Monday, June 8, 2009

For Sale By Owner?

Kate on Ashland in Sunset Park asked a good question about For Sale By Owner in the comments:

I am going to list my SM house, but hate the RE agents as much or more than most of the bloggers on here.

Is there any data that shows a FSBO (for sale by owner) is as successful as a real estate/MLS listed home?

I am sure the MLS is the most powerful tool out there, but I REALLY don't want to list with an agent! I am just furious about having a stupid middle man in this transaction.

Thanks for asking, Kate! In addition to others' replies I'd add these from my past experiences as a home buyer and seller. (I should emphasize my disclaimer, that I've never worked in real estate or law, and take no responsibility for what you do with free advice from this blog!)

Check current Sunset Park sales prices, see where you think yours fits, and price it close to market. Buyers of FSBOs may expect a deal, like saving most of the commission you're not paying. Not that you should give it to them.

Things a seller should get from an agent include:

* Standard contract forms for the offer and sale have lots of legal detail. A FSBO seller will need this from another source, and a real estate lawyer's short consultation wouldn't hurt.

* Listing in the MLS, holding open houses, advertising.

* Negotiating with potential buyers and/or their agents. It may be harder for an owner to negotiate face-to-face with a buyer. Or if the buyer is represented by an agent, will you pay that agent a 2.5% co-op commission?

* Qualifying a potential buyer. Do they have the down payment, and can they get the loan? An unqualified buyer that falls out of escrow can waste a lot of your time. Which could also cost you money if the market declines more later this year.

* You'd use an escrow officer in either case, but you should know that buyers have been known to turn inspection contingencies into opportunities to negotiate a price lower.

FSBOs definitely can work, but you need to know your stuff, do more work, and may give the buyer part of the commission you save. But your price segment should get lots more interest than higher-priced ones, a reason for FSBO.

If you do use an agent, talk to lots of them at open houses to find one you like and trust. Check their sales record, references, and get a proposal on pricing and marketing. Or consider a discount brokerage like Redfin that gets you the basics of the MLS and contracts for much less commission, although I have no personal experience there.

34 comments:

bay jenny said...

We just sold our loft in New York City as a FSBO & saved $36,000! I would say go for it. If you google "FSBOs in California" there are several online sites that will allow you to purchase a listing on the MLS. You can also list on a number of FSBO websites that help to market your property. Craigslist is also a great way to list your place. I often look for properties in Venice / Santa Monica on CL LA.

Good luck & don't let the realtors intimidate you. If you can make your own show sheet & show your own space, then you can sell your own house.

Anonymous said...

Kate

FSBO is a really good option for someone that has the time and the energy to do the job right.

If you know you will put in the right effort, go for it

However if you get busy with other important things in your life, your work selling your house will suffer and you will wish you hired a realtor.

It all depends. I am not in the real estate profession and am not biased. FSBO is right for many people and hiring a relator is right for many other people

Please do us a favor and in exchange for this free advice, post your experiences on this blog as you sell your home - we would enjoy hearing how things go for you

Post info ever step of the way

Anonymous said...

It would seem that the focus of this blog, and the interests of the posters would, by definiition, ensure that nothing but bad advice will be posted here.

I personally say take the first offer, whatever it is, no matter how low.

Anonymous said...

Well most people on this blog are hoping for prices to come down, and most people on this blog will give Kate advice NOT to extract the highest possible price from buyers.

But there are enough of us that will give her good advice that she can use.

Kate, you took the risk of ownership by buying this and you deserve every penny of profit you can get from it. Make sure to not leave any money on the table

Mike D. said...

I would say that most people on here would hope that Kate gets the best price possible. The market may be overpriced vs. fundamentals, but any seller should try to maximize their individual sale price.

Anyway it's tough to say whether you'll ultimately put more money in your pocket doing FSBO vs. using a listing agent. bay jenny says she saved $36k, but there is really no way to know whether an agent could have brought you a better offer. All you really know is what you saved on the commission.

I too would recommend you use a discount brokerage like Redfin that will rebate you most of the commission. They will handle the technical issues, paperwork, etc., but you will still have the ability to get a better price if you put in the effort of trying to sell it. I've generally heard good things about their service. Also I too would like for you to post about your experiences once you're through the selling process.

Anonymous said...

Interview a handful of brokers, get pricing estimates from them, set your benchmark, sell it yourself, offer a cooperating 2% to procuring broker. Or, negotiate with a broker for a reduced commission. if your pricing expectations are reasonable and they think they can sell it fast then you might have some success doing that.

Anonymous said...

Kate here-

Thanks a million to everyone who weighed in on the selling of my home. I really appreciate your advice, there are some smart well informed people on this blog and you are hyper aware of the RE market, esp. in Santa Monica.

I am fixing up the house now, painting, landscaping, etc. I am looking for staging companies too as my furniture is a little tired. I used your advice already!

I'll let you know how it is progressing....thanks again!

Anonymous said...

Go Kate!

I hope you do go the FSBO route and discover how nice it is not to be extorted out of 6% by a useless middleperson whose only credential is having taken a multiple choice quiz. Whether you use a Realtor or not will have absolutely no bearing on what price you can get--you will get what the market will pay. But you will, for sure, save 6% on closing costs. Also, using Redfin you can probably do much better analysis on how to price based on nearby comps.

Anonymous said...

Save the money on the staging nonsense. Just exercise some common sense and keep the place neat and tidy and if any rooms have too much furniture or clutter, get rid of it.

Nobody is fooled into buying a house merely because it's full of rented designer crap. Indeed, some of us slap our hands on our pockets the moment we see a place like that and back out the front door. A staged house means an over-priced house to any experienced prospective home buyer. Talk about a hype service of the bubble era!

Anonymous said...

I agree. Clean the house thoroughly and skip the staging. You want real buyers, not gawkers. A real buyer will look over the shabbiness of the furniture if the price is good. Don't go saving on realtors and spending on stagers. It's foolish in these times. Every penny you save is less money for your asking price. Be competitive with price, not with fancy stuff no one needs.

Anonymous said...

I prefer an empty, clean house.

Anonymous said...

By "staging" I would just get rid of as much stuff as you can. Pictures off the walls, no semblance of pets, no kitchen clutter. Just store all the junk in the attic and you'll be fine. Staging works but in this market at this time in your area, I wouldn't worry about it as much.

Anonymous said...

I prefer to buy 'ready to move in' house
also low utilities/ water & elect monthly bill

Anonymous said...

Again, thanks a million for the advice. I have contacted some staging companies, and you are right....they are really expensive.

I am considering a major clean up, repaint and decluttering....think that will do?

-Kate in Sunset Park

Anonymous said...

Anon 9:30,

What does a low utility & elect utility bill mean?

Anonymous said...

I would suggest that you buy cans of paint that you can use to touch up all the interior and exterior paint. this must be done carefully but $100 worth of paint can really make a house worth ten thousand dollars more

And get an industrial cleaning company to do an extra special (expensive) clean

academic studies have shown that buyers react especially well to immaculate / sparkling clean homes

Anonymous said...

Just remember. If it's not selling it is because it is priced too high. There are no magical buyers out there that will walk in 2 months down the road and offer you more money than any other potential buyer.

Prices are declining too, and will be for the foreseeable future. So, the longer you wait, the less you will be able to get.

Anonymous said...

Look at the last comp in your area and price it just under what that sold per square foot and keep your fingers crossed. Don't do the "chasing the market down" thing. Real buyers know when something is overpriced, and the pool of stupid buyers is dwindling by the minute. Even if they want to buy, they can't get a bank to loan them the money like they used to.

Wooster said...

You know what, just get a broker and negotiate down the commission. You seem lost. FSBO is not for everyone. People with a greater chance for success would have been listed FSBO already. They would have said "I'm selling my own house" and started doing all the clean-up and repair and went out and got it listed on some sites. You don't seem like that much of a self starter if you are waffling back and forth on a reader thread of westside bubble. I am turned off by RE brokers about as much as I am turned off by car salespeople, but you need to get your house sold for the most amount of $ in the least amount of time before you start playing the chasing the market down game. That could easily be worth a 4% commission because, before you know it, your uncertainty and hesitation could lead you to delays in a declining market where each month you have to reset your expectations. That, or you just don't realize how much you can get and you lose out on $100k. Just be careful.

Anonymous said...

Idiots are rushing in to buy south of montana this month -

1.28 million was paid for 858 19th - a town house -

it closed escrow may 8th

congrats to the seller for getting out while the getting is good

Anonymous said...

"Idiots are rushing in to buy south of montana this month."

Idiots with money are great, hopefully there are more and more!

Anonymous said...

How about a thread about the crazy prices for three bedroom townhouses -

a town house selling for more than 1.2 million is a curiosity worthy of deep discussion

Anonymous said...

"How about a thread about the crazy prices for three bedroom townhouses - a town house selling for more than 1.2 million is a curiosity worthy of deep discussion"

It sounds crazy to those of us in SFR's for the same $ or less in the same neighborhood. Anecdotally, the friends and neighbors I talk to in the large townhome units actually prefer to live in a townhouse setting. Again, based on my small sample, the folks are mostly East Coast transplants who reference similar units growing up, owning, or renting in NYC, Philly, Baltimore, etc.
A little different than the California dream of a SFR and a patch of grass to call your own, but it works for them and they seem happy.

Anonymous said...

I agree that there are people out there that prefer a large townhouse to a SFR -


let's do the math -

1.3 million dollar townhouse in the 90403 = two thousand square feet in a building built in the 1980's

1.3 million dollar SFR in the 90403 - 1200 square feet in a building built in the 1950's

on the basis of how new the property is and on the basis of the square footage you get, the townhouse is an attractive option

As for myself, I need the grass and the privacy of a sfr . I will never consider a townhouse

but I can understand the many other people that prefer a townhouse for 1.3 to a SFR for 1.3

It takes all kinds

Anonymous said...

I'm with the get stuff into storage to make the place look empty, fresh paint, and everything clean route.

but bear in mind you don't have to use the nearest self-storage to get the cheapest storage. You may want to consider getting a locker a bit further away and saving a ton of money. We moved to a place half the size and we got a 10x10 unit which despite serious planning as to where everything was going to go, quickly got very full and a pain to get anything out of. if the storage has a lift, i would definitely take upstairs rather than downstairs - yes - its takes longer to get in and out - but we've not had any vermin issues and many people talk about rats and other natives visiting the ground floor units. less casual theft from upstairs units too - we were warned to expect dust but it hasnt' been a problem yet.
we pay just under 1/ per sq ft - about half what it costs for here in santa monica. I hate the idea of dealing with a realtor too - If I were buying from you, I would absolutely expect you to document what I could expect to pay via the mls and see you show me half the discount to cut out the middle-man/woman/shark. fair is fair I want half the saving cos i'm going to have to deal with you who doesn't routinely do this either.
you might want to consider keeping the locker for easing your move to the next place - but if you pay too much you'll be made keen to be out of there - and month to month you can get stiffed on the rent hikes

I'd also be very interested in your property's floor plan and the price per square foot - because that is a metric I can compare from house to house. And being a suspicious git, I'd measure both in and outside dimensions to see if you were being honest. You can frig numbers very effectively with estimates -and I would put verbiage to effect that buyer is to verify all dimensions so you don't get sued for being of by an inch or two

Anonymous said...

5:39 Anon.

You are really strange.

'Measure inside and out of the house in order not to get sued?'

Add 6" (typ. wall depth for houses) to the inside dimension to get the building footprint square footage.

MOST home buyers care about the inside (read: useable) dimensions/square footage.

You sound like a litigious idiot.

Anonymous said...

Hey KAte, don't answer the question by Anon 5.39...you don't want to sell your house to that guy.

Anonymous said...

Anon 5:39 is a freak.. the kind of control freak who would leave a hidden cam behind his 'inspection' of the house...

Anonymous said...

Do you have dead bodies in that all important storage locker?

Anonymous said...

I have no idea what anon at 5:39 is saying. Maybe english is not its second language, whatever, but Katie you should just ignore that one it's very creepy.

Anonymous said...

I recently sold my place FSBO. I lived in a 1980s cookie cutter development with about half a dozen same-model-same-square-footage properties for sale, most languishing on market for months.

I considered using an agent, but in the end I took the general price agents were suggesting (which was around the asking price of similar properties in the development) and knocked it down by 5% to pass the advantage of no commission to the buyer.

I sold the place within a week at $4,000 below my asking price; closed escrow within 30 days. Used an escrow company for the escrow and had a real estate agent look over the contract. No other comp units in the development sold during that period.

Did I leave money on the table? Maybe. But my goal was to get my place sold fast, and by skipping the agent and commission I had the flexibility to come in a bit below comp properties and get the deal done.

Plus it was nice selling to a buyer who also had no use for real estate agents.

adrin said...

I would say that Kate should consider the suggestions which has posted in the end of the article.

Boise real estate

Legal Tender said...

This is laughable. I know many real estate agents that make 150k+ per year because they are good at what they do. They have the experience and the tools to get you the most money for your house. The taxes and interest you pay while your house sits in FSBO la la land do not compensate you for the small amount you save on the BAC and SAC. Not to mention a brokered MLS listing have been proven to bring far higher selling prices and offers. Get real...stop crying and finally sell your house.

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