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:

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 - Productivity Coach 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
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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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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
202,399
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.

 

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March 27, 2010 01:12 PM
Rainmaker
260,268
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
Anonymous
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Rainmaker
202,399

Dr. Chantal Saucier

Realtor/Career Consultant - Keller Williams Realty
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Helping buyers and sellers reach their real estate goals in Lafayette and Acadiana area of Louisiana.