For Sale By Owner?

By
Services for Real Estate Pros with Whitecomb.com, LLC

With the new year amongst us, it means a salary increase for many of the people I work with at my company. With that, some of them are looking to upgrade to a new home this spring and are just starting the leg work in getting pre-approved to determine what they can afford. 

This morning a co-worker of mine (who spoke to me in the Fall about selling his townhome in the city (Chicago)) asked me if I knew anything about selling a home by owner. I told him that I have never sold a home this way (or bought one for that matter) but was intrigued as to how the process worked. (Why he asked me about this, I have no idea, maybe because I've bought and sold a home before..I dont know...).

So, I basically told him that if it were me, I would consult with a realtor to handle the transaction taking into mind that he is new to the selling process (from a home owners end) and its a tougher market these days (not to mention other factors). Thus, he began his research on selling by owner and scoured the internet for resources and made a few phone calls (while he should have been working on a custom web application that needs to be rolled out ASAP..)

Of course, he went to buyowner.com and someone contacted him shortly. He was pitched, and soon thought the idea was the greatest thing since sliced bread. Having a been involved with selling and buying a home, I began to give him a little caution before he just "jumped" into the idea (once again, Im not a realtor..). 

His first response was, "Well, you dont pay commission on the sale of your home...that could be approximately 5 percent of the sale price...thus, I get more revenue..all I have to do is show the house."  (I think he's spotted the increase of these commercials in the Chicagoland area on TV..)

My response was, "Well, in so many words, thats somewhat true; however, do you want to be dealing with handling showings, dialogue with clients, the possibility of clients just browsing and not pre-approved, marketing that needs to be done, doing the comps and getting the right price set, and the eventual negotiation and sale processes, etc.?"

Being excited, he was still on the "for sale by owner" train and wanted to get started right away. I just told him that if it were my home, I would contact a few realtors (referrals, agents in the area, research, etc.) and interview them before making such a committment. This way, you'll see both sides and be able to draw your own conclusions, but at least you'll be more informed. I also told him, from what I heard, that a lot of home sellers eventually obtain a realtor as the for sale by owner process goes bust and thus time and money are wasted. Not to mention the experience a realtor has in identifying what needs to be completed before the house goes on the market so no time is wasted (staging, etc.).

So to my questions, as I know nothing about this...

  • What are realtors feelings about sellers that sell by owner? Obviously, and I am assuming, realtors probably dislike this as it takes them out of the process, but is it a good option, in some cases, for sellers to consider?
  • Will realtors show a home to clients that are buying if it is for sale by owner? If not, will they show it if the seller offers an appropriate commission to the buying agent?
  • What actually differs in the process in terms of selling by owner vs using a realtor (I'm simply asking..)? Does the process go the same regarding showings (besides the seller handling the calls and scheduling)? How does the process work once a bid is submitted (I assume its seller vs. buyer?)?
  • By using for sale by owner websites, does the home still get listed on the MLS system or is that an added fee? Basically, is the home seller betting on the fact that buyers will directly contact them or do realtors still consider a home for sale by owner as a regular listing?
  • How does the closing aspect work once a bid is put in? Do the buyer and sellers need to work out the details (title, etc.) or do the attorney's still handle all that? 

Just trying to get realtors thoughts on this... 

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Rainer
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Cindy Lin
Staged4more Home Staging & Redesigns // EcoJoe - South San Francisco, CA

i would recommend your friend have a few stagers come over to see if he needs staging (it's definitely not waste of time, it will help to move the listing off market sooner in any market and possibly for more money).

 realtors generally dislike FSBOs and they usually would want to convert homesellers into listing the home. home selling is very tedious and there are LOTS of paperwork, at least in California. there are a lot of liability issues involved. if your friend is still on the FSBO track, i would certainly recommend to offer an attractive commission % for the buyer's agent to increase the possibility that it will get shown to prospective buyers. one of the the advantage of selling through a realtor is the marketing. realtors can increase the exposure tremendously by listing your home on MLS and market it actively in the community through ads, etc. their main job is to ensure your deal goes through. having a buyer just started the battle. there are a lot of factors that can cause the deal to fall apart. if he is set on FSBO, maybe consider to hire a transaction coordinator, etc. just to make sure he has the right paperwork.

sometimes it may be just worth the upcharge to not deal with hairy issues like clients bargaining, different vendors like appraisers, stagers, etc. it will make home selling a much less stressful situation.

good luck!

cheers,

cindy

i love staging and all things staging!

i stage to sell, live & work in san francisco bay area

www.staged4more.com

http://stagingtipsandmore.com 

 

Jan 10, 2007 05:48 PM #1
Rainer
5,664
D. Comber
Whitecomb.com, LLC - Chicago, IL
Whitecomb Dot Com

Thanks Cindy for your comment...It appears that home staging is becoming a crucial aspect in the selling process of a home (if it hasn't already). Its amazing what home stagers do in getting a home ready to sell and letting sellers know what areas are of concern from an arbitrary point-of-view.

I indicated to my co-worker that it would probably be in his best interest to obtain a realtor (as this is his first time selling), but if he still opted to sell by owner, he should at least offer a commission to the buyer's agent so the house doesn't get lost in the shuffle or not shown at all. I think selling by owner is an interesting option, in terms of saving money as a seller, but then again (and as you mention) there are a lot of a intangibles involved that realtors deal with in order to get the deal done. It does seem that a lot of sellers that opt for selling by owner eventually acquire an agent to sell the house at some point.

From a marketing aspect, it seems like a some realtors (im not saying all) put the listing on MLS, put an info box out front with the listing and it the listing to their own website. I've also seen a few listings have their own dedicated website address as well. Technically, couldn't a home seller do this on their own? They could pay to have the listing put on MLS, print out the MLS listing and put it out front of their property, etc. Obviously, the negative here is that the listing wouldn't "make its way" through a realtor office and via other realtors with clients per past contacts, etc. Of course, a homeowner does have to make such a committment to develop their own marketing strategy and materials, but then again, some people can be creative with this. I think in the end, the money saved breaks even by the amount of time a seller would dedicate in doing all the necessary tasks.

It does seem that a lot of advertising has been done by for sale by owner companies lately (at least in the Chicago area). I wonder if its due to the new year and done to attract those contemplating selling their home by giving another option or a sign that the market is changing and an increase of homeowners opting to sell by owner.

Jan 10, 2007 11:06 PM #2
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D. Comber

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