Real Estate can be a huge money maker, but it is very hard to understand without lots of experience and help along the way. 3 years ago, I walked into it thinking, no biggy, I can sell our Brooklyn Co-op on Zillow, For Sale by Owner (FSBO for those in the know). Why do I want to spend $30K on commission to realtors!? Am I right? Wrong… I failed. Hired a realtor, and they failed, too (partly because we were both over confident, and also because we didn’t follow their suggestions for fixing up the home). Two years later we came into it knowing what we knew, hired a new realtor and finally succeeded in selling it quickly and at a great profit to boot. After all of this, here’s what I learned and would like to share with you!
What You Need to Know About FSBO
(For Sale By Owner):
- ZILLOW: Yes, it’s free to use as a buyer, seller, and renter. Seems too good to be true, and as a seller, it pretty much is too good to be true… What they don’t tell you, and this is something to watch out for as a buyer as well, is that when you list FSBO, a “premier agent” (i.e. someone who pays to play) will almost always get their contact info listed above you, and most people don’t realize that. They just click contact and get sent to that realtor who has no idea about you or your property. They may answer the client and say “Yes, I’m happy to show you the property” and then get in touch with the seller to arrange a showing. They may also answer the client saying “Oh I’m sorry that listing is already sold, but I have many others I can show you” whomp whomp whompppppppp NOT COOL!!!! For this reason, I really dislike Zillow, as do most realtors who don’t pay to play as premier agents. Also, many listings are scams (homes not actually for sale, just pulling you in so that the realtor or landlord can show you stuff they do have) and many are out of date (already off market but Zillow hasn’t updated yet). So frustrating!! Zillow can be very helpful in your search, but use it with eyes wide open, please!!!
- SPAM CALLS: When listing FSBO, your contact info is out there for the masses. This means you will get a bazillion calls. Not from people wanting to buy your property, but from thirsty realtors trying to convince you that you should list with them. It’s VERY annoying. And if you give up and unlist your property, the calls keep coming. For months. If you decide to FSBO, consider getting a phone line and email address only for this purpose.
- STRANGER DANGER: When selling your own home, you are also responsible for hosting open houses and showings. People you don’t know are coming into your home. Most likely totally fine people who are just looking to buy a house. But you never know if one of them could have bad intentions, and it’s kinda scary.
- CHILD CARE: When you show your home or host an open house, you really shouldn’t have your kids home (remember the potential danger I mentioned above? Plus no one wants kids running around, it’s hard for you to show the home and hard for potential buyers to focus and picture that as their own home). If you have a spouse/partner who can take kids out for a few hours it’s not a big deal, but you’ll get calls from realtors wanting to show the place in a couple of hours, and it becomes a real headache trying to juggle schedules or find a last minute sitter (which adds up $$$ real quick).
- THIRSTY REALTORS: Great realtors follow the moral code, but shady ones will simply not show your FSBO property to their clients because they aren’t guaranteed half of the commission that they would be from a home listed by a realtor. Maybe if you find it yourself and ask them they’ll take you, or they may say “Oh I called, it’s just been purchased”. Hmph. One way to try to get around this is by promising seller’s agent a 3% commission in your FSBO listing.
Photography is IMPORTANT!!!
If listing FSBO, you definitely should consider hiring a professional real estate photographer. They know the best angles, how to use wide angle lenses to get the whole room into a shot, how to perfect the lighting, heck they can even edit in blue sky through your windows if it was raining on the shoot day (they did on mine, below right)! HA! Professional photos are almost always covered by the realtor’s agency, which is a big plus! I’ll show you an example of our home below, with my DIY photos when I did FSBO (on left) vs. the professional photos after decluttering with our realtor (on right). In the 2 years between listings, we replaced the old foggy windows (realtor’s suggestion), did a mini kitchen renovation (our choice), put a ton in storage (realtor’s suggestion), and removed the gate from our fire escape window (realtor’s suggestion). I’ve seen some listings that were so horribly done, even had dirty dishes or people in the shots!! Just a big no to that guys, no no no!!! First impressions are so important! You don’t want to mislead people, which is why I’m not a fan of the virtually staged photos showing what it *could* look like after a renovation, for example, because then they walk into your home and it’s a big let down. But you can show it in its best light with great photography, for sure!
My Take on Using a Realtor:
- Not all realtors are created equal. Boom. I said it. Some have much more experience than others, are more knowledge in your area or about your type of home (ex. if you have a Brooklyn co-op, make sure you’re using an agent who has lots of Brooklyn co-op sales under his or her belt). Some may have better teams and agencies behind them who have more budget, connections, and know-how when it comes to marketing. There are TONS of differences, so do your homework when finding a realtor!
- The commission is not set in stone. You can negotiate this! Typical is 6%, split between the buyer’s broker and the seller’s broker. They each broker shares a portion of that with the real estate agent who actually represents the buyer or seller depending on the scenario. So the realtor listing the property for sale for the seller and the realtor showing the house and helping their client become the new owner have to pay a substantial chunk of their commission to their team/agency/brokerage (they don’t get nearly as much as you think they do). You can get creative with the commission. For example, some agents will list at 5% or maybe even less. Just keep in mind, that the best agents rarely discount their commission. You pay for what you get. It could also harm a seller to discount commission anyway. The typical agent would easily bypass showing a house that offers a discounted commission and favor showing other houses that are offering the typical or customary commission that comes from a 6% listing agreement.
- When buying, you are very unlikely to save money by not using a realtor, unless you find a great FSBO that is (in which case make sure you have a great inspector and lawyer so you don’t get screwed over with a lemon or scam). The seller’s realtor will not want to negotiate away some of their commission if they don’t have to. So just because you don’t have a realtor to split it with, it’s not likely they’ll say “Oh ok then you can have 2% off the selling price.” Nope.
- Meet with several realtors and go with one you feel is trustworthy, experienced, and that you vibe with. Make sure you’re on the same page about how much input you want in the process, how often and in what cases you want an update (for example, do you want a call after every open house to know how many people came, or do you just want to know when you have a solid offer). They’ll research comps (similar homes that have sold recently – at what price, how long on market etc) and give you some options for pricing (highest, middle road, and lowest for quickest sale). Keep in mind pricing depends on the market, and over pricing could mean you are listed for months and months and keep having to drop the price and oh my gosh, this is what happened to us 3 years ago. This last time around, our realtors were realistic, we agreed on a very fair but good listing price, and it went very quickly!!
- Realtors can also be very helpful in suggesting what you need to fix, repair, replace, declutter, put into storage, etc. The first time we tried to sell, we were not receptive to these “expensive” suggestions and just kinda said NAH. 9 months later, after having dropped the price a whopping $70k, we gave up on the sale. Second time around we listened to our realtors, we put a HUGE amount into storage and yes it was a pain in the butt but made a world of difference!!!
- Realtors can also gave you great suggestions for staging – we bought some huge mirrors that made it appear more light and spacious. Put some paintings on the walls, put flowers out. If you want to really go for it, they can help you put everything in storage and hire a company who will fully furnish and stage the place, this is an especially great option if you’ve already moved and don’t want to show it as an empty space. Some buyers need to visualize it as their home, and could use some help.
- Realtors are very helpful in negotiating the price with the buyer, but it also leads to a bit of frustration because the back and forth has so many involved!! Buyer puts in an offer through their realtor who calls your realtor who calls you. You discuss and come up with a counter offer and your realtor gives to their realtor who gives to buyer. They discuss. And continue… If you offer too low or counter too high, the other party may be offended, not think you’re serious, and just walk. It’s such a game and I had no idea how to play, our realtors were SO helpful.
- Realtors can also be helpful finding you a good lawyer, inspector, etc. If it’s someone they work with often, they may even be able to get you a discounted price!
OK there you have it! What I learned from a failed attempt at FSBO, a failed attempt with a realtor, and then finally a great success with a realtor! If you’re looking for a great realtor in the New Orleans Metro Area, then be sure you check out the expert, local team at Rise Up Real Estate Group, who says “Think of hiring a real estate agent like our team here at Rise Up Real Estate Group as adding an advocate for yourself to help navigate what is sure to be an emotional, time sensitive, and financially important process.”
Original article found at https://www.usjapanfam.com/blog/fsbo-vs-realtor-what-i-learned-from-selling-our-home