Offer from Realtor

[notfarnow]

Just keep in mind that many, many buyers depend on their agent to put together a list of homes to see on a weekend. The agent goes through MLS to see what's available. You're not on that list, and you've eliminated a significant % of the buyers for your home.

In my experience, the houses that sell fast and get top $$ are the ones that are well-priced and well marketed from DAY ONE. They create a buzz when they hit the market, you get tons of showings EARLY and people have a sense of urgency... they feel they have to get it before someone else does.

It can be really hard to generate that "buzz" on a FSBO, but it can be done. There are tricks to generating interest in a home, you just have to do it RIGHT from day one... and day one is well before you stick a sign out front.

If I were in your shoes, I'd call the agent you intend to use when you BUY a house, and see what they're willing to do for you.

[strupgolf]

I'm not sure, but maybe he was saying that if you bought one of the houses he was selling, then he would sell yours at "no charge, no commission". He knows that he would get the whole sellers commission, and he might have to split your home comm. with someone else. He probably hates to see FSBO houmes anywhere, so he's trying to cover more ground. Get hime to explain "comps" to you.

[einreb]

Will you have the house listed on the MLS? I *think* that the next time I sell, I'll do a FSBO, a flat fee with somebody to list on MLS and then offer a 2.5% to any agent that brings in a buyer.

In our area, the selling agents hang lock boxes and don't even show up at 'showings'. The open houses seem like a way to market themselves rather than the house.

Its an interesting racket. I can see how Jake and Rob (smart guys) could make a good living and enjoy it.

[TechnoViking]

One problem with FSBOs is that the potential buyers' agents are going to be less likely to show your home to their clients. Because they can't get the 3% they'd expect from a traditional sale.

If I understand correctly, there is data in the MLS that shows the agents the commission available for the sale. Agents will gravitate towards the higher commission deals. I had one agent friend go so far as to tell me they will blackball a FSBO, and not show it to thier clients at all unless the client finds is and asks to see it.

Another problem with FSBOs is you are going to attract low-ball offers from people who think "hey, he's not paying a commission, so I can get a lower price".

Now, if you're not in a hurry, it may be worth the few thousand bucks you put down on one of those FSBO deals to see if you can get a buyer. But in this market, I'd say you need all the help you can get.

Remember, the way it's SUPPOSED to work (basic agency theory) is that the agent gets you enough extra for the house to justify the commission (like paying a CPA to do your taxes...they should pay for themselves by finding deductions, avoiding audits, etc.)

I realize 6% is painful. In fact, it's downright collusion or price fixing if you thinnk about it to keep the commission fixed.

I'd find a good agent, and try to negotiate a 4-5% deal.

[notfarnow]

Originally Posted by Martin Smith

One problem with FSBOs is that the potential buyers' agents are going to be less likely to show your home to their clients.

....I had one agent friend go so far as to tell me they will blackball a FSBO, and not show it to thier clients at all unless the client finds is and asks to see it.

When someone decides to go the FSBO route, they've decided that they don't want to pay a commission. Many FSBOs are openly hostile towards realtors.

So here's a scenario for you, a REAL LIVE ONE: I am showing a nice couple 5 homes on Saturday. I know exactly what they are looking for, what price range, what style of house, what area. I need to book 5 showings @ about 30 minutes each. I go on MLS, there are currently 13 houses that fit the bill. It'll take me 15 minutes to touch base with the listing agents and book the showings. I know 3 of those agents, and I know they'll warn me of any potential issues ("feedback has been that the lack of an ensuite is an issue", "the basement does have some water" etc) I don't care if the buying commission is 2, 2.5 or 3%... I just want to find them a perfect house. There are plenty to chose from.

Can I really justify scouring Kijiji and other places for FSBOs, then calling sellers who generally want NOTHING to do with realtors, and who generally won't want to pay commission? If they DO want to pay commission, I go to there house, assess it, and 60% of the time find it has issues or pricing that make it unsuitable for my clients so my time has just been WASTED. And the rare one that's worth me showing, I have to do a listing agreement and other paperwork that use up more TIME. And *if* I do end up showing the house, the FSBO seller generally wants to be there, making it awkward to talk openly with my clients, and sometimes the seller will decide to give you a "grand tour" and the whole history, which can take AGES. Then you are running late for your next appointments, inconveniencing the next homeowners and making a bad impression.

TIME is pretty precious when you work 60-70 hrs a week. That's TIME that's better spent with clients who value your service, not ones who have demonstrated that they DON'T see value in what you do.

So. It's 1215 here. I have to book 5 showings for tomorrow. What do you think I should do? Spend 4-5 hours chasing FSBOs, or taking 15 minutes to book showings that I KNOW will be worthwhile, then spending the rest of the afternoon calling past clients to see how they like their homes, and maybe seeing if they know anyone looking to buys or sell.

What would you do?

See, a lot of people think aversion to FSBOs is about commission. It's not... it's about TIME and opportunity cost. I am better off at home, on the couch napping with my 10 month old daughter, than I am chasing FSBOs

In fact, I'll go door-knocking in neighborhoods to see if anyone's looking to sell, before I'll call FSBOs. Almost 40% of my income in '09 was from door-knocking, no kidding. 0% was from FSBOs

Originally Posted by Martin Smith

I'd find a good agent, and try to negotiate a 4-5% deal.

You might find the two are mutually exclusive.

[Dueller]

I FSBO'd the sale of my last house...but a) I had a few people who were interested and b) I knocked 6% off the asking price. But I have done many closings as an atty and I knew what needed to be done beyond just offering the house for sale (enforceable contract, escrowing earnest money, appraisals/home inspectors a lender would accept, etc.). I still had to hold the ultimate buyer's hand to refer her to mortgage brokers, etc...something selling agents have to do as part of their job. I had committed to purchase a home before I had the buyer for my old home. On the offer of the house I purchased I did not make the offer contingent on sale of my old home and dropped a relatively large earnest money deposit ($25K) in order to get the seller to accept my offer (multiple offers were in play).

Wouldn't ya know it, the sale of my old home fell thru at the last minute. I had 11 days to find another buyer, get them financing in place and close simultaneous with the house I was purchasing. It cost me a bit of money to make it happen but I pulled it off. Not making the purchase of the new home contingent on the sale of my old house was a calculated risk but under the circumstances I stood to lose $25K as I could not put together a bridge loan to close on the house I was purchasing as the proceeds of the sale of my old house ($150K) was critical to closing the purchase.

I guess thE bottom line is that if you are not experienced in buying/selling real estate a good realtor can be invaluable in getting top dollar and handling a lot of behind the scenes problems. What chapped my azz when shopping for a new home was many FSBO sellers want to pocket what they're saving in realtors' fees and not budge on the sale price. My situation was unique and I doubt many realtors could pull off what I had to do to move my house (possibly by some ethical restraints) in a hurry. I have no doubt the selling price of my house would have been higher had I listed it with a realtor but it would have taken more time.

All in all it worked out fine for me...I netted pretty close to what I would have if I had listed it but it did require some extra work on my end. And the buyer got a good deal in the process, essentially getting 100% financing but with equity built in due to the sales price. I doubt that is the case with most FSBO's. YMMV

For most sellers, however, a good realtor isn't expensive. They're priceless.

[legion]

My local market is hot right now in starter homes. I'm selling a starter home.

The market is also extremely slow in the price range I'm looking. I expect almost all of the open houses we've visited to still be on the market in a month or two. I'm not wasting anyone's time by looking at houses that will still be on the market when I'm ready to buy.

And local RE agents don't negotiate and will not list on MLS without full fees. They operate as a collusive oligopoly. We do have a very active local FSBO site though. And I can advertise in the company newsletter, as the house is walking distance from my building.

[Dueller]

Sounds like you're in the driver's seat, then.

[legion]

So...tell me about bridge loans.

We're going to sell our house before buying, but I'd like to close on the new house first.

[notfarnow]

And just to be clear, I'm not knocking FSBO. I know some people who have done really well selling their homes privately... some are even buyers of mine. If you're smart about it, you can do well as a FSBO

I'm just saying that as a Realtor, I'm not "steering" customers away from FSBOs. They are just too much TIME and energy that will likely be wasted, and I can't afford it.

[legion]

This is an experiment. The house gets 2 months on FSBO to sell. If it does not, I'll go with a listing agent.

[strupgolf]

Over time, I've sold 3 homes by FSBO. I advertised each with a price, and recieved the asking price all three times. But it's been a few years ago, 1980, 1987, and 2003. With a good lawyer, it's easy. But many times, its good to use a realtor.

[TechnoViking]

So my dad FSBO's his house and it sold in a few weeks for what they asked. Sale went off without a hitch and they felt they saved some money.

On the other hand, I tried to FSBO a condo (in a good market) and dicked around, spent a lot of time showing the place, making my own flyers, holding an open house, etc., and got two really low-ball offers.

Finally got tired of the process (and I'm in freaking sales BTW) and hired an agent. Condo sold in 4 days for 20K more than the best offer I was able to get FSBO. The 20K more than paid for the commission.

[1990C4S]

I think you have to assume that the buyer pays slightly less than he would with an agent, and you earn slightly more. The savings have to be split.

[island_dude]

I bought my last house from a couple that had come off their agreement with the listing brokers. We decided to do it without involving the previous brokers. I had reasons for this. I was attempting to get an appointment to see the place by the broker and we got an interrogation about our suitability to buy. We told the broker to go to hell. The owner showed me the place. When we had signed our P&S the broker got wind of it and asserted that they were still owed a commission. They wanted the full 6% even though they had never even talked to me let alone showed the place or submitted an offer. The sellers offered to cave and gave them 3%. I pulled money out of my pocket to make the deal go since it was a lot of cash for them. The brokers still wanted the other 3% from me. I was not willing to pay anything given how I was treated (very nasty, with a strong sense of entitlement) and that they were not providing anything I needed. We got to the closing and the selling broker insisted on make a show of providing value. She was unprofessional and nasty to me. In fact she was nasty to my kid. During the closing she started reviewing the paperwork and found an inconsequential mistake. She started talking down to me in a rather nasty way ("Oh look... He marked down that there is a cook top when its a range! How stupid!"). She missed the fact that the sellers hadn't done required repairs and that we agreed to an escrow. I asked her if we should stop the sale over the issue that she was raising. She proceeded to start yelling at me about how hard she worked and was getting ripped off. I told her that we had agreed to a deal and I don't understand what her problem was. She was getting paid far more than she deserved. She would not shut up and I finally told the sellers (politely) that either she was going to leave or I was. She did eventually leave and the transaction proceeded smoothly. The broker was a friend of the wife of the seller. She proceeded to blame me for all of the unpleasantness. Honestly, in this case the brokers were a barrier to a good deal. The lady didn't bring the sale but she wanted to be paid for having to try to sell the house. I can't see how I am obligated to pay that much to someone who provided no services to me and actually stood in the way of my trying to buy the house.

[Rick Lee]

Island_Dude, I know a lot of NoVA realtors. Who was this c&nt?

[911Freak]

Originally Posted by legion

So...tell me about bridge loans.

We're going to sell our house before buying, but I'd like to close on the new house first.

Your not considering a contingent sale?
I would think because your current home is in such a desirable area and would sell fast, contingency would work just fine...
However, if you go the FSBO route and give yourself 2 months then look to a realtor to sell maybe contingent wouldn't work...hmmmm

Anyway, as I remember bridge loans (if you can still find them):

They involve both properties, the one your selling and the one your buying are both tied to the transaction. Once your current home sales the cash from that sale pays down the amount of your bridge loan, then the balance left (from new home purchase) rolls into a new/final loan with new terms, secured by title/deed of your new home. Bridge loan is done.. Maybe they are structured differently now, I'm sure Rob or Jake will chime in....

I used to do a lot of commercial bridge loans when the market was hot.



IndyMac used to have a great bridge loan program...I digress

[legion]

I'm trying to stay away from a contingency in the beginning. Right now the term is almost toxic with local sellers.

[Dueller]

Originally Posted by legion

I'm trying to stay away from a contingency in the beginning. Right now the term is almost toxic with local sellers.

I assume you want a bridge loan in the amount of your down payment on the new house which for most folks is the equity from the sale of your old home. That was the situation in my case. If its not a huge amount and you have decent credit just borrow the money on a 90 day note with your personal bank to avoid tieing it into both properties.

Only problem is that it might affect qualifying for your new mortgage. Very fact dependent situation.

[GH85Carrera]

I was lucky when I bought my first house. The owner financed it. We shook hands on November 1st and I moved in on November 10th. The closing took 10 minutes in the living room of my new to me house.