[[William: Are you really trying to tell me that, as a buyer, I'm going to search for weeks, find the home of my dream, put a bid in, and not budge because I care that a realtor didn't market the house?]]
That is correct. As a buyer you are not going to want to overpay for marketing that didn't happen. If similar homes all sold for $300,000 through Realtors, then you are going to pay $285,000 max for the FSBO. If you pay more, you ripped yourself off.
The Internet is changing the real estate landscape, both for Realtors AND participants. Buyers are smarter now and know that it is economically correct to discount their offer to a FSBO when compared with homes that sold through Realtors. Again, the fair market price for a FSBO is the market value of Realtor sold homes minus the prevailing commission.
By the way, if $7,500 is, as you put it, a "life-changing" amount, then how much is $15,000? If it's wrong to pay the final 2.5% ($7,500 in our example) and get correct marketing and full service, then isn't it more wrong to pay $15,000 over market for a FSBO?
[[William: As a realtor, would you encourage a client to put a deal in jeapardy ... on a home that's priced well ... on the basis that they didn't pay one of your own to market it? ]]
That's the point. It's NOT priced well. If the asking price of the FSBO is $300,000 and my client can get it for the proper price ($285,000), then full steam ahead. Priced well = minus commission. A deal "in jeopardy" because a buyer refuses to overpay is a deal that BELONGS in jeopardy.
[[William: Buyers don't give a hoot about your commissions - they care about price and value (price is everything, right?) and no sane buyer is gonna pass on their dream home if they can get it at the right price.]]
Correct. The right price. The right price is $285,000. The wrong price is $300,000, because everyone else who got $300,000 REALLY GOT $285,000. Doesn't that make sense?
[[William: So the answer to your question why they shouldn't pay the extra 2.5% and get the full monty on a $300,000 home is : $7500 ... and if they find a buyer without at realtor, the potential for: $15,000. For most people, those are life-changing amounts.]]
Yes, but the only way they get the $15,000 is if they find someone to overpay. That CAN happen, so sometimes someone who is not all that motivated to sell CAN roll the dice and get lucky. But usually it DOESN'T happen. Buyers are much smarter now. Some buyers will get smarter as a result of reading this dialogue. They will smartly expect to pay a fair price for a FSBO if they run into one that they like. The fair price will be the standard price for similar comparable homes MINUS the commission they are not paying.
[[William: I'm not anti-realtor Marc, there are lots of legitimate positives to using a realtor, but keep the arguments fair and don't cheat on your math :)]]
And I am not anti-FSBO. I have helped many FSBO's sell on their own. A certain percentage become frustrated and list with me at some point. I've kept a few out of foreclosure by finding the buyer they couldn't. I am working with one couple right now who I am sure will NEVER list with me. They just are set on going it alone. But, they DID give me a huge box of Godiva chocolates for doing a website for their house. Had to cost $75, and it lasted me for about 10 movies...
Finally, Realtor.com and the MLS are just the tip of the iceberg. There are literally thousands of sites where my homes get listed. And it is not only WHERE you list. It is also HOW you list. If you look on the Net, how many listings look unappealing because of lousy photography, incomplete or poorly written descriptions, incorrect factual data, lack of compelling presentation (video, virtual tours, etc), bad staging, poor showability, etc. There's a lot more to marketing than mere appearence on the MLS and Realtor.com. I have $20,000 invested in high end cameras and software to make my listings look good. Not to mention the hair I've had to pull out to learn how to use it all. Not complaining, it's a lot of fun really.