Should I sell myself or list with an agent? I plan to sell in the next month.

Asked by Mark, New York, NY Mon Sep 13, 2010

A realtor quoted me 4%, split 50-50 with buyers agent.
This sounds very reasonable for a broker fee.

Still, I am considering to instead list with a flat-fee MLS service that also provides free website
listings including realtor dot com. Along with this, I would offer a 2.5% commission to buyer brokers.

This should, theoretically, provide more incentive to buyers agents at least. (2.5% vs 2%)
However, I don't know how the industry looks on this. Do buyers agents shun this type listing?

I know a broker adds value: They field calls, show property, bring their own network into
play and hopefully more actively market. However, I am not sure this always translates into
a higher sales price. I work for myself and have a flexible schedule, so am willing to answer
calls and show the property myself if it saves me 1.5%.

I welcome thoughts on this. NB: I am not a distressed seller.

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Answers

14
Keith Sorem, Agent, Glendale, CA
Mon Sep 13, 2010
BEST ANSWER
Mark
Thanks for posting this question . We see quite a few just like yours.

So, just reading the question, it appears to me that you are assuming that the main factor in getting your home sold for top dollar, in your time frame, and with your terms, is the amount of commission paid, is that right?

To put it another way, the lower the commission rate , the more you put in your pocket, correct?

I have some ideas for you to consider:

See the link below:

I am assuming that your home is at least the average listing price of $477,288. So you are willing to pay a buyer's agent 2.5%, you'll have to pay for the MLS fee and do all your own marketing, so let's say you are trying to save 2%, is that fair? or in your case, $9,545.76.

According to the Trulia link, your market is declining 4.9% in the last 12 months, or 0.4% per month.
Also, there were 70 foreclosures with a current listing inventory of 330 homes for sale. So that probably means you will be competing with foreclosed or bank-owned homes.

So, plan A is to save $9,600 with you in charge of everything. Let's say that you do all your work, in a month, you put it on the market. It's on the market the normal 60-90 days, then you have an accepted offer. Being optimistic, with no problems with appraisal, inspections, etc., you close escrow in another 60 days. that means you move in February, does that work for you?

If the numbers are correct, during the 90 days it took from prep to an accepted offer, your home lost 1.2% in value, or about $5,727.46 less. So now you really saved about $3,872.54. Was it worth it?

I monitor the performance of discount brokers and MLS Entry Only brokers every quarter based on MLS stats, compared to full service brokers. You might be surprised at their performance
1. Homes listed by discount or MLS Only Brokers sell for 2.0-2.6% less than homes sold by full service brokers.
2. The homes fail to sell twice as often (we call those "expired listings"
3. The homes take longer to sell when they sell.

I'll add a few more important facts:
On average homes that sell within the first 30 days sell closest to asking price, but only about 20-25% of homes are sold within 30 days. The rest, 75 to 80%, are sold between 30-120 or more days. Why didn't they sell earlier? Because they were overpriced. And these are homes listing by Realtors.

Note that MLS Entry Only and Discount brokers only account for about 1% of the sales (or less), so how could it be that the majority of homes are overpriced?

The truth is this: If you want to sell your home for top dollar, then you need a Realtor that can do three things very well:
1. Help you properly prepare the home for sale. They know what buyers want, and what they don't want. Spend the time and money highlighting the features in your home that will show the most value to buyers. That saves you time and money. And you don't have time...you are losing $1,909.15 per month, or about $450 per week.
2. Know value trends. Your market is declining. So a property needs to be priced slightly below market in order to sell for more than market.
3. Are good at negotiating...that means with you, the buyers agent, the appraiser, everyone.

The Realtor I mention above is probably in the top 5% of your market. However, how do you know when you are talking with a 5% Realtor, or one of the 95%, and of all Realtors 70% are part-time. so how do you know?

Good luck.
1 vote
Mack McCoy, Agent, Seattle, WA
Sat Oct 16, 2010
Mark, it really comes down to whether you want to play listing broker on the most valuable asset you own.

Life is short, and if you can afford to allow yourself the pleasure of playing real estate agent, then, by all means, live it up.

There is scant hard evidence that there's a performance difference between FSBOs and agent-represented properties, mostly because nobody believes that the irregularities in the data sets ever "balance out."

However. I've found that there are segments of the population that would much rather pay brokers full freight rather than take on the tasks themselves or place them in the hands of discounters: developers, investors, retired agents, rich people, and busy people. Probably some others.

Good agents just seem to have more success in getting listings sold, and I'd be inclined to pony up the point and a half to hire one of them, rather than hope I could make it up from my own efforts.

But in the end, what's important isn't the price you pay for service, it's the value you receive. With no offense meant, I think you're the only person you know who thinks that you will provide 1.5% value in this transaction. I certainly wouldn't pay you 1.5% to market a property! Then, again, if you're going to enjoy yourself, why not do it your way?
1 vote
Marc White, Agent, Charlotte, NC
Mon Jun 10, 2013
Mark, I know that most of the respondents are from NY, but please consider the remarks from Gina in North Carolina (she is not trying to get your business, and neither am I; we are only here to help). I have friends everyday that "think" saving a few percentage points in commission is worth their time and effort trying to sell their home. While on paper, it all looks great. But, in reality, top dollar is not what you will expect to get. In my opinion, a discount broker is not good at marketing themselves, or negotiating terms for a seller, thus they discount their services. On the contrary, a great broker, is going to fight tooth and nail for every penny. You can laugh all you want at my beliefs, but as an owner of a real estate company and VP of Operations of one of the top producing Keller Williams teams, I have seen it all too clear.

Of course, if you hire a crappy agent...guess what you are going to get. AGAIN, I have not fight in this, I live in North Carolina and do not seek your business, but I KNOW what a great agent can offer you...and what a FSBO or Discount broker will bring to the table.
0 votes
James Scacal…, Agent, Brooklyn, NY
Mon Jun 10, 2013
Speaking for myself, I do bring integrity into the process and try to inform you of potential red flags in a deal. I can assist you in the process with my knowledge and also put you into touch with the right attorney who will assist you as you close.

James Scacalossi
Charles Rutenberg Realty
0 votes
Joseph Crifa…, Agent, Ridgewood, NY
Wed Jan 26, 2011
If you have not listed your property with a realtor yet, please consider the following:
Interview the two most active Realtors in your area.
If you list with a flat fee broker there is no incentive to get you the highest and best price. Offer a percentage based commission.
Also consider that a buyer broker is working for the buyer and is acting in he best interest of the buyer.
If you have any questions, feel free to contract me at 718-821-5999.
0 votes
Joseph Hasti…, Agent, Bayside, NY
Sun Jan 9, 2011
Hello all. I know I'm coming late to this party but the number was interesting. Saving 1.5% is the goal here, yes? I'll be brief.

I suggest that minor amount would be gone in the blink of an offer. That is of course, provided you get one after some time on market. The amount saved(?) may not be worth the time lost. Others below may agree. The Realtor percentage quoted is awful fair.

I do wish you all the best in whatever you decide.
0 votes
First Last, , 90002
Sat Oct 16, 2010
Your property sounds like a nice two-family in Ridgewood, Queens. It could be owner-occupied, yes, or it could make a very nice investment property, depending on the rental market, which in general is getting stronger in NYC this quarter owing to an influx of new jobs here.

My question is: How do you plan to reach potential investors so they know your property is available? In your case it's not enough just to reach out to the single family homeowner.

I would also add that if you don't need to sell right now, can you wait until the economy recovery happens? (fear not, it will, it always has and it always will).

If you don't want to be an active landlord, you could hire a property manager to take care of administration for you. A property manager must be a licensed real estate agent ("broker") in New York State.

Karla Harby,
Lic. Real Estate Salesperson
Charles Rutenberg Realty
kharby@crrnyc.com
0 votes
First Last, , 90002
Sat Oct 16, 2010
Although MLS exists in New York City, many brokers will tell you there is no MLS at all because they've never heard of it! It just seems like there isn't an MLS, but there is, it just isn't vital the way it is in other parts of the USA.

Sellers should know that many buyer's brokers will not work with For Sale By Owner properties at all. For one thing, it can be hard to find your listing! It just won't be in all the databases brokers use.

I do work with FSBOs, but I must have an agreement with the owner, in advance, regarding my commission in the event one of my buyer-clients closes on the property.

Realize, too, that in New York City, buyers rarely pay real estate sales commissions at closing, the sellers pay the broker's commission, and in this buyer's market that custom is not likely to change. However, it's just a custom--everything is negotiable about commissions!

It might interest you to know that when developers market apartments in New York City, they often RAISE commissions for buyer's brokers. Commissions are ALWAYS negotiable, both up and down. You can negotiate any commission you want, but real estate agents work for money, just like you do, and it's natural they are going to work harder where they are getting paid more.

The other concern of brokers with For Sale By Owners (FSBOs) is that they won't actually pay up when the time comes, or that the seller will scheme behind the broker's back somehow to cut out the broker. This fear keeps some brokers away. I screen FSBOs with care before I bring my buyer, and I get an agreement with the owner in advance, and this keeps everyone very happy. No one can afford to work for free.

Estimates vary, but 75% to 90+% of apartments sold in Manhattan involve two brokers--one for the buyer, one for the seller. Whatever the exact numbers, the odds are high that your apartment will sell to someone who is accompanied by a broker, or who has used a broker to help in their search.

The other way brokers add value, that you may not appreciate yet but you might certainly later, is by keeping the buyer on the deal. Buyers are flighty and nervous these days, and who can blame them--we've all just lived through an incredible market shift. Taking care of buyers starts with screening the buyer to make sure they can afford your place, and then helping them all the way to closing.

As a buyer's broker I may provide supporting data about a wide variety of subjects when a buyer starts having concerns (aka cold feet); helping them find an attorney; working with their bank when the bank can't figure out how to obtain certain documents in NYC (I recently did exactly this); giving them the names of contractors to talk to; and often just being there for late-night phone calls.

When you say you plan to sell in the next month, what you mean of course is you plan to put your property on the market in the next month. Unless it's priced well below market rates, if you work hard at marketing you can expect to take 3 months to find a buyer, and another 2-3 months to actually close, because banks are taking 8 weeks in many cases to approve loans.

Feel free to contact me if I can be of service ~

Karla Harby
Charles Rutenberg Realty
kharby@crrnyc.com
0 votes
Mark, Home Buyer, New York, NY
Tue Sep 14, 2010
Kieth: Thank you for the statistics and link to the Trulia overview page for my zip code. I found your post very helpful overall...

I don't know if I agree that pricing a property slightly below market will get it to sell for more than market. This should work well in a sellers market, or a very attractive property, but I doubt people will get into a bidding war over most properties in this buyers market. I would appreciate if you could elaborate on this if you don't agree with me.

Ralph: What I call a buyers broker is perhaps not a buyers broker in the true sense. I think often brokers don't have formal contracts with their buyers (true buyers brokers might be more common in Manhattan) but rather find a serious buyer through contact from one of their own listings, and then find and show them properties that fit what they are looking for through contact with various listing agents. In these scenarios, the buyers broker still wants the buyer to pay as much as possible, because they share the commission. This will be true unless their compensation either isn't effected by the ultimate price, or effected favorably by a lower price.

Karla: Your point is well-taken. I think, however that in the cases you refer to with these high buyers broker commissions, the properties are brand-new, 1st class developments, where the developer is looking for top-dollar on a luxury property and so can afford to pay top-dollar to get all the sales power they can working on moving their properties. In my case, I don't think paying top-dollar will help get substantially more money, although I assume it will help sell the property quicker.... My property is a 2-family house in a working class neighborhood, with middle of the road finishes. It is not luxury.

I will seriously consider your suggestion to offer 3% instead of 2.5% buyers commission.. Do you really think this would make a substantial difference? For brokers who work in zip code 11385, what is the standard commission payouts nowadays for the larger companies like Coldwell Banker or ReMax, etc?

You are right to correct my word choice; I plan to put my property on the market within the next month. I don't expect it to actually sell so quickly. (but that would be a nice surprise!!)
0 votes
Ralph Windsc…, Agent, Hauppauge, NY
Tue Sep 14, 2010
Most of these sites also offer you the opportunity to sell the property on your own and pay absolutely no commission. However, this same ability may translate into fewer showings because many agents are afraid their buyers may try to make a deal behind their back and thus cut them out of their commission. Although you may not be the type of person that would do this, the perception is still out there. Probably more important, however, is how much does a good listing agent bring in terms of value for you. Dealing with which might be several different buyers' agents will put you at a disadvantage - buyers' agents work for the buyer, not you and their job is to get your property as cheaply as possible. At the end of the day, any perceived "savings" will probably end up costing you money if the house stays on the market longer than necessary and you end up with a much lower sales price had you hired a good listing agent. Does a lawyer go to court and represent themselves? No. Doctors also have their own doctors, right? Hire a good listing agent.
Ralph Windschuh
Certified Buyer Representative
Senior Real Estate Specialist
Associate Broker
Century 21 Princeton Properties
631-467-0009
rwindschuh@c21princetonproperties.com
In The Top 2% of Century 21 Agents Nationwide!
0 votes
Joann Corwin, Agent, Marshfield, MA
Mon Sep 13, 2010
The 4% you are referring to is that 50/50 spit between the listing agency and the buyer's agency? If so consider this...If you try to sell your own home, and you are willing to pay a flat fee to a MLS service, and you are willing to pay to advertise your home, you are willing to host open houses and pay for the signage. How much are you saving?

You are self employed and your schedule is flexible, but how flexible especially if you have children? I consider myself self employed I have 2 children and their schedule is not always flexible.

And you are right, most realtors have advertising contracts with local newspapers and many websites, they have their own signage, and hosting open houses is part of their job. A realtor the knows the current market , and a good one studies it every day. A realtor is constantly up to date on any new regulations (title 5, smoke detectors etc.) and the difference between 2.5% vs. 2% really does not matter when you are working with a buyer.

If you are still not sure whether or not you should list with an agent, meet with a few of them, get a couple of market analysis done. Good luck!
0 votes
Gina Storeho…, , Charlotte, NC
Mon Sep 13, 2010
Mark,

Consider this....are you really "saving" anything by selling your home on your own? The numbers are in and FSBO's sell for less money than those homes marketed by agents, and most do not sell or take very long to sell. Here's the link to the article showing the numbers...http://www.realtor.org/research/research/fsbofacts.

If you do list with a "limited service provider" to list your home in the MLS for a flat fee, be aware that many agents (not me, but I've seen it done often) will still be very hesitant to show your home. This is because they know that they will have to deal with a home owner vs. a professional Realtor. This can be time consuming and sometimes walking a fine line when you start asking us about the process and legal documents if we get into negotiations. Not to mention the points already made below including the possible risks you are taking by not knowing the legal requirements and your duty to disclose material facts to potential buyers.

Being a Realtor is not as easy as it seems to the general public. If everyone Could do it themselves, then everyone Would do it themselves......and we would be out of jobs!! Hire a professional to represent you. You will be happy you did once you see what is involved!

Gina Storeholder
704-299-5254
gstoreholder@cbunited.com
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Sep 13, 2010
Keep in mind that commissions are always negotiable between you and your agent--also do keep in mind that pricing and marketing that maximizes your exposure are paramount in today's market--and when it comes to selling by owner--your house is your home. Emotions are homebound---selling your house is a business transaction. In a business, a professional is able to best to protect your interests. A real estate professional is better at selling your house than you could be at selling your home-- A good agent closes deals, he/she will know all the ins and outs of buying and selling a home, can tell you things that may need attention before a potential buyer conducts an inspection, handles related paperwork, etc., whereas when it comes to by owner some mistakes happen--such as pricing errors, lack of negotiating skill-- one doesn't want to be perceived as desparate, pre-qualifying potential buyers--in today's market different lending practices exist, allowing strangers into your home, as you really have no idea who is entering, etc. To sell on your own, or not, is a decision only you can make--if you choose by owner, do work closely with an attorney who specializes in real estate from the very beginning and avoid potential lawsuits later.
0 votes
Eduardo Saav…, , Anaheim, CA
Mon Sep 13, 2010
As a Realtor I would never advice anyone that is not licensed to sell their own property. It isn't because Realtors are going to miss out on the commission. There are many, many documents that have to be properly executed as well as disclosures that have to be filed. You have to beware getting sued for naything that goes wrong. Is this worth 1.5% commission you are "saving"? A Realtor is a professional individual just like a dentist or a doctor that merits the money he/she makes by applying their expertise gained through licensing and taken courses to excell in the field. And yes I would never take a listing or bring a buyer if I'm not making what I'm worth.
0 votes
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