notice to make it happen. Realtors are used to working evenings and weekends, put you may not be, so consider how the FSBO role will affect your lifestyle before you open your house to strangers and yourself to the imposition of phone calls, emails, and broken appointments.

#5

Special Alternatives

Brokerage firms offer many different kinds of programs and services as alternatives to the ones typically associated with the real estate business. As mentioned above, there are real estate brokers who offer a limited menu of services for a discounted rate but will place your house in the MLS. Others will provide assistance with contracts and negotiations if you do your own showing appointments and tours; and there are a number of variations on this theme of partial service in exchange for a discounted fee.

Sit down with a legal pad and create a list of the advantages on one side of the page and the disadvantages on the other. By taking a visual inventory of the process before you begin, it can help to picture how things will turn out, and whether the sacrifices of going it alone are worth it in terms of your time, stress levels, and financial rewards. One thing to keep in mind – regardless of which way you go – is that you can always change your mind if things don’t work out as expected.  

For example, when your listing agent’s contract to sell your house expires, you can try to do it yourself. Selling it yourself can be fun – and can give you added confidence and tons of experience that you would not get otherwise. That experience will carry over into other aspects of your real estate investment career and pay you back in dividends that might be worth tens of thousands of dollars.

Or if you start out as a FSBO and find it too difficult, you can always pick up the phone and start interviewing eager real estate brokers. Creating a working partnership with an expert Realtor can be a great way to not only sell houses, but also tap into a network of information about good deals about to come on the market. Realtors you trust and can rely on are also a great resource for managing properties you already own. They can help you rent them, screen for new lease tenants, or oversee such things as repairs if you have investments in other cities and can’t personally attend to them.

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