Lets face it there is only one reason to sell your own home – to save money. The decision to sell your property by owner allows the homeowner a “potential” savings of 6% in real estate fees. The average home in USA last year was approximately $270,000 so the “potential” savings is over $16,000! Here’s the realty check – fewer then 14% actually realize that savings. The remaining 86% save somewhere between 3% and nothing – the majority save absolutely nothing. Why? The answer, in my opinion, is the ill fated “all or nothing attitude” of the typical For Sale by Owner. The single biggest challenge for a FSBO is effective marketing. Effective marketing costs money! Spend a little – Save a lot! If you could spend $500 and increase the odds of selling your home to 85% and still save a significant amount of money – would you consider it?
Most FSBO’s do buy a lawn sign – good decision – according to the National Association of Realtors, based on hundreds of thousands of annual sales, 14% of homebuyers saw the “For Sale” sign first – a very cost effective marketing tool considering you can buy one at LOWES for $10. So how do you reach the other 86% of your potential buyers? All too often FSBO’s live and die with the $10 sign. When the $10 sign fails, most list with a full service real estate agent and agree to pay them 6% of their asking price. Make sense? Not to me! The other common mistake of the unsold FSBO is to lower the asking price – the “it’s not selling – must be priced too high” mentality. Lowering your asking price is more accurately compensation for a lack of effective marketing. Real estate agents will tell you that FSBO’s typically sell for less then real estate listed properties. I believe that is a combination of two things, one the seller passing a portion of the real estate commission savings to the buyer to facilitate a faster sale and the all too common unnecessary price reduction. The analogy I often make is this – if you park a 2008 Corvette in your garage and put a price tag of $1000 on it and shut the door – guess what – it won’t sell – why? Because no one knows its there! You can go out to the garage after a month and lower the price to $500 – guess what – IT STILL ISN”T GOING TO SELL!
So what is the solution? Simple – Flat Fee MLS! What is Flat Fee MLS and how does it help you save money? Flat Fee MLS is a service provided by a licensed realtor that simply puts your property on the Multiple Listing Service (MLS) for a “Flat Fee” as opposed to the typical listing agent commission of 3%. A typical “full service” real estate service charges 6% – half of which (3%) goes to the listing agent – the other half (3%) goes to the Selling agent. With a Flat Fee MLS you eliminate the listing agent and their fee and only pay the selling agent if they sell your home – you still have the option to sell your property yourself and pay no commissions.
Flat Fee MLS accomplishes two VERY IMPORTANT things – one – it increases the odds of selling your home six fold (14% vs. 85%) and secondly it exposes your property to a 2 million strong, professionally trained sales force. It also gives you a very real chance of saving 3% of your asking price!
The fact is this – if you don’t sell your home you save absolutely NOTHING – over 85% of FSBO’s fail – they fail because they are not effectively marketed. Buyers don’t even know the property is for sale unless they drive by and notice your $10 sign! 85% of all homes sold in the United States listed on MLS! Pretty compelling statistics! So you can either list your property on the MLS through a Flat Fee Agent and save the listing agent fee of 3% – please note the average home sale is approximately $270,000 so 3% is around $8,000.00 – or you can waste your time with virtually useless Open Houses, $10 signs and $200 in classified ads, most likely fail and then hire a your favorite Realtor and pay 6%.
Here is an actual real life account – (please note names have been changed to protect the innocent) – Barbara lists her home in Florida on FreeFSBO.com for $205,000- receives free online listing, free lawn sign and free For Sale by Owner consultation with a renowned internet and FSBO marketing expert. Part of the FSBO Marketing Consultation is an introduction to Flat Fee MLS and how it works. One month later – without spending a penny to market the property Barbara gives up and hires a full service agent and contractually agrees to pay 6% of the selling price to a real estate agent (a “friend”) who also convinces her to lower her asking price to $199,900. Within one month Barbara has gone from unrealistically saving the entire real estate fee of $12,000 to giving up $17,000? That’s if she gets a full price offer!
A listing agent does one thing of value and one only – they put your home on MLS! They then put a $10 sign on your front lawn, hold a couple of self serving Open Houses* and typically spend the duration of the listing trying to convince you to lower your asking price so another agent can sell it and they can collect their 3%.
Bottom-line; don’t wait to spend some money on effective marketing, list your FSBO with a Flat FEE MLS agent right out of the gate! Actually save money instead of dreaming about it. 85% of all homes SOLD are listed on MLS – need I say more? Do not, under any circumstances engage a full service real estate agency!
*Open Houses serve two purposes, both benefit the listing agent, one, they use them as lead generation opportunities (collect names to sell them “other” properties) and two, to support their position that your home hasn’t sold, in spite of all their work, and you should lower your asking price.