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?

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Re-Bloggged 18 times:

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Topic:
Home Selling
Location:
Louisiana Lafayette Parish Lafayette
Tags:
fsbo saving the commission
4 kinds of home buyers

Comments 108 New Comment

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Anonymous #90
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.

September 26, 2009 02:29 PM
Rainer
132,548
Michelle Molinari
Feature This Real, Estate Staging & Curb Appeal Concepts
FEATURE THIS... Real Estate Staging & Interior Decor

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

September 30, 2009 03:05 AM
Rainer
77,641
Latonia Parks
Military Relocation Expert
Top Bragg Realty, Fayetteville NC, Home of the 82d ABN DIV

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....

October 21, 2009 07:24 PM
Rainer
59,430
Dennis Puckett
Adams,Cameron & Co.

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.

October 22, 2009 08:43 AM
Anonymous #94
Anonymous
Laura Coffey

Great Post, Love the break down!

March 19, 2010 08:54 AM
Rainer
60,290
Bill Buettner
Your Real Estate Connection
Keller Williams Greater Columbus

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.

March 19, 2010 09:16 AM
Rainmaker
127,815
Aaron Silverman
Improving the Real Estate Experience through Educa
Bluewater Property Management, LLC and Lowcountry Turnkey Properties, LLC

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.

March 19, 2010 09:56 AM
Rainmaker
997,506
Karen Fiddler, Broker/Realtor
Laguna Beach & Lake Arrowhead, CA (949)510-2395
HOM Sotheby's Intl Realty, 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

March 19, 2010 10:40 AM
Ambassador
625,691
Doug Rogers
Your Pineville Louisiana Agent
Bayou Properties Realty

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!

March 19, 2010 10:50 AM
Rainmaker
1,238,198
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

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.

March 19, 2010 11:11 AM
Ambassador
595,189
Janna Scharf
Coeur d'Alene Real Estate Pro
Keller Williams Realty Coeur d'Alene

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.

March 19, 2010 11:21 AM
Rainmaker
212,354
Judy Orr
SW & Near West Chicago suburbs
Classic Realty Group

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

March 19, 2010 11:30 AM
Rainmaker
333,351
Ty Lacroix
Envelope Real Estate Brokerage Inc

Who wrote 'Only A Fool Represents himself"?

Ty

March 19, 2010 02:48 PM
Rainmaker
680,225
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605
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.
March 19, 2010 03:49 PM
Rainer
11,857
Walter Espejo
Bellevue TN Homes for Sale
Weichert Realtors - The Andrews Group

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.

March 19, 2010 04:12 PM
Rainer
11,857
Walter Espejo
Bellevue TN Homes for Sale
Weichert Realtors - The Andrews Group

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.

March 19, 2010 04:12 PM
Rainer
159,990
Megan Izdebska & Hanna Manoufar Chandler, Scottsdale Real Estate Agent
United Brokers Group

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.

March 19, 2010 11:30 PM
Rainmaker
205,529
Dr. Chantal Saucier
Realtor/Career Consultant - Keller Williams Realty
Keller Williams Realty Acadiana

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!

March 20, 2010 01:59 PM
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>

 

 

March 27, 2010 01:12 PM
Rainmaker
261,430
Wayne B. Pruner
Tigard Oregon Homes for Sale, Realtor, GRI
Oregon First

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!

April 18, 2010 11:42 PM
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Rainmaker
205,529

Dr. Chantal Saucier

Realtor/Career Consultant - Keller Williams Realty
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