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Dear For-Sale-By-Owner Seller on MLS:
I understand that you want to make as much money on your sale as possible and that it isn’t cheap to sell a house. But I fear you don’t know the whole story. Now I won’t pretend to be unbiased – I’m a REALTOR after all and I make a living by selling houses like yours. But there are a few things you should know about being a For Sale By Owner (FSBO), and I’m betting the company you’re paying peanuts to simply put it on MLS isn’t telling you:
1. If you want to sell your home, you need to be prepared to show it. When I call you to make an appointment to bring my client on Wednesday, telling me that you “you have hockey Wednesday night but might be home on the weekend so, check back with me on Saturday and I’ll see if I’m around” just doesn’t work. There are plenty of other houses and condos for my client to see, and neither of us is likely to schedule our lives around your unconfirmed schedule. Showing your home is time-consuming and you need to be flexible.
2. Offering me a $1 commission to bring you a Buyer is not only insulting, it’s not likely going to work. Yes, I will show your home to my client even though your neighbour is offering me 2.5% and the $1 you think my time is worth won’t even cover my gas to drive to your home. But you should know that my Buyer is contractually bound to pay me 2.5% if you don’t, so the real price of your house is 2.5% higher then you have it listed for. Here’s the thing: my Buyer knows I’m worth more than $1 and they don’t want to pay you the same for your house as your neighbour’s house AND pay me 2.5%. I guess they don’t want you to pocket that 2.5% that your neighbour is paying his REALTOR. Buyers can do the math too.
3. I know you think you have nicest house ever and those renovations in 1993 were expensive but you’re probably priced wrong. Pricing a house isn’t easy and it is a moving target. How much I think your house is worth today is probably not the same as I’ll think it’s worth next month or maybe even next week. How much you should sell your home for will change depending on the house that sold last night, the new listings in your neighbourhood that came up for sale today and what’s happening in the overall market. Are you staying on top of the market that closely? And I hope you have good negotiating skills by the way, you’ll need them.
4. It’s not true that houses sell themselves – you need to actually market the property. Sure, some people are lucky and have the perfect house in the perfect condition on the best street in a top neighbourhood, and maybe their house will sell itself. But that isn’t most people and it’s probably not you. Even Apple invests in marketing and their products are pretty spectacular.
5. I know you decided to hire a company to help give your home exposure on MLS, but the company that listed your home on MLS for $1,000 probably doesn’t have great success rates and you may just have wasted $1,000. According to this blog, only 52% and 43% of homes listed by the top two companies that provide this service sold in 2012. Those are pretty brutal stats for Toronto’s hot 2012 real estate market. I know those companies tell you that they want to save you money, but they just pocketed over $1,000,000 in fees for houses that didn’t sell. Ouch.
Don’t believe the stats? Consider that Colby Sambrotto, founder of ForSaleByOwner.com, couldn’t sell his own New York condo…so he turned to a realtor–and sold it for $150,000 more than the original list price, covering the commission several times over. Not exactly a ringing endorsement of his product (other than how good it was for making him money; the condo was worth $2.15M).
6. I hope you’re prepared for the legal landmines that come with the sale of your house. I know your lawyer can help you with the paperwork, but there’s a lot more to selling a house than just an agreement of purchase and sale. Specifically, I hope you know what you need to disclose to potential buyers so that you stay out of court, and that you’re ready for the “stuff” that comes up before closing–and it always does. It’s never fun to deal with.
7. If you don’t think hiring a REALTOR is worth the money, maybe you’ve been speaking to the wrong REALTOR. Marketing, negotiation, staging, pricing and understanding real estate law are skills that vary significantly from agent to agent and do impact the price you get for your home.
Now please understand, Mr. or Mrs. FSBO, that I wish nothing but the best for you. Sometimes selling a home on your own works, sometimes it doesn’t. And if we happen to meet across the negotiating table, I’ll do my best to represent my client…good luck.