FSBO. That’s the acronym used for For Sale By Owner, the terms used to describe a home that is being sold by the homeowner without the services of a licensed real estate agent or broker. There are a few reasons homeowners attempt to sell their homes themselves. Sometimes they have a friend, relative or neighbor who successfully sold their own home, they have a relative in another state who is in the real estate business and is willing to give them advice, or they just don’t want (or can afford) to pay the “commission.”
I have been in the real estate industry since 2004, and I still hate the word “commission.” I prefer to refer to my compensation as a Professional Service Fee. Many homeowners feel that real estate agents simply put a sign in the yard, post some photos in the multiple listing service, and then let other agents come inconvenience the owners to show the house. I will agree, this type of service warrants a “commission”, not a Professional Service Fee. Often times the “savings” a homeowner thinks they are receiving is not actually savings at all. In fact, in many cases they are losing money.
When interviewing real estate agents, here are some things to remember.
- Buyers are smart bargain hunters. A buyer who is looking at your home knows that you are not paying a Professional Service Fee, and they know that standard industry rate. Most buyers will factor this in when they are making an offer on your house. If you are saving the money, they want to save it too.
- It’s simple economics—real estate brokers will get you a higher price. By attempting to sell your home on your own, you are exposing it to a limited pool of buyers. Real estate agents who are members of the local MLS, and state and National Association of Realtors have access or a much larger pool of buyers and network of professionals who are working with buyers ready to buy.
- Time. Would you rather be sitting at your open house, or shopping for furniture for your new home? I definitely miss my Saturdays and Sundays being free to enjoy the beach, but it takes a lot of time and commitment to sell a house!
- Safety. Do you normally open your door and invite strangers in? Buyers who are working with Realtors are more likely to be serious buyers who are vetted. As a Realtor, we are held to a strict code of ethics. Your Realtor will “set the rules” for any showings and other real estate professionals must follow them. This means you won’t risk strangers making you uncomfortable in your home, imposing when you aren’t ready, or worse, harming you. Unfortunately, the world is a scary place and we should all take extra precaution to make sure we are protected.
- Negotiating. A good real estate professional is a seasoned negotiator. As an expert in the market, we know how to get a seller the highest price possible for their home. It’s what we do every day!
- Marketing. A good real estate agent or broker will effectively market your home. Marketing costs money and the cost is generally absorbed by your Realtor.
- Enticement. Let’s face it, we all work for money. We may love our jobs, but would we really be able to do them for free? While a professional service fee may be 6–7%, most real estate agents offer half of that fee to other real estate agents or brokers to bring a qualified buyer and acceptable offer. That big check you thought we were skipping down the street just got cut in half. After we deduct the cost of marketing your home, calculate time spent showing your home, negotiating, handling inspections, and guiding the sale to closing, it really is fair compensation.
In most cases, a real estate agent or broker will not get paid until you have accepted an offer that is satisfactory to you, and the sale has successfully gone through closing. You know your bottom line, so when you are entertaining offers, keep that in mind.