Selling Your Home On Your Own

Ray Martin With Advice On Going It Alone, Without Real Estate Agent

(CBS)  Many people selling their homes in this very trying market are doing it solo -- without the aid of a real estate broker or agent -- so they don't have to pay the commissions such providers get -- typically six percent of the sale price. Agents contend you'll get more money for your home and sell it more quickly if you use them. But, explains Early Show money maven Ray Martin in the column below, if you choose the "FSBO" route -- there are several strategies you could use to up your chances of being successful.

As the housing market downturn continues, one thing is clear: Folks are having a tough time selling their homes. And if that isn't enough to concern home sellers, here's another: the commission you'll have to fork over to real estate broker.

Paying six percent of the selling price to a broker can often mean the difference between breaking even on the sale or having to dip into your savings. With the median home price at about $215,000, paying a typical six percent commission to a realtor can amount to almost $13,000. If you sell your house for what you owe on your mortgage, you'll have to dip into your savings just to pay the realtor.

Some sellers look at the issue this way: Paying a commission to a listing agent is money paid to a person who does nothing more than put your home on the Multiple Listing Service. When another agent sells your home, the listing agent collects half of the commission. Others say listing a house with an agent can provide marketing advice and save time and the hassle of arranging showings, all of which is worth the commission paid to the agent.

For these reasons, For Sale By Owner, aka FSBO, pronounced “fizbo,” without the help of an agent, is an option that seems to be gaining the attention of more home sellers.

It can be a good strategy when your home is in a desirable area, at a price that is affordable to a lot of potential buyers, where a home like yours is in short supply.

There are conflicting numbers on how many homeowners are selling their homes themselves, but industry reports suggest as many as a quarter of home sellers try to do it solo. The average number of days on the market for FSBO sellers is about 114, and about 12 percent actually close, fetching about 96 percent of their asking price.

If you are considering selling your home yourself, it's wise to consider this advice:

Think Like a Buyer: It's important to keep abreast of the trends and what is working to sell a house. The National Association of Realtors Profile of Home Buyers and Sellers can be of some help to home sellers.

In order to successfully sell a home, you'll need to think like a buyer. A report from the National Association of Realtors helps with these insights:

Most buyers use the Internet to search for a home. Such use has risen dramatically over the past few years and now, over 77 percent of buyers report doing so.

Buyers first learned about the home they bought from three main sources: 36 percent from a buyer's real estate agent, 24 percent from an Internet search, and 15 percent from yard signs.

A typical buyer visited nine homes, conducted their search for eight weeks, and bought a home an average of 12 miles from their previous residence.

The take-away from this is that it is critical to your selling success to get your home listed on the Internet and to attract the attention of a large number of real estate agents in your local area.

There are many services where you can, without using a traditional real estate broker, get your house listed on your local area Multiple Listing Service, thus avoiding paying a commission to a listing broker. In doing so, you can still offer to pay a three percent commission to a selling agent, thus creating an incentive to show and sell your home.

But, while every home seller should try to save on real estate broker commissions, being your own real estate broker is not for everyone. There are some things you will need to pay careful attention to:

Set the Right Price: After getting a listing on the MLS, this continues to be the single most important factor in successfully selling a house. The housing market is constantly changing, and you really need to have a good feel for the market and good information in order to set the right price to sell your home. Not only is a home the biggest purchase most people make, it's also the biggest asset people have to sell, and setting the wrong price can cost you real money. You don't want to leave money on the table by setting a price that's too low, and you don't want to scare buyers away by asking too much.

But here is another thing to think about: A successful pricing strategy in a buyers' market is much different than in a sellers' market. In the latter, you would typically set the price for as much as you can get. But in a buyers' market, where competition for a limited number of buyers is fierce and the supply of homes is high, sellers are advised to research the market and set the price at the low end of their competition. Pricing at the lower price point of comparable homes will ensure that your house will get the attention of bargain-hunting buyers.

When setting the listing price for your house, use round numbers, in increments of $5,000. According to industry professionals, buyers who use the Internet typically will search in increments of $5,000. So a listing at a price of $250,000 will turn up in more searches for homes priced at $200,000 to $250,000 and $250,000 to $300,000.

Get the Word Out: Putting a "For Sale" sign on your lawn is probably not going to sell your house. To know why, just think like a buyer. Most buyers don't have time to drive around neighborhoods, searching for signs. The fact is that most buyers will begin their search either on the Internet or by asking a realtor to search the listing services of the local market for them. When a home is “listed” with a broker, they place information about the house in the area's Multiple Listing Service (MLS). That alerts all real estate agents in the area that your home is for sale. The MLS also makes it easy for other realtors with access to the MLS to search for a home by location and price range, and if yours fits their search criteria, they will show it to potential buyers.

Consider All Offers: Selling a home is one of the most emotional transactions you'll ever make, second only to buying one. Mixing emotion and a large financial transaction is never a good thing. If a buyer comes through the door and immediately points out your home's flaws instead of the beautifully restored floors or newly painted walls, it's likely to hurt your feelings. You may be tempted to turn down this buyer's offer, even if it's for a fair price. This is where a realtor can help, by showing a home and selling its features to would-be buyers and keeping the colorful comments out of the report back to the seller. To the realtor, it's not a home, it a deal, and a deal they want to get done so they can get paid!

Despite these pitfalls, I'm not trying to steer people away from selling their homes themselves. You need to be aware of the pitfalls and, if you think you can tackle them, give it a try, particularly if your home is of the price, size and location that is in demand or in short supply in your locale. Remember, you can try the FSBO route for a set amount of time, and if you're not successful, you can turn to a broker. Some sellers even report that they first unsuccessfully listed their home with a local real estate broker, only to re-list using FSBO and sell successfully later, saving money in the process.

If nothing else, use the knowledge that you “could” be your own broker to NEGOTIATE a lower commission with a broker. That storied six- percent is a result of tradition, and nowhere does it say that you HAVE to pay real estate brokers a six-percent commission.

FSBO Alternatives

There's no question that there are a lot of services targeted to sellers looking to go FSBO. If you are looking for an alternative to a traditional six-percent real estate agent, some of the options that are becoming popular include:

• Flat-Fee Brokers: These are companies such as Help-U-Sell and Assist-2-Sell. Both are franchises that offer to connect you with the offices of local licensed real estate agents who subscribe to their low-cost realtor business model. You agree to show your home yourself, they perform all other duties of a traditional broker, such as advertising, marketing, helping with contracts, and even arranging inspections. The best part: You pay them one flat fee that varies based on home's value, location, etc. If you pay them a little more, the realtors from these companies will show your house, too. They can also list you home on the local MLS, but if they do, and another brokers brings you a buyer, you'll have to pay that broker their commission of 2.5 to 3 percent.

• For Sale By Owner: Other companies, such as FSBO.com and ForSaleByOwner.com, offer home sellers a variety of marketing options at different pricepoints. You can choose to have your home listed on the companies' Web sites; you can pay more and have yard signs and color brochures designed for your home, and pay even more and have a virtual tour included in your home's listing. Each company is different and offers different listing packages, which can include listing your house on the local MLS -- the same place a real estate agent would list your home. Again, there's the catch: If a buyer is brought to your home by an agent who saw the listing on MLS, you DO have to pay that broker's half of the traditional commission, which is two to three percent.

• Negotiate Brokers Commission: There is no law stating that you have to pay a six-percent commission. As a matter of fact, commissions now average a bit over five percent, according to a survey by Real Trends publishers. If your home is an above average-priced home in a market where homes like yours are in short supply, you should have a serious conversation about a reduced commission with any prospective broker who asks to list your home. If you list your house with a real estate broker, they will charge you a five-to six percentage point commission when your house sells, even if all they do is list your home. But if you list your house on the MLS using one of the services above and a real estate agent brings you a buyer, you will only pay the commission charged by the buyer's agent, which is typically half the amount charged by a listing real estate broker. Use this point and your knowledge of how your house compares to the supply on the local market to drive your negotiation for a lower commission.

[alberthepp]

I couldn''t agree with the importance of the MLS when you are selling. As a flat fee MLS Broker, I have seen seller after seller walk out of closing with checks that are $8,000 higher on average, and it is not uncommon for sellers to save two to three times that amount.

The internet has only strengthened the Realtors MLS, and Flat Fee MLS Listings are a great way for sellers to save money and sell by using the MLS.

Thanks.

Albert Hepp
BuySelf Realty, Inc.
My blog: http://FlatFeeCoach.com
http://FlatFeeMLSListing.com

[alberthepp]

I couldn''t agree with the importance of the MLS when you are selling. As a flat fee MLS Broker, I have seen seller after seller walk out of closing with checks that are $8,000 higher on average, and it is not uncommon for sellers to save two to three times that amount.

The internet has only strengthened the Realtors MLS, and Flat Fee MLS Listings are a great way for sellers to save money and sell by using the MLS.

Thanks.

Albert Hepp
BuySelf Realty, Inc.
My blog: http://FlatFeeCoach.com
http://FlatFeeMLSListing.com

[cj78415]

I forgot to add that mls4owners.com (it cost you about 800.00 but you get listed on all the mls lists in your area. People can find your house easily on the internet..!

[cj78415]

I sold my home "FSBO" I paid the 800.00 to list it on the MLS4owner.com I had my home inspected before selling, so I knew what I was up against. The buyer can take your inspection...or get their own as long as has been done within 3 months. The buyer picked their own mortgage company, and I picked the title company. It''s sold... It really wasn''t that difficult to do. Since the mortgage lenders and title company do the majority of the work... don''t forget that the Title company usually gets 3% of the sale. Real estate gets 6% if you use them. Thats a total of 9%. Sell the house yourself... Clean it up make it look nice and not cluttered...!

[lovesamerica]

I do not have the confidence to sell my home myself and I am in a pickle.20yrs ago my husband and I bought a farm house with 5 acres of land. We put in a large barn,new deck and a pond. When my husband left I kept the home for the kids to be able to stay in their school and home. Now for 10 yrs I have sided the house,17,000, new fireplace,chimney liners,roofs ect... I am being told that I cannot even get much more than We paid for it 20yrs ago. I have had to refinance over the years to pay for repairs as I am doing it on my own. I work 5 jobs in order to keep it and my animals. Now my job is threatened and no one is looking at my home. I am skrewed.I drive an old car, do not have a cell phone,boat,ipod,or new clothes either. the taxes are killing me, my interest on my mortgage is 5% fixed,my taxes double my monthly payment.

[byownerpros]

"I don''t know where ByOwnerPros took his/her real estate classes, but the ones I took covered all this and more."

To answer your question: Indiana. I''d sure like know what state taught you about exposure, negotiation, achieving a higher sales price, reducing liability, lending, appraising, inspections and safety issues in as little as 9 whole days! Amazing! (I took the 11 week course both times.)

Certified appraisers need 2 full years of training alone! We were however taught all about the outdated "Meets & Bounds" method of recording land parcels using trees and stones! (No longer used here in Indiana)

As far as any agent claiming that reducing liability is part of what they do, they are either misinformed or lying. Agents names are NEVER on the purchase agreement. In fact, agents do not "write" purchase agreements, they simply fill in the blanks of an attorney prepared version. Agents aren''t even allowed to give legal advice! Which means there is NO liability shift by paying an agent to fill in the blanks of an attorney prepared contract. Even if the buyer or seller sues an agent for errors or omissions, the money may help the situation, but the actual liability is still with the buyer or seller who signed the purchase agreement.

[displeased]

Go ahead an list your house. With 87 foreclosures all around it on the same block, see how much you get for it.
Posted by DeckardBR

It all depends on timing. When I sold my home, it was a sellers market. Now, things would be more complicated, although the housing market in my area is better than most of the rest of the country.

[newmark3]

YOU can sell you house on your OWN, either hire a real estate attorney or hire an open agent to do the paper work, with a flat fee. I agree I sold 2 homes on my own, I listed my house with Mr. LISTER.com and he listed them on the MLS listing and put his sign in my yard each time. I only paid one agent, the one who bought the actual buyer a 3% commission. So My only advice is that you hire someone and pay them the flat fee you will save Thousands of dollars.

[mountainzen]

Oh, a good tool to find market values of houses is Zillow:

http://www.zillow.com/?kwg=zilo.com

You can do that without a Realtor.

[mountainzen]

I was looking for a new house for around three years. The Realtor had other clients looking for more expensive houses, so I was a low priority. The few listings he showed me were terrible, and put a lot of pressure on me to buy on the spot. I also noticed that his company was the selling agent as well on these properties. The experience left me a very uneasy feeling, and I didn''t trust the Realtor after a while.

I''m sure there are honest Realtors out there, but the angry post from Realtors on this article remind me of the "High Pressure Sell" tactics the Realtor I was using employed ("This will be gone by tomorrow, you''ll never get another value like this, You''re making a mistake..." etc.

I checked a couple of "FSBO" houses, and the sellers had overestimated the houses value, like the article warns against. Finally, I found a house, "FSBO," that was perfect for me at a very good price. (I found it by riding my bike around the areas I was looking for a home and looking for "For Sale" signs, as well as looking at listings on the internet (Craigslist))

You really only need a lawyer if you''re selling, a lawyer, an inspector, and a mortgage broker if you''re buying. Oh, yeah, CLEAN, FIX UP, AND PAINT the house first! Thats one of the things a Realtor will tell you will help you get the best price.

[hlrealtor]

I don''t know where ByOwnerPros took his/her real estate classes, but the ones I took covered all this and more. Even more detail was given in my Broker Licensing class. Advising sellers to get market info before trying to sell on their own is wise advice - but where are they going to get that? As a Realtor, I have that info at my fingertips. A Realtor is a professional, and earns their commission. Commissions are negotiable, not written in stone. Remember, the person who represents himself in a legal matter has a fool for a client.

[jadedone23]

I''ve sold two homes on my own, and had no problems whatsoever. It''s not a quick process, but if you have the time, I highly recommend giving it a try.

[displeased]

I had no problem selling my first home on my own. The appraisal, advertising, home inspection, and the closing all went well. I won''t hesitate to FSBO again.

[byownerpros]

I applaud Ray Martin and CBS for running this article. Despite the comments left by "professional agents" this story is articulated very well and I found it to be dead on. As a real estate broker who publishes a For Sale By Owner Magazine, I can verify the article as written to be correct. The agents who have left remarks indicating you need to hire an agent for superior exposure, negotiation, achieving a higher sales prices, reducing liability, lending, appraising, inspections and even safety issues are just plain mistaken. Having gone through both agent and broker licensing classes, I can share with you exactly how much is taught about each of those subjects in class: ZERO. Furthermore, agents should not be confused with appraisers, lawyers, mortgage professionals, inspectors, or title agents. These are all very different professions who will all work with the for sale by owner seller as easily as with an agent. None of whom will be paid for their services if the home does not close! So they all have a vested interest in helping the for sale by owner seller as much as possible so they all get paid. Of all the professional companies who are involved in day-to-day home transactions, it is ONLY the agents who complain about the for sale by owner seller. And quite simply that is because they are the only expendable piece of the pie.

[kimmook]

Your profession is not the high and mightly only choice:
1st - yes, you can get all of the exposure needed without an agent. The internet, newspaper, flyers, word of mouth, etc.
2nd - knowing how to price it is the reason you can get the most value, not just by using an agent.
3rd - You must be joking - how is an agent letting strangers in to my home any different than myself letting strangers in? Either way there is always a safety issue.
4th - Just because you sell it yourself does not mean you won''t go through all of the proper legal channels. You don''t need an agent to help with the inspections, paperwork, etc. You can hire a real estate lawyer for a flat fee(much, much less than a commision %) who will cover all of that.

[tmeadlock]

I was appalled and stunned by this story. On national TV you are encouraging the public to take risks with the most important and expensive purchase or sell in their lives. What about the negotiations, home inspections, contracts and other liabilities that are involved in the transaction? Who is taking responsibility for the seller and the future repercussions from failure to disclose pertainate information? Realtors are trained in all areas of the transaction and are insured against these items. Realtors spend millions of dollars each year to market their listings. The homes are measured for accuracy and for the protection of the buyer. Photos are taken, brochures printed, ads written, and buyers are screened. The Realtor handles the showings and the inconvenient calls late at night and on weekends. For Sell by Owner websites do not give the exposure that our Multiple Listing sites give. The MLS sends the home to thousands of realtors, the people that represent the buyers! Plus it is made available for the public to view on the internet. Why do you think a Realtor does nothing for their fee? Would you tell your doctor or your mechanic that you could do a better job? How many Realty Franchises advertise with your company? Let me know when you run the story telling the public to doctor themselves at home. I want to hear the reasoning behind that.

[adillon70]

In this market, price seems to be a very serious consideration. With the downturn of the market, your house probably can''t be sold at a price that is high enough to include a 6 or 7% commission for a realtor. When homes were in the mid to lower $100,000 range, a 6% commission was $6000 or a bit more. Now that we have so many homes that are $300,000 and up, that is over $18,000, which most people cannot afford. The buyer knows full well that the price is inflated to include a commission. I listed my house with several agents for over 2 years before I woke up. Each agent that called had the same line "Are you familiar with the way I work?" Finally I said "Yes, you talk me into listing with you and hope somebody else sells it so you can get a hefty commission without much effort." If you go with FSBO or Assist to Sell, be aware that a large percentage of your calls will be from agents only interested in listing your property for a potential commission. Unfortunately, these days many agents are using the same old marketing methods and expecting the same old results as in the past...and it just doesn''t fly in this supressed market.

[preadave]

I am getting sick of these 1 sided stories involving my proffession.
1st, you highly recomend use of the internet. NO single homeowner can possibly get the exposure the that we as Realtors can unless they have millions to spend on advertising.
2nd, it has been proven time and time again, Realtors get the highest value for homes. The company I work for gets higher than all name brands.
3rd is saftey. FSBO''s have no idea who they are letting in their home, so think about your saftey and your family''s before you put the $3 sign out front.
4th, why don''t these "experts" let the public know about the liabilty sellers have without having proper disclosures signed by both party''s? A closing does not exclude you from lawsuits. Not to mention, the lender, appraiser, lawyer, inspector and bank attorny''s all work for the buyer in a real estate transaction. So for a 6% commission, you get people on your side, that screen potential buyers that are allowed in your home, and a proffessonal works to get you the highest possible price.