So you want to save the commission?

By
Real Estate Agent with Keller Williams Realty Acadiana

One comment we often hear as real estate professionals is "I'm selling my home myself to save the commission." That is fine so long as you don't think that your potential buyers don't know that.

In fact, did you know that there are only 4 kinds of buyers out there? That's right, 4. And they are either working with a Realtor or they, too, will want to save the commission. If you have a "For Sale By Owner" sign in your yard, everyone knows that you are not paying a commission to a professional.Home for sale

1. First time home buyers: They are the most likely to seek the help of a professional because they do not know all the ins and outs of the home buying process. Even if they come across your home and like it, they will want their agent involved. Being open to working with a buyer's agent and paying at least some commission might help you get your home sold.

2. Relocating buyer: They, too, usually work with a real estate agent because they are not in town, yet. Again, if you are willing to pay a buyer's agent commission, you may be able to work with one of these buyers and sell your home, that is, if you are available to show it when this buyer is in town house shopping. If not, they might just buy your neighbor's house because it's listed and on a lockbox and they were actually able to view it.

3. Moving up (or moving down) buyers: They tend to feel more confident about the process because they have been there before. However, if they choose to work on their own, they'll negotiate you down on your price to save some of the commission themselves. Since 2 out of 3 FSBO that go under contract do not close when no Realtor is involved, it might not matter if you split the would-have-been commission with this buyer. The question is: can you get them to the closing table?

4. Investors: Probably the most savvy buyer out there and you can bet that they will not pay you a commission to work the sale of your home for you. Unless you are an investor yourself and you've sold many homes in the past, this buyer knows more about the process than you do and he/she knows that they will have to do all the work. And, unless you are an awesome negotiator, you will not save money if your buyer is an investor. Not a penny.

There you have it! These are the only 4 kinds of buyers out there, no more, no less.

Here's another way to look at it: appraisers do not care about the commission. Your house is worth what it is worth, whether or not there is a commission involved. For example, if you live in a neighborhood where homes of similar age and sizes sell for 150K, then your home is worth 150K.

With a 6% listing commission, you would have to pay 9K in commission, usually split between the listing and the selling brokers (if two agents are involved). If you sell on your own, you are not going to save the full 9K. Buyers will want to split those savings with you and might only offer you 145K for your home. If this is acceptable to you, all is good, but your savings are now down to 4K. If you calculate 2 or 3 months extra on the market (and 2-3 months of extra house payments), the advertising and signs costs, and the time involved in showing your home numerous times to buyers who may or may not qualify to buy it, is it really worth the aggravation? Besides, getting an offer/contract on your home is the easy part. Do you know what to do if you ever get that far?

I know what my time is worth, do you?

logo LaRealEstateDoctor.com

Posted by

 

 

close

Re-Blogged 18 times:

Re-Blogged By Re-Blogged At
  1. Jennifer Prestwich 09/22/2009 08:10 AM
  2. Lina Robertson Jones 09/22/2009 08:39 AM
  3. Margaret Goss 09/22/2009 11:28 AM
  4. Jeremy Williams 09/22/2009 11:29 AM
  5. Tim Ludemann 09/22/2009 11:29 AM
  6. Ralph Gorgoglione 09/22/2009 12:46 PM
  7. Patti Lawton 09/22/2009 02:51 PM
  8. Patty Mortara REALTOR, ABR, CRS | Hunterdon County (NJ) 09/22/2009 03:36 PM
  9. Svetlana Stolyarova 09/22/2009 07:19 PM
  10. Mike Montague 09/24/2009 11:26 AM
  11. Michelle Gibson 10/06/2009 03:55 PM
  12. Charles Stallions 10/14/2009 08:41 PM
  13. Barbara Martino-Sliva 10/24/2009 12:59 PM
  14. Bill Buettner 03/19/2010 09:17 AM
  15. Walter Espejo 03/19/2010 04:15 PM
  16. Denise Dutson 03/21/2010 07:22 PM
  17. Sybil Campbell 03/24/2010 07:55 AM
  18. Jon Sigler 03/24/2010 08:49 AM
Topic:
Home Selling
Location:
Louisiana Lafayette Parish Lafayette
Tags:
fsbo saving the commission
4 kinds of home buyers

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Anonymous
Brenda Henley

I agree with everything you have said.  This is my second year in Real Estate and I have been focusing primarily on FSBO and expireds.  Many sellers believe that all we do is drive people around and show them homes.  Once they encounter the pitfalls of trying to do it all themselves they don't see  commission as an issue.  I am challenged daily on commissions and do not have any difficulty defending my worth.  I feel like I earn it on every deal.

Sep 26, 2009 02:29 PM #90
Rainer
132,548
Michelle Molinari
FEATURE THIS... Real Estate Staging & Interior Decor - Lafayette, LA
Feature This Real, Estate Staging & Curb Appeal Concepts

Chantal -

Superb post - the best and most concise arguement I have every heard on why not to go FSBO!

We should do lunch sometime...

~Michelle

Sep 30, 2009 03:05 AM #91
Rainer
77,643
Latonia Parks
Top Bragg Realty, Fayetteville NC, Home of the 82d ABN DIV - Fayetteville, NC
Military Relocation Expert

Amen!! I was actually working with a buyer who wanted to see a particular house.  The FSBO owner told me she is selling the home herself after I made several attempts to contact her.  FSBOs should reconsider their stand when there is a "bird in the hand" of a professional.  We are already the one who will ensure all goes well to get to the closing table.  Great post....

Oct 21, 2009 07:24 PM #92
Rainer
59,530
Dennis Puckett
Adams,Cameron & Co. - Deland, FL

Wonderful post. So many time the FSBO just can't see past the idea that they are saving something. If only they knew what's involved, they might realize that in the long run it could cost them much more than the commission would be.

Oct 22, 2009 08:43 AM #93
Anonymous
Laura Coffey

Great Post, Love the break down!

Mar 19, 2010 08:54 AM #94
Rainer
60,440
Bill Buettner
Keller Williams Greater Columbus - New Albany, OH
Your Real Estate Connection

What a great post! Too many FSBOs think they are ahead of the game, but in reality, the game is usually turned back around on them. Ultimately, they don't save as much as they think.

Mar 19, 2010 09:16 AM #95
Rainmaker
133,692
Aaron Silverman
Bluewater Property Management, LLC and Lowcountry Turnkey Properties, LLC - Charleston, SC
Improving the Real Estate Experience through Educa

Great article. Many Realtors vent about people disagreeing with their commissions, and you justified it.  Well written.  Blogging is designed to present your knowledge to potential customers and colleagues, and you accomplished that.

Mar 19, 2010 09:56 AM #96
Ambassador
1,107,383
Karen Fiddler, Broker/Realtor
HOM Sotheby's Intl Realty, 949-510-2395 - Laguna Beach, CA
Laguna Beach & Lake Arrowhead, CA (949)510-2395

I pay a gardener, a house keeper, a mechanic, a house painter, a restaurant, a hotel...

I could pull my own weeds, clean my own house, change my own oil, paint my own baseboards, cook my own food and camp on vacation....

Yikes

Mar 19, 2010 10:40 AM #97
Ambassador
643,395
Doug Rogers
Bayou Properties Realty - Pineville, LA
Your Pineville Louisiana Agent

I Chantal,

  I went to high school in Lafayette (Comeaux). My mother in law, Diana Hebert, is a Realtor in your area.

 So true about the four types of buyers. Off hand I can't recall, but Dirk Zeller or Gary Keller us the same classification system.

One day I would LOVE to return to Lafayette. Go eat at Riverside for me!

Mar 19, 2010 10:50 AM #98
Rainmaker
1,286,270
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Well put.  I did a post a long time ago that FSBO is like putting Walmart up on your lawn, everyone showing up is looking for a discount.  It does not pay.

Mar 19, 2010 11:11 AM #99
Ambassador
654,560
Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Real Estate Pro

I love Gene's comment above about the FSBO sign being like a Walmart sign attracting everyone looking for a discount.  EVERY buyer shopping FSBOs is expecting that they will be the ones to recieve the benefit of no commission, not the seller.  And in most cases, they succeed.

Mar 19, 2010 11:21 AM #100
Rainmaker
212,755
Judy Orr
HomeSmart Realty Group - Orland Park, IL
SW & Near West Chicago suburbs

I always market to FSBO's but I have to say there aren't too many in this market.  Great article!

Mar 19, 2010 11:30 AM #101
Rainmaker
333,353
Ty Lacroix
Envelope Real Estate Brokerage Inc - London, ON

Who wrote 'Only A Fool Represents himself"?

Ty

Mar 19, 2010 02:48 PM #102
Rainmaker
683,647
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
This is soooo true. There aren't that many FSBO's out there that stay that way for long. This is just not the market for it. Often they get a dose of how expensive it really is to market a home - not to mention how much WORK. Then they list.
Mar 19, 2010 03:49 PM #103
Rainer
11,957
Walter Espejo
Weichert Realtors - The Andrews Group - Nashville, TN
Bellevue TN Homes for Sale

This is such an excellent post. Love the different buyer group breakdown and insight on what/how FSBOs think. This will be bookmarked and reblogged.

Mar 19, 2010 04:12 PM #104
Rainer
11,957
Walter Espejo
Weichert Realtors - The Andrews Group - Nashville, TN
Bellevue TN Homes for Sale

This is such an excellent post. Love the different buyer group breakdown and insight on what/how FSBOs think. This will be bookmarked and reblogged.

Mar 19, 2010 04:12 PM #105
Rainer
160,090
Megan Izdebska & Hanna Manoufar Chandler, Scottsdale Real Estate Agent
United Brokers Group - Chandler, AZ

I have never grouped Buyers the way you did. From now on I would classify them right away to have better understanding of their approach. Very good post.

Mar 19, 2010 11:30 PM #106
Rainmaker
206,142
Dr. Chantal Saucier
Keller Williams Realty Acadiana - Lafayette, LA
Realtor/Career Consultant - Keller Williams Realty

Doug: There is a script going around at Keller Williams about 4 types of buyers. It is a little different as one of their categories is "looky loues" or window shoppers that are not really in the market to buy anything.

Gene: I, too, like the Walmart comparison. So true.

Thanks all for the great comments. Glad you enjoyed the post!

Mar 20, 2010 01:59 PM #107
Anonymous
Jessica4u

This is an excellent to gorup the buyer. But with saving your commission you will lose your earning.

 

 <a href="http://www.accountpro.com/Products/11037-accountpro-sales-commission-platinum-software-module.aspx">Accountpro Sales Commission Platinum Software Module</a>

 

 

Mar 27, 2010 01:12 PM #108
Rainmaker
264,568
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

I like your approach and your reasoning. Many FSBO's in our area are trying to save money to avoid a short sale. Good Luck!

Apr 18, 2010 11:42 PM #109
Post a Comment
Spam prevention
Show All Comments
Rainmaker
206,142

Dr. Chantal Saucier

Realtor/Career Consultant - Keller Williams Realty
Ask me a question
*
*
*
Spam prevention

Additional Information