[Published Oct. 22, 2015, in most Jeffco editions of the Denver Post's YourHub section and in three Jefferson County weekly newspapers]
Many sellers jump into “For Sale By Owner” without considering what they give up and how little they’ll actually save by going this route. Here are some things to consider before making the FSBO decision.
Who’s going to handle showings? You do NOT want to handle showings yourself! With most brokerages, you benefit from a professional showing service that takes the calls at all hours and makes sure that lockbox codes are only given to licensed agents. Some agents provide electronic lockboxes that prevent codes from being used more than once.
Who’s going to show the home to buyers who don’t have an agent? This is your listing agent’s job. And most buyers are uncomfortable looking at homes when the seller is present.
Are you skilled at negotiation? If you’ve priced the home right (and how would you know?), you will receive multiple offers, which is how you get the most for your home. An experienced agent knows how to juggle multiple contracts and get you the best deal, which goes far beyond the best price. You may want flexibility on the closing date, and your listing agent may be able to get the winning buyer to accept a defect as is or to buy that excess furniture you were going to have to put on craigslist. What a relief that would be!
Who’s going to help you understand the contract submitted by a buyer’s agent? If you’re the only party to the transaction without professional representation, you could lose out on finer details. If you don’t have an agent, you may have to hire a real estate attorney. Now you’re talking big bucks!
How will you deal with the inspection objection notice? Getting under contract is only the beginning. You’ll need to negotiate repairs and possibly deal with a low appraisal. An experienced real estate agent does this well.
Have you considered your out-of-pocket expenses? There’s the lockbox, signage, advertising, photography, fliers and website fees. Maybe you’ll pay some “limited service” agent a few hundred dollars just to put it on the MLS. Listing brokerages assume those costs, and a good brokerage pays extra to feature your home on Zillow, Trulia, Realtor.com and other websites.
How much do you think you’ll save? Most FSBO’s end up paying a 2.8% “co-op” commission to the buyer’s agent. You may think you’re going to save 5-6%, but it ends up being much less, even without considering what a skilled agent can save (or earn) you, as described above. And most listing agents will discount your listing commission considerably if you let them earn a commission on the purchase of your replacement home.
Your listing agent might sell your home and save you even more. Many agents will reduce your listing commission if they don’t have to pay the co-op to a buyer’s agent. This means your 5-6% commission could be reduced to 4-5%. That means you might get the benefits of a listing agent for 1-2% above what you would have paid a buyer’s agent.
[See next post for a description of Golden Real Estate's "value adds"]