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As the housing market is recovering significantly and allowing homeowners to ask for higher prices, the desire to hold on to those profits is also growing stronger. The largest expense for most sellers is the commission paid to their real estate listing agent, which typically averages about 5-6 percent. That’s why For Sale By Owner (FSBO) is an alluring alternative to hiring a Realtor. Before deciding how to approach the do-it-yourself route, however, you need to know that there is one rule you cannot afford to ignore.
List Your Home on MLS
The first rule of FSBO is that you can do everything else on your own, such as staging your home, but you absolutely must participate in the real estate industry’s Multiple Listing Service (MLS). Nearly all buyers – and the Realtors working with them to find properties – rely 100% on the MLS as their primary source of listings. If you try to sell without including your property in the MLS you severely limit your chances of anyone even knowing that your home is on the market.
Think of your home as a website. People looking for it will need to know the exact web address in order to go see it. That limits its exposure to the small group of people who know you or are aware of your website. If it is included in the database of a major search engine like Google, however, even people who aren’t specifically looking for it may discover it when they do a web search. That’s similar to the kind of advantage that the MLS offers to you, so you can think of it as the “Google” search engine for real estate sales.
How to Include Your Property
Since exposure is so critical to a successful sale, trying to sell your own home without inclusion in the MLS database puts you at a tremendous disadvantage. Attracting buyers by putting up signs or running ads – which can be expensive if they are effective ads – is like hunting for a needle in a haystack. The good news is that there are many real estate brokers who will charge a nominal fixed fee for simply adding your listing to the MLS. You don’t have to pay them a sales commission.
Yes, it may cost you a few hundred bucks to get listed on the MLS for several months, but it is a small price to pay for the most effective advertising in the industry. Trying to save money by skipping that step will likely cost you a great deal more in terms of lost time and all the extra mortgage, utility, insurance, and property tax payments you have to continue paying while your home sits because buyers don’t know it is available.
Another smart strategy is to hire a discount Realtor who offers a streamlined menu of services for a fixed price. Rather than charging full commission for services you may not need since you can do some of the work yourself, they only handle the most complicated and essential elements of marketing and selling the home. Many brokers will, for example, charge a fraction of their full rate to include your home in the MLS, pre-qualify buyers for credit worthiness and have the ability to secure financing, negotiate with the buyer, and take care of all the paperwork and contracts through closing. They won’t do open houses or advertise your home in local print publications and you’ll need to handle phone calls from potential buyers and conduct the property tours. There are some who will do all of that though, for a fixed, nonrefundable fee paid in advance.
Important Safety Considerations
You may also find brokers who will make the appointments and do the tours for a slightly higher fee that is still much less than full commission. The compelling reason to pay more for those services is twofold. On one hand you may be too busy with work and other responsibilities to make yourself available when buyers are out shopping, and that lack of availability could impede your ability to sell the home. The other issue is personal security. Many so-called home buyers are simply posing and are actually criminals who want to “case” your home. They then return later and rob you. In some cases they meet property owners at the scheduled time and rob them. Realtors are usually trained to screen home shoppers ahead of time and they also have other tactics to help ensure their safety while showing homes to strangers. Paying a little extra to have someone else deal with the public may be worth it unless you are entirely comfortable doing that yourself at the risk of your security and that of your home.
Define FSBO Tailored to Your Particular Skills and Budget
There is no longer a one-size-fits-all definition of FSBO homes. Remember that you can do as much or as little as you decide, and you can outsource the nitty-gritty tasks to a professional if that makes more financial sense to you in terms of the value of your time and trouble. The idea is to minimize unnecessary expenses without sacrificing a faster and smoother sale. Keep that in mind while you shop around and interview various brokers who offer simple MLS inclusion, more value-adding streamlined services, or a menu of almost full service at a discounted rate.