Do You Hate to Pay Huge Commissions?
It’s time to sell your house, but you hate to pay huge commissions so you’re thinking FSBO?
It’s time to sell your house, but you hate to pay huge commissions so you’re thinking FSBO?
What Is FSBO?
This is selling your house by yourself, but using the exposure of the Multiple Listing Service. FSBO stands for “For Sale by Owner.” It’s a method of selling your own house where you don’t use the services of a real estate agent, but instead, you do the work.
Therefore, you save the commission. It requires a lot more effort on your part, but some people think it’s well worth the effort.
Some people believe that it is being a good steward of your equity. Your equity is defined as the amount of monetary value that you have in your house that you can get out after you sell it and then pay off the mortgage. Some people think that FSBO’s just the better way to take care of it.
It is giving yourself a step-up to your next life step. Many people, when their family grows, outgrow their house, and start looking for a larger house. I call this a step up, because it usually involves spending more money and having a larger mortgage payment.
The reason to sell your first house is to take that money (your equity) that’s left over, and apply it towards the purchase of a larger house or a better house. It may be in some other manner different. It may just be in a different neighborhood. This is all still a step up. They are usually more difficult to do unless you have some money going into them.
Who Cares?/Who benefits?
You benefit from more profit and more flexibility in pricing. You, the seller, are the one who benefits from this process.
You have the ability to price your house with more flexibility. You can price at a level lower than the market, and sell it faster than other houses, or you can price it a little bit higher and offer a higher commission to another agent who helps you sell your house.
The bottom line is that you can end up with a little more profit selling your house as well. One or the other may happen, and sometimes both of them. They are all to your advantage.
They are also to the advantage of the new owner, the buyer of your house because he gets to purchase a house without having to indirectly pay for the commission by paying it to you, so that you can pay it to the agent. So it’s a win-win situation.
Everybody does well usually in a for-sale-by-owner house as long as it’s done correctly, and the t’s are crossed and the i’s are dotted. Everybody wins.
Your house also benefits by being represented by the one who knows it best.
If you have read any of my books or articles, you already know that I am not a proponent of your conducting a tour of your house when it’s for sale. I am, however, a huge proponent of someone being there, somewhere, to answer questions for a prospective buyer.
I think that being in the house while they are conducting their own tour is advantageous because everybody is going to have questions. You can answer questions that a flyer won’t answer and a real estate agent can’t answer.
You were there during most of the recent improvements and maintenance on the house, and you have paid the utility bills, so you’re the perfect one to answer any questions.
You are not a prospect for stagers/designers/others making money off you Today there is a new community of industries designed to help sellers enhance their home at the time of sale.
These cottage industries are made up of people who stage houses, design houses, take care of lawn and grounds maintenance, store items on a temporary basis, etc. The list goes on and on. These people will consider you their prospect when your house goes on the market.
When you put your house all the MLS, it does not seem so much to be the target of prospecting efforts as a “For-Sale-By-Owner” is when it is not officially on the multiple listing service.
Who Does/Has Done It?
I have been a real estate agent licensed in Tennessee for more than 38 years. Our first transaction that was done in the new “MLS entry only” genre was at the beginning of 2005.
That was over 15 years ago, here in middle Tennessee
At the time, I had noticed a couple of different firms in California and elsewhere had been using this process. When we started using it, there was no book to read about how to do it. There was no video to watch. We had to experiment and learn everything ourselves.
As we grew in our knowledge, we became better at it. We got to the point where we even wrote the book (several books) on the process. So over that length of time, we have helped hundreds and hundreds of people sell their own houses.
It has become a very accepted form of doing real estate business, and more and more firms are embracing that business model as time goes on.
When we first started doing business as “MLS entry only” we had to educate many other real estate agents on what the process was. Some actually even asked me if it was legal. One once told me I was “going to ruin this business.”
We have for you to read, a lot of testimonials. I love testimonials but not everybody is inclined to stop and give me one after they sell and close their house. They are excited to move on to the next step in their life, but you can still see a lot of the testimonials on our website here at my website online, state-wide.
How Does It Work?
You might ask how does this work?
Actually, the MLS is a big cooperative designed by Realtors and for Realtors. The only way that you can have a property in the multiple listing service is if you are a Realtor.
I always say that the MLS is like a big country club. It may have the nicest golf course in town or the tastiest restaurant in town, but if you are not a member of the country club, or with a member of the country club, you won’t get to enjoy the amenities.
The MLS is like that, if you’re not a member, or if you’re not working with a member. You won’t get to have your house in the MLS and get that wonderful exposure.
Therefore, it takes a broker who is licensed by the state and a member of that area’s multiple listing service, to be able to put your house in the MLS. Usually, that meant a traditional listing where you had to pledge a large amount of your profit or your proceeds to the Realtor in order to be in the MLS.
Now we are talking about a new type of real estate broker who is willing to put your house “for sale” in the MLS without the traditional listing and pledge of large commissions. This is called “MLS entry-only” type listing. Not every agent or broker is willing to do this.
A lot of agents are in the business to make the larger commissions and that’s understandable. So your first job is to find a broker who is willing to do an MLS entry-only type service.
You can Google that, and go to a huge national map, where you have to pick out the state where your house is. But if you purchase a service through that map/company, then that company is going to have to seek out a local broker in your state to handle your listing. Licenses for real estate are done on a statewide basis.
So whichever way you handle it, whether national map company or your local state people, you must find a broker that will put your house into the multiple listing service. — Step 1 — Check!
Now you get to answer the phone when somebody calls about your house, and you get to set up showings of your house, and you get to show your house. It’s not without its efforts. It’s not easy.
Sometimes the public is easy to deal with. Sometimes that’s not the case. But at this point, it is your job.
The next part of your job is to handle negotiations. And of course, you hope that it comes to that. Otherwise, if there’s no offer, and if there’s no negotiation on your house, you’re probably not going to sell it. This can be a little tricky but it’s not too terrible.
Just remember, you do not have the experience of a REALTOR to fall back on unless you have made those arrangements already. Just be careful what you’re doing.
Some people think they know what to do already, but this is not intuitive. Read what you can. Have a good real estate attorney and just be prepared for surprises.
You don’t know what you don’t know, so be prepared to think on your feet.
What Does It Get You?/Why Use It?
What do you get and why should you use this process? Firstly, we’ve talked about the fact that you are going to be saving a huge amount of commission.
Also, the bottom line is that you have more flexibility in pricing, more flexibility to compete in the market, and hopefully more proceeds from the sale of your house.
The second thing that you gain by using this method is that you will be more in control of the situation. You will be in control of the transaction. You’ll be in control of the showings. This is especially important if you have an otherwise busy life or if you have children.
The third and final thing that you gain from this type of transaction is a tremendous sense of self-satisfaction after the sale is completed. Some people believe that agents don’t really earn their commission.
This transaction will probably show you that they do earn a lot of their commission — perhaps more than you ever thought.
But the fact is, it’s your decision. If you decide to do the work you will save the money. If you decide the money is less important, then you will do considerably less work.
Get a free printable pdf WORKSHEET/ORGANIZER PACK to make a dozen house-sale details almost take care of themselves! CLICK HERE!
Parts of this article originally published in one of my blogs Aug 4, 2020.
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