There’s No Free Lunch
I spend hours every week reaching out to For Sale By Owners (FSBOs).
A majority of these folks, give selling their home by themselves a good try before eventually listing with a realtor like me. In some cases, after receiving no acceptable offers, they decide to take an interim step of listing with a discount broker, or as some call it a FLAT FEE Broker (FFB).
This is how that works. For a monthly fee, the FFB puts the homeowners property on MLS. They convince the seller that this will be the same as if they listed their home with a professional full service realtor, because “hey, you’re on MLS!”
But is it the same, really? Can it be that easy?
Come on, shout it out, you know the answer.
I’m going to list the advantages, and then the disadvantages. You decide.
Advantages:
If you get an offer, and you get to the closing table with the deal still alive, you won’t have to pay the listing broker side of the commission (usually between 2-3%).
Disadvantages:
You still pay the buyers commission, between 2-3%
The extra work your lawyer will have to do will cost considerably more than the standard low transaction fee the law office charges when you’re represented by a full service realtor. Pro Tip: lawyers charge by the hour
The Days On Market (DOM) count starts as soon as your FFB sticks your house on MLS. This is bad, because if and when you do list it with a Pro, your listing won’t be as fresh.
Your name and number goes on the MLS listing, and once again, you are completely responsible for talking to, meeting, and showing your home to every Tom, Dick and Sally at all hours.
You will not be able to prequalify people that show up without a buyers agent, and there will still be some of those.
Owners are terrible negotiators when it comes to their home. They are emotionally attached, and have no training in the subtleties of real estate transactions or negotiations. Can you hide your contempt when a buyer offers a ridiculous low price to your face?
You won’t have someone focused on getting feedback from potential buyers after a viewing, or marketing your property to other agents and the public. No one will be calling other realtors, scores of your neighbors, and knocking on doors to get the word out about your great property. In short, you are responsible for marketing and selling your home.
Now, Here’s the Bad Part…..
Remember all those agents who the FFB told you would flock to your house with buyers now that you’re on MLS? …. well you may get a few, but most of them will not be showing up.
Why?
- your house was never priced correctly by a pro, it’s likely too high
- Agents are more comfortable dealing with other agents
- Legal liability for errors increases for the buyers agent (and you!)
- Deals can easily fall apart without a listing agent to rescue them, equaling time wasted. Buyers agents can not afford to invest hours and hours on a deal that then falls apart due to mistakes by, or the emotions of, an unrepresented seller.
One could actually make the case that showing their buyer clients homes using FFB’s exposes their buyer client to a much higher risk of not closing on a property they want.
If you do get a buyer who comes with their agent, you will be working against yourself. A professional buyer’s agent will get you to reveal more than you should about your motivation and your price expectations, thus giving their client the upper hand in any future negotiation. It’s not your fault, remember… you’re not supposed to be there!
Would you go to court with tens of thousands on the line without a lawyer? Of course not. Then why try to negotiate one of the biggest transactions of your life, without an agent?
If you’re still confused, and are thinking about signing up with a FFB, feel free to contact me for a no-obligation consultation. Of course, whatever you decide to do is totally fine, but at least you’ll have all the facts.
Have a great weekend and a terrific upcoming week and Happy Mothers Day to all you great Moms!!!
Sal Busacca, Realtor