I realized when writing the headline and inserting the “Pending” photo it may seem we have a buyer on our current home. Not true, although I wish it was! Lots of traffic and interest but no buyers yet. We are on showing #6.
We are selling our home “For Sale By Owner” but it’s a much different process than the traditional “For Sale By Owner” that many people think of. Think of our approach as FSBO on speed. Before I begin, I want to make it crystal clear that we love and respect all realtors. We recognize their value and importance. In fact, our approach actually involves a realtor. Keep reading… I’ll get to that.
The traditional For Sale By Owner process is pretty dreary. The biggest barrier working against you if you go this route: you aren’t able to put your home on the MLS. Only people with real estate licenses are able to post on the MLS. Without a doubt, no matter what anyone tells you, putting your home on MLS is going to sell your home infinitely faster than without it. The exposure you receive from your local listing service is hard to match. You want your home to be visible to buyers and buyers are searching on the MLS.
You might wonder: why would people want to ever sell their home by owner? It all comes down to money. Many times, by not having to cover realtors’ commissions, owners are able to price their home more competitively with the comps in the neighborhood. Or in our case, we want as much money as humanly possible to come directly to us. We don’t want to give up any of the equity we’ve worked really hard to increase over the years. In other cases, people cannot afford to pay a realtor commission—they might be at risk of a short sale or some other type of financial hardship. But probably the most popular reason to avoid realtors’ commissions: people need a certain amount of cash from the sale of the first home to cover the down payment on the next home.
A QUICK SHOUT OUT TO CURRENT AND FUTURE BUYERS: Do not believe it when someone tells you, “But using a realtor doesn’t cost you anything!” Yes, it is true, that at closing, you do not owe any cash to your realtor. The seller pays that cost. HOWEVER, the seller raises their listing price to cover all realtor costs, including yours. For example, the home we are about to buy, the seller reduced the listing price by nearly $10K automatically because we came realtor free. For Aaron’s home, we had two prices: One for a buyer with a realtor (3% more) and one for a buyer with no representation (3% less). So yes buyers, you absolutely pay for your realtor via an inflated listing price. 3% of the home’s listing price in fact. And because it’s embedded in your listing price, that means that if you have a home loan, that 3% becomes much, much more as your loan matures. No thanks!
Ok, ok back to my point. Selling your home FSBO on speed. Here’s how we do it. We pay a real estate agent a flat fee of $200. For US folks, you can use the service, MLSmyhome.com, to find your flat-fee real estate agent. If you are in northern Kentucky/Louisville area, you will be referred to the amazing Chuck of Busy Bee Realty.
For the $200 fee, our real estate agent does several things: He puts our home and photos up on the MLS, he posts all necessary documents to the MLS (like agent remarks, seller disclosures, etc.). The agent will also field any offers (in the state of KY and likely your state too, the seller’s agent must be the party that receives the offer, not the actual seller). He will also aid in the negotiations, schedule your appraisals and inspections, coordinate with the title co, etc. So basically, for $200, he provides everything to you that a traditional seller’s agent would minus the marketing of your home and the showing of your home. At closing, this realtor is not owed any percentage of your home’s sale whatsoever.
It’s pretty much the best thing ever.
The responsibilities left to us—the showing and the marketing—those things are a piece of cake. For showings, we clean and we leave the home for about 30 minutes. That’s it. 99% of the time prospective buyers come with their agent, who is normally the one who shows the home. We literally do nothing when it comes to showings (except maybe creepily drive by a bunch of times).
And marketing? Most of us belong to this super powerful marketing engine called… Facebook! Social media plus some flyers out by the sale sign is about all we do.
If all of this still feels overwhelming, many realtors often provide a la carte services too, such as consultations and staging tips, to help you feel a little bit more prepared about going it alone.
And quick tip: If you can, still offer the buyer’s agent a commission of 3% (which around here, is half of the total agent commission). This will generate much better feelings towards your property (meaning agents will be more inclined to show it). Buyers’ agents should not have to work for free!
So yea, that’s how we do it. And it’s worked really well for us. Aaron’s home sold just before the 6-month mark (when Aaron bought it, it had been sitting on the market for 9+ months) and my home has received a ton of traffic. Thank you MLS!
Whew. I think this is the longest post I have ever written. Would love to hear any questions or experience you may have with this approach!
A quick legal note. In most states and especially in Kentucky, if your home is on the MLS but you are not using a traditional agent, you are no longer legally allowed to say, “My home is For Sale by Owner” because technically, you are using an agent to sell the home. If someone catches you, it’s a $500 fine in our neck of the woods. Our sign in front of the house has the “By Owner” part removed and we’re sure to not mention “By Owner” in any of the marketing materials we put out. Instead they say, “Listed by Busy Bee Realty.”