Is this a good strategy to increase competition? - I just listed my house FSBO, what if I offer 3% to the

Asked by Mike, USA, Mobile, AL Mon Jul 21, 2008

buyers agent plus a 2% bonus to the agent/broker who brings in a buyer and handles the closing?
Given that I will fax this offer to local agents. I'm on the MLS and I need to sell fast and want more traffic through my home. I will also hold open houses to attract non-Realtor buyers.

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20
Alan May, Agent, Evanston, IL
Wed Jul 23, 2008
I would follow the advice of several of the agents below, and do some research until you can find a 5% listing agent in your area.

Offering 3% to the buyer's agent, and an additional 2% to the same agent for bringing a buyer and handling the closing is not a good idea. The 3% should be enough to attract a buyer's agent and his/her client.

Save the 2% to use as a negotiating tool, since you seem to be running a tight enough margin already. In fact, you could use the 2% to lower your listing price, and be even more attractive on the market, hopefully attracting more than one potential buyer, and bringing you the highest potential price.

I find it difficult to believe, that you can't find a single 5% listing agent in your area. I think some additional research would turn one up, and in my opinion, that would be the best option.
4 votes
Maria Morton, Agent, Kansas City, MO
Wed Jul 23, 2008
Mike,
here's the thing many people who are not in the real estate business aren't understanding:
When I list a home for sale, here's what happens:
Not only do I put it on Heartland MLS (our professional Multiple Listing Service in Kansas City),
I also:
-announce it at our weekly sales meeting which alerts all 130 agents in my office to the new listing
-send out a listiing alert to all agents with buyers looking for a home like that in the area
-send out a listing alert to all buyers registered in our database
(we have ~2500 agents in our company so this is huge)
-send out emails to all other brokerages in the area notifying them of the new listing (~10,000 agents)
-put it on agent tour (last Tuesday there were ~200 homes on tour south of the river) All agents from all companies with buyers looking for homes like the one I'm showing will try to see as many as they can in 4 hours and then report back to their buyers).
We will probably have to see other homes beyond the tour (called Previewing) to make sure we have complete information on the comparables.

While on Tour, we talk to each other about what's on, what's coming on, and "I have a buyer looking for..." or "Do you know anyone looking for a great 3bedroom bungalow in Brookside?".

The other thing a realtor does is help you present the home to it's best advantage.
In our area, the top 10% of homes are selling in about 30 days.
These are the best of the best.
We see a lot of houses so when the really good ones come along, we get on the phone to our buyers and tell them about the best houses.
FSBO houses are not on our tour. Not on our emails. Not in MLS. Rarely do the owners have the correct paperwork started.
In KC, we have over 20,000 homes for sale on MLS, finding FSBO listings is time consuming and cumbersome to show as they are also not set up on Centralized Showing. With all the homes available, there is no reason for a buyer to go through the extra headaches of dealing with amateur listings who will not have the paperwork in order.
And when it comes to Inspections and negotiating after inspections, again inspections are difficult to arrange because the home isn't set up for safe, easy access.
The owners do not have a thorough knowledge of real estate contracts so are often remiss in meeting deadlines and submitting the correct documents.
Here's another tip for getting more agents to show your home: although there is no standard commission rate, suppose that many of the homes in your neighborhood are listed with 6 or 7% commisssion, if yours is at 8%, agents will definitely want to show your home to any buyer who is looking in the area. It's simple arithmetic; 4% is greater than 3.5& or 3%; 4% puts more food on the table.
After our broker takes his cut, we agents pay ~30% to Uncle Sam for taxes; ~30% for advertising budget; ~20% for licensing and other professional maintenance fees; leaving ~20% of each commission for food, shelter, health insurance, car payment, etc.
1% is not much more to the seller but it will definitely attract an agent's attention.

Other facts:
Only 10% of real estate transactions without realtor involvement make it through to a successful closing.
Sellers net an average 15% more on houses sold by realtors.
Houses sold by realtors sell faster than those sold by homeowners (don't recall the %)
2 votes
;, , Riverhead, NY
Wed Jul 23, 2008
Mike, why not reduce the price by the bonus amount?
Web Reference:  http://optionsrealty.com
1 vote
Mike, Home Seller, USA, Mobile, AL
Wed Jul 23, 2008
Thanks for the answers so far, you guys are doing a good job! And thanks Trulia for hosting this board!

I've only been fsbo for a week but you guys are pointing me in the right direction I believe.
1 vote
J R, , New York, NY
Wed Jul 23, 2008
For only 1% more you're extending the time on the market. No one is going to talk up, advertise, or otherwise promote your house. If you get someone on your own you can tie yourself up with an qualified tire kicker. Do you mind my asking how did you arrive at the price you're asking? Because if it's based on you "breaking even" rather than on market value then everything you are doing in this sale so far is working against you.
1 vote
J R, , New York, NY
Tue Jul 22, 2008
If you're willing to pay 5%, why not just hire an agent to sell it? There's a lot more to be done to put a house "out there" so that the agents (the people who have the buyers) will see it, than just putting it on MLS.
1 vote
Vicky Chrisn…, , 20176
Tue Jul 22, 2008
It sounds like you are offering to pay 5% total in commissions. I am curious why you aren't hiring someone to handle this for you? At 5% I would think you could find a full time, professional agent to handle this for you. Obviously, it is not the commission that concerns you. Did you have trouble finding a reputable agent? If you are in the MLS, then you have some kind of representation agreement, I would think. Will that brokerage allow you to convert to full service coverage? Check it out.
1 vote
Keith Sorem, Agent, Glendale, CA
Mon Jul 21, 2008
MIke
Your problem is going to be exposure.
Faxing offers to local agents is not going to receive a respone unless you're giving away your property.
Your other problem is generating enough buyers who will write an offer. In a typical market you need 10-12 showings for one offer.
Maybe you'll get lucky. 5% of sellers sell to someone they know, 5% to someone they don't know, and 86% list with a Realtor.
Not surprising, Realtors average a sales price 16% higher than sellers marketing without professional representation.

My suggestion is to interview three Realtors, ask them for an Estimate of seller's net proceeds, then run the numbers. Most markets in the US are downward trending. Most people move in the summer. IMHO you do not have time to "test the market"

Good luck.
1 vote
Rene Pratt, , Charleston, SC
Thu Jul 24, 2008
Dear Mike:
While I generally agree with the other agent's advice, I do think it will improve your chances to sell the house if agents know that you welcome the opportunity to work with them even though you are a FSBO listing. But I think it makes more sense (if you are still unwilling to use a professional real estate agency/realtor to list your property) that you advertise your home for sale in the paper, internet and email declaring that you welcome agents' involvement and that you will pay 4% to whomever brings a qualified buyer. To me, being FSBO suggests that you are handling the closing if you secure the sale. If someone else does, it goes without saying that thier buyer will choose the closing attny etc. They are responsible for paying for the customary closing costs unless you negotiate a different deal. But FAXes aren't going to be very fruitful, in my opinion. Use email, photos, internet or direct mail for the best results. I think inviting realtors to your open house is a great idea, if they know they will make the same money or better bringing a buyer to your home. Good luck!
0 votes
Scott Godzyk, Agent, Manchester, NH
Thu Jul 24, 2008
You would be better offer to give it to one agent to handle for you, faxing it to lots of agents in theory seems like a way to get more exposure, however virtually none of those agents that get the fax will give you there all as there is no security for them to hard and not get scooped by someoen else. The best way is to sign a listing with 1 trusted broker, let him splash your house all over mls where other realtors will have more faith in what they are reciving and bring their buyers to your house. You can get more with 1 agent giving there all than 1000 agents giving your fax a onceover. It will cost you the same amount as you are proposing and most certainly give you more exposure. Let the realtor hold your open house, advertise on your behalf and introduce your house to every broker through mls, a realtor has more resources and will ultimately get you a better price in a quicker amount of time. Good Luck.
Web Reference:  http://www.ScottSellsNH.com
0 votes
Mike, Home Seller, USA, Mobile, AL
Thu Jul 24, 2008
Sure, I'll send you an e-mail off of this board. Thanks!
0 votes
Gary De Pury, , Pasco County, FL
Thu Jul 24, 2008
I was in the military with a guy who live up there and is a REALTOR. Would you like his information?

Gary@BayVistaRealty.com


Gary De Pury
Broker-Owner
Bay Vista Realty
0 votes
Mike, Home Seller, USA, Mobile, AL
Wed Jul 23, 2008
Thanks for all the feedback. i was a novice when I started this and didn't really understand the system. I thought that fsbo would help me save money but it looks like it might actually cost me more in the long run. I also thought that listing with one Realtor would limit my exposure but now I see that you guys share everything anyway and that going it alone severely limits my exposure. I will probably be looking to list with a Realtor soon. Anyone know of a good agent in Maryland - Bowie/Crofton area? My fsbo listing is below so you can see what I was listing.

Thanks Everyone!
0 votes
MichelleinNC, Home Buyer, Wilmington, NC
Wed Jul 23, 2008
I agree with others that said to lower the price by the 1% - 2% to make it more enticing to buyers.

Another option is to list on websites such as Craigslist. That will give you increased exposure. Homebuyers are also combing the newspaper, so make sure you have an ad there.

Good luck! And just out of curiosity, where is your house located? I'm a potential buyer in Wilmington, NC.
0 votes
Gary De Pury, , Pasco County, FL
Wed Jul 23, 2008
Mike,

Google 2007 Home buyers and sellers survey. See what thousands like you have already said.

Good luck!!!!!!!!!!!!!!


Gary De Pury
Broker-Owner
Bay Vista Realty & Investments, Inc.
Chairman, Communications Committee
Greater Tampa Association of REALTORS®
Director, Florida Association of REALTORS®
0 votes
Wayne F. Smi…, Agent, Hillsborough, NJ
Wed Jul 23, 2008
Mike,

I have scrolled down and found your response of....... most agents are looking at a 6% and at that rate you will have a hard time breaking even. Are you looking to purchase a new home in or around the area? If so, remember that you will probably get more house due to the price corrections. Also, like I mentioned in my prior post on average a FSBO gets 15% LESS. How will that affect your break-even point?
The 1% difference in commission versus the 15% less number will far, far outweigh the listing brokerage fee. The important thing is to "right price" your home. I find that most FSBO pricing is off the mark since the price reflects what the seller needs versus what a ready willing and able buyer will pay. As mortgage rates creep upward a buyer's "power" is decreased. It appears that the longer your home is on the market the closer your getting to "break even". The correction, in the Hunterdon Count an NJ area is expected to run through 2009. Yes, the most dramatic correction appears to be behind us, but a 1% further correction takes you out of the break even zone. Readington has a 10 month inventory level and Hunterdon County as a whole is 12 months. I prepare "Absorption Rate" statistics for by Broker by Township for Hunterdon County. You need to get the word out to as many agents as possible as soon as possible. The MLS is the fastes way to do that. I also suggest that you look to someone who will also enter you home into both the Garden State MLS as well as TReND. These 2 data bases cover nearly every agent in NJ and most in the Eastern part of PA. MLS listings feed into realtor.com which is the most popular search site for a potential buyer. In addition to trulia, zillow, oodle, NJ.com, homes.com, craigslist, and a host of others are part of a full marketing campaign which will help reduce your days on market IF your home is priced properly.
Web Reference:  http://www.waynefsmith.com
0 votes
Don Tepper, Agent, Burke, VA
Wed Jul 23, 2008
I agree with the others. You really should be able to find an agent willing to accept a 5% commission. (Hey, negotiate! Commissions are negotiable. And you appear to believe that you're a competent negotiator already; you'll have to deal with offers and counter-offers anyhow.)

If you're planning on buying another property, work a deal with an agent--5% as the listing agent on your current property, and you'll use the agent when you're looking for your new property.

Even if you can't find an agent who'll agree to 5%, that extra 1% will buy you a lot of services and exposure: Maria lists a lot of things agents do. Can you do all that for 1%?

Hope that helps.
0 votes
Debt Free Da…, , 85260
Wed Jul 23, 2008
I think I would just hire someone. That just sounds too complicated for the end result.
Web Reference:  http://GetPrequalified.com
0 votes
Wayne F. Smi…, Agent, Hillsborough, NJ
Wed Jul 23, 2008
Mike,
I'm a bit confused for which I apologize. Most FSBO sellers try this route in order to attempt to save the Real Estate Broker fees. You are offering close to a full Brokerage fee with your 3% + 2%.

According to the NAR, 90% of buyers, regardless of where they find a home for sale, will work with an agent to purchase that home. A large percentage of these buyers find a home through an agent and find an agent through the home listing. Also according to the NAR the median price for a FSBO is 15% LESS than a home listed by a full service broker.

So, here's my confusion...since you are offering a good broker fee what is your reason for not taking advantage of the added agent exposure and representation by listing your home with a broker? In addition to the 5% you are willing to pay out you also state that you will be doing the Open Houses. You will have the added expense of advertisement for your home and the Open House.

This appears as though you are willing to pay our dentist, but will perform self administered dentistry. I'm not trying to be "smart" with that analogy but simply confused. If you have had a less than stellar past experience your direction is more understandable. However, not all agents are alike.

Could you clarify why you are trying this on your own? Remember, every agent that you will be associated with under your current direction is trying to get the LOWEST and BEST terms for the BUYER. The only agent that is working to get the HIGHEST and BEST terms for YOU is your "sellers agent".

E-mail your property information to me so I can keep it in mind.
Heck, I'll do the Open House for you....call me and I'll explain how this can be done. I already have a listing in Readington so I have people (from prior Open Houses) that are looking specificially in the area

My focus is Hunterdon, Somerset, Warren, Mercer and Bucks County PA.
Web Reference:  http://www.waynefsmith.com
0 votes
Mike, Home Seller, USA, Mobile, AL
Tue Jul 22, 2008
Agents in my area won't sell it for 5% they are asking for 6% which makes it tough for me to break even.
0 votes
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