Author Topic: Setting Asking Price for FSBO  (Read 11657 times)

Scottma

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Setting Asking Price for FSBO
« on: May 05, 2013, 12:45:17 PM »
I am thinking of selling my home FSBO and need a way to come up with a realistic asking price. Has anyone use an appraiser to set their selling price? I know real estate agents with do an analysis to set the price for free, but I shy away from asking them to do that knowing full well they won't get paid at all for it.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #1 on: May 05, 2013, 02:26:23 PM »
Appraisers deal with history - sales that have closed.  Agents deal with the current market.  I would never hire an appraiser to price a home for sale.

FSBO makes the most sense in a fast market with a tract home where there are a lot of listings and recent sales.  Everyone knows what the house is worth.  There are some minuses to FSBO - often buyers see it as their way to cut the commission too, and you don't receive the best market exposure.  If you think you are going to get your buyer from Craigslist, look to see how many real FSBO's there are in Craigslist in your location.  Not a lot of retail homebuyers are looking there. 

If you are set on trying FSBO, a lot of agents will still give you a market analysis.  They figure you are going to fail at the job, and there's a good chance they will get the listing eventually.  Call some of the agents that work in your area, tell them you are thinking about FSBO, and see if they offer to provide comparables.  If all else fails, offer to pay for the analysis.

Scottma

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Re: Setting Asking Price for FSBO
« Reply #2 on: May 05, 2013, 03:02:48 PM »
I guess I'm a bit confused then. I understand that appraisers work off of closed sales data, but isn't that the same data that a realtor would be going off of? I thought that to predict the market, as you say, they would look at recent sales as well.

I plan to purchase a space on the MLS for exposure, I've read that it costs around $300 to do so. I'll also work with the buying realtor and give them a cut. So maybe not a true FSBO but who cares, I'll be saving thousands anyway.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #3 on: May 05, 2013, 03:23:25 PM »
You don't "buy" a place on the MLS.  You pay a broker for what is called a "limited service" listing.  The MLS is likely owned by a brokers' association.

An agent will also look at pending sales and listings.  If the market is changing, they will consider that.  If the agent is really familiar with the neighborhood, they have a better idea of the desirability of the individual properties.

Have you ever done a FSBO?  A real estate transaction can be very complicated and there is a lot of liability attached.  I'm not an agent, but in my experience they do bring some value to the table.

Scottma

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Re: Setting Asking Price for FSBO
« Reply #4 on: May 05, 2013, 03:50:07 PM »
Well, however you want to put it - I'll end up on the MLS.

I've never done a FSBO before and have read completely opposite opinions on it across the internet, and I suppose they are reflections on personal experiences with FSBO. You have to start somewhere, right? Only way to get experience is to do it.

It's my understanding though that for the state I live in, the title company is the one doing all the legwork in a transaction, and the real estate agent appears to be very replaceable. I also plan to have a real estate lawyer draw up documents and review everything for me, so I should be covered on the liability end.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #5 on: May 05, 2013, 04:40:33 PM »
If an agent member of the MLS brings you a buyer, the offer will be on the MLS contract.  You will have to sort through whether the buyer is qualified, whether the offer is reasonable, how to negotiate the price and terms, how to answer any request for repairs post inspection, etc. yourself.

It will be interesting to hear about your experience.  Please let us know how it goes.

honobob

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Re: Setting Asking Price for FSBO
« Reply #6 on: May 05, 2013, 05:09:58 PM »
Well, however you want to put it - I'll end up on the MLS.

And then what?  It will magically sell itself?

If you don't have a good idea of the market value of your home you probably should NOT be trying FSBO.  Anotherreader is correct about agents knowing the value NOW.  Sales generally take 45-90 days to record and become public record but good active agents know when properties are getting offers above old sales.  In my areas that can be as much as $50,000-$200,000.  You're not saving much when all your neighbors sold for current market and you took a lowball offer based on old information.

My recent 2008 experience with a cut rate MLS company was horrible.  They had a listing in a building I already had a unit in and I was willing to pay market price.  They were at $459,000 too high and through the building grapevine I heard they rejected a $440,000 offer which was about market at the time but the market was falling.  They reduced to $435,000 and I contacted one of their agents about similar properties.  I did not want him to know I was only interested in their unit.  Although their listing matched my parameters to a "T" he presented all other properties EXCEPT theirs.  Guess what?  All the properties he wanted to show me paid him considerably more.  They seemed to be using their listing to get buyers for full commission properties. I finally forced an offer on their property at market value and they did not counter saying they'd rejected an offer for $10-15000 more.  The market was still falling and I anticipated 5-10% drop but was still willing to pay todays market to lock the property for me.  I told my regular realtor about this and said I did not want to bother her for a cut rate commission but she offered to present a contract for me (their salesman had since left the company).  I offered a little over $400 and they would not even counter.  i told them I would pay whatever market value they could support but they only had comps from much better buildings that of course sold higher but it was comparing apples to oranges.

They never sold it, the owner listed with a full commission agent and sold for $370,000 about 9 months later.

Scottma

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Re: Setting Asking Price for FSBO
« Reply #7 on: May 05, 2013, 06:01:16 PM »

It will be interesting to hear about your experience.  Please let us know how it goes.


I'll try to provide updates as I can, I'm sure the process will keep me pretty busy...

Well, however you want to put it - I'll end up on the MLS.

And then what?  It will magically sell itself?

Well, I figure I'll be doing as much as a selling realtor, which would be, yes, sitting around waiting for offers. Assuming I staged and priced the home correctly I don't see the problem? Don't forget I'll be paying the buying realtor their commission.


If you don't have a good idea of the market value of your home you probably should NOT be trying FSBO.  Anotherreader is correct about agents knowing the value NOW.  Sales generally take 45-90 days to record and become public record but good active agents know when properties are getting offers above old sales.  In my areas that can be as much as $50,000-$200,000.  You're not saving much when all your neighbors sold for current market and you took a lowball offer based on old information.

I didn't say I have no idea what my home is worth. I have lived in Kansas City my entire life and know the neighborhoods well. I understand where the dividing lines between the "nicer", "moderately nice", and "crappy" parts of town are, and I've been tracking my neighborhoods sales for over a year now on Zillow. I have a range of prices that I feel confident that my home's value is within. The reason for my request is that I need some assistance fine tuning that range to the right price.



My recent 2008 experience with a cut rate MLS company was horrible.  They had a listing in a building I already had a unit in and I was willing to pay market price.  They were at $459,000 too high and through the building grapevine I heard they rejected a $440,000 offer which was about market at the time but the market was falling.  They reduced to $435,000 and I contacted one of their agents about similar properties.  I did not want him to know I was only interested in their unit.  Although their listing matched my parameters to a "T" he presented all other properties EXCEPT theirs.  Guess what?  All the properties he wanted to show me paid him considerably more.  They seemed to be using their listing to get buyers for full commission properties. I finally forced an offer on their property at market value and they did not counter saying they'd rejected an offer for $10-15000 more.  The market was still falling and I anticipated 5-10% drop but was still willing to pay todays market to lock the property for me.  I told my regular realtor about this and said I did not want to bother her for a cut rate commission but she offered to present a contract for me (their salesman had since left the company).  I offered a little over $400 and they would not even counter.  i told them I would pay whatever market value they could support but they only had comps from much better buildings that of course sold higher but it was comparing apples to oranges.

They never sold it, the owner listed with a full commission agent and sold for $370,000 about 9 months later.

I guess I don't see how this makes FSBO not feasible. It sounds like the owner didn't have any idea what their property was worth.

honobob

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Re: Setting Asking Price for FSBO
« Reply #8 on: May 05, 2013, 06:40:13 PM »


Well, however you want to put it - I'll end up on the MLS.

And then what?  It will magically sell itself?

Well, I figure I'll be doing as much as a selling realtor, which would be, yes, sitting around waiting for offers. Assuming I staged and priced the home correctly I don't see the problem? Don't forget I'll be paying the buying realtor their commission.

Well I'm thinking Another Reader wants to say it but I'll be the guy.  You sound so naive to think the selling agent sits around waiting for offers.  And as far as the buying agent getting the buyer's commission BIG WOOP!  That agent is not going to show your house unless it's the only one on the market knowing he'll have to do ALL the work for half the commission and probably even MORE work because he'll have to come behind you teaching you what you need to do and preventing you from screwing up the deal!  No he'd much rather sell a property where there are two professionals working to get a deal done.  Some agents won't even show some agents listings because they know how lazy/incompetent they are. 

So agents won't show your home so you're left with lookie loo's and criminals.  Even if a lookie loo wants your house who is going to sell it to him?  Most people are not decision makers.  They need someone to nudge them into action.  The decision makers you'll meet will know you need to discount the property by, let's say, the cost of the commission.  Again, no savings to you.


Another Reader

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Re: Setting Asking Price for FSBO
« Reply #9 on: May 05, 2013, 06:44:38 PM »
If you think all a listing agent does is wait around for offers, you don't understand the process.  Most of the work for listing agents happens at two points.  First, the price has to be set, attractive pictures taken, verbiage written, and all that put in the MLS in a way that will attract buyers.  If the market is normal, there are broker tours, marketing flyers, signs and lots of other listing details to be accomplished.  This is the easy part.

Once an offer comes in, the fun begins.  What exactly is being offered?  What are the contingencies?  Are closing costs requested by the buyer?  What is the buyer's financing?  Is the buyer approved for the mortgage?  Is the lender solid or some flakey broker?  Is there a better offer likely out there? 

Once the seller agrees to an offer, the listing agent has to get the property through the inspection and appraisal process.  If the property does not appraise, are there better comps the appraiser did not use?  Is the square footage correct?  What problems did the inspector turn up?  Will they kill the sale?  How much will the items cost to fix?  Who can do the work at the best price?  Is the seller in a strong enough position to say no to the repairs?  Handling the process from the offer on is really why you pay your agent. 

If you are comfortable with this process, then go for it.  Some people can do a good job selling their own properties.  Understand a lot of buyers' agents may not want to deal with a seller, who they think might be unreasonable because of the type of listing.  If your property has competition, there may be reluctance to show your listing.  You may not receive full market exposure.

Like I said, I think your experience will be educational for you and is worth sharing on this forum.  Please do share, maybe even think about starting a house selling journal. 

honobob

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Re: Setting Asking Price for FSBO
« Reply #10 on: May 05, 2013, 07:03:58 PM »




My recent 2008 experience with a cut rate MLS company was horrible.  They had a listing in a building I already had a unit in and I was willing to pay market price.  They were at $459,000 too high and through the building grapevine I heard they rejected a $440,000 offer which was about market at the time but the market was falling.  They reduced to $435,000 and I contacted one of their agents about similar properties.  I did not want him to know I was only interested in their unit.  Although their listing matched my parameters to a "T" he presented all other properties EXCEPT theirs.  Guess what?  All the properties he wanted to show me paid him considerably more.  They seemed to be using their listing to get buyers for full commission properties. I finally forced an offer on their property at market value and they did not counter saying they'd rejected an offer for $10-15000 more.  The market was still falling and I anticipated 5-10% drop but was still willing to pay todays market to lock the property for me.  I told my regular realtor about this and said I did not want to bother her for a cut rate commission but she offered to present a contract for me (their salesman had since left the company).  I offered a little over $400 and they would not even counter.  i told them I would pay whatever market value they could support but they only had comps from much better buildings that of course sold higher but it was comparing apples to oranges.

They never sold it, the owner listed with a full commission agent and sold for $370,000 about 9 months later.

I guess I don't see how this makes FSBO not feasible. It sounds like the owner didn't have any idea what their property was worth.

I could be wrong because things do change but I'm assuming all calls from the MLS will go to the Broker.  Do you think your phone number will be in the MLS?  So when a call comes in the agent will try to steer the caller to a property more suitable for them, say one with a full commission for them. Geez, if they sell your house they'll get a small commission and no more calls from prospective buyers. Better to use your house as bait.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #11 on: May 05, 2013, 07:19:00 PM »
The limited service listings with which I am familiar give the seller's contact info and the caveat that this is a limited service listing, please contact the seller for information or to make offers.  Some of these brokers have a menu from which you can pick services, such as listing pictures and signs.  There's a company licensed in the Western states that does the menu approach called Congress Realty.  I don't know anyone that has used them, so I have no idea how successful the model is.

honobob

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Re: Setting Asking Price for FSBO
« Reply #12 on: May 05, 2013, 07:33:28 PM »
The limited service listings with which I am familiar give the seller's contact info and the caveat that this is a limited service listing, please contact the seller for information or to make offers.  Some of these brokers have a menu from which you can pick services, such as listing pictures and signs.  There's a company licensed in the Western states that does the menu approach called Congress Realty.  I don't know anyone that has used them, so I have no idea how successful the model is.
I can understand the cut rate broker ads showing the owners name and number (I have no experience with this totally no service model) but I have NEVER seen an owners information on realtor.com or any other realtors property search website.  Maybe they screen them out or I did it without realizing.  Another Reader, other than the cutrate listing agents website can you show a site that shows these cutrate listings with the owners contact info?

Blindsquirrel

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Re: Setting Asking Price for FSBO
« Reply #13 on: May 05, 2013, 08:38:07 PM »
  Get a guess from a local Realtor you know and run an ad on CL, or look at your local MLS listings, make a good guess after looking at 10 houses nearby (they are your competition after all)  you do not need a Realtor and CL ads are free. Take a boat load of good pics for your ad and if you get no offers in a reasonable time frame, list with a Realtor. We have purchased a few off CL (3) this last year and sold one. Do not let a deal flop for chump change or being stubborn. Just my 2 cents and what has worked for me.

Scottma

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Re: Setting Asking Price for FSBO
« Reply #14 on: May 05, 2013, 08:48:46 PM »
I do appreciate all the advice and I don't mean to get raise any hackles. If I sound green it's because 1) I am and 2) I never intended for this post to be a full explanation of my plan to FSBO, so I left out some major details. My point in posting was to see how those who had done FSBO set their asking price.

If you think all a listing agent does is wait around for offers, you don't understand the process.  Most of the work for listing agents happens at two points.  First, the price has to be set, attractive pictures taken, verbiage written, and all that put in the MLS in a way that will attract buyers.  If the market is normal, there are broker tours, marketing flyers, signs and lots of other listing details to be accomplished.  This is the easy part.

Once an offer comes in, the fun begins.  What exactly is being offered?  What are the contingencies?  Are closing costs requested by the buyer?  What is the buyer's financing?  Is the buyer approved for the mortgage?  Is the lender solid or some flakey broker?  Is there a better offer likely out there? 

Once the seller agrees to an offer, the listing agent has to get the property through the inspection and appraisal process.  If the property does not appraise, are there better comps the appraiser did not use?  Is the square footage correct?  What problems did the inspector turn up?  Will they kill the sale?  How much will the items cost to fix?  Who can do the work at the best price?  Is the seller in a strong enough position to say no to the repairs?  Handling the process from the offer on is really why you pay your agent. 

Thanks for taking the time to write all that out, Another Reader. I was hasty in speaking and didn't mean to imply that a selling realtor doesn't do anything. I'm just in a place where I don't believe they're doing anything that I wouldn't be willing to do myself.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #15 on: May 05, 2013, 08:55:10 PM »
I have seen Congress' listings on the Arizona MLS (ARMLS), but not recently.  I don't know if the listing aggregators pick them up or not.  Some of the Phoenix brokers have adopted some very confusing disclosures for sellers about sharing information with IDEX and the aggregators.  It's all part of the love-hate relationship between the brokers and Zillow/Trulia crowd.

If the OP goes with a limited service listing, the OP should determine where the listing will be displayed.

I don't see many real FSBO listings on CL in Phoenix or the Bay Area.  Occasionally you see a rent to own that's grossly overpriced, or paper lots in the middle of nowhere.  Agents will sneak listings into the "By Owner" section as well.  Blindsquirrel must live in another part of the country or maybe is less blind than I am.

Another Reader

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Re: Setting Asking Price for FSBO
« Reply #16 on: May 05, 2013, 09:04:59 PM »
Being willing to do it and being able to do it so you get the best price in the shortest time may or may not be the same.  Some people take to the selling process, others find it very stressful.  I'm all in favor of do it yourself, when you end up with the best result.  That's why I suggested the journal thread, so you can evaluate your progress and the final result objectively and others can learn from your success or failure.

Nords

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Re: Setting Asking Price for FSBO
« Reply #17 on: May 06, 2013, 12:37:09 AM »
I am thinking of selling my home FSBO and need a way to come up with a realistic asking price. Has anyone use an appraiser to set their selling price? I know real estate agents with do an analysis to set the price for free, but I shy away from asking them to do that knowing full well they won't get paid at all for it.
We've bought & sold several times via FSBO.  If you have the time then you can save 3%-6% and avoid a lot of realtor drama.  Of course if you do a bad job then you'll leave money on the table (tuition for your education) or encounter a lot of buyer drama or not sell the place at all.  Your default option is to fall back on a realtor.

We've never used an appraiser or a realtor to set the price, but we've been pretty familiar with the neighborhood from going to open houses and keeping an eye on the listings.  It's pretty easy to watch the listings turn into sale prices and figure out how your market is doing.  If you're a few months away from selling your own place then this is the time to start visiting open houses and checking listings.

A couple suggestions:
Nolo has a pretty comprehensive overview of the process.  I realize you're not in CA (they have a book for that state) but you'll get a feel for the issues.
http://www.nolo.com/legal-encyclopedia/real-estate-agent-sell-house-30259.html

Comps:
Your local newspaper/website may list recent home sales in your neighborhood. 
Residential sales may be listed on a local govt website, or you could check at your city/county offices.
Zillow is a source of information on what homes have sold recently, although their prices seem to vary widely. 
If you're a USAA member then you can check your home value on HomeCircle.  They've licensed CoreLogic, a different database that's probably better than Zillow.

Ask your friends & neighbors.  You'll sift through a lot of data but you'll get surprisingly good crowdsourced info.  They're also the people who know people who'd like to take a look at your place.

Although I said "avoid a lot of realtor drama", the reality is that you'll attract the less ethical ones like flies.  They'll assume that you're a clueless/desperate seller and they'll tell you about all the wonderful full-price buyers who are waiting in their car if you'll just sign this contract.  The tactic that worked for us was to politely (and repeatedly) say that we'd be happy to pay a 3% commission to that realtor just as soon as they brought us a full-price offer. 

Frankly your pricing may depend on the response.  If your first open house produces two offers near your listing price then you did it right.  If it gives you eight at your listing price then you went too low.  (Sorry!)  If it gave you zero offers then you'll have to grit your teeth for another 4-6 weeks and listen carefully to the feedback. 


secondcor521

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Re: Setting Asking Price for FSBO
« Reply #18 on: May 06, 2013, 08:56:07 AM »
Ditto what Nords said.

I've lived in four houses now, sold the third one FSBO with no issues and bought the fourth by working directly with the listing (selling) agent, also with no issues.

As far as the sales price on the third house, we basically looked at comps ourselves and knew the direction of the market and our particular property's pluses and minuses compared to the competition.  To look at comps, just call up a realtor and ask for listings, giving them the specs to your house.  If you live in a 3br/2ba 1500sqft house in zipcode yyyyy that you think is worth $xxx,xxx, plug that in, do some drive by's, and decide if a rational buyer would prefer this house or that house at the asking prices.  You'll know what your house is worth in a very short period of time doing this.

Also, what happened in our case may be instructive.  We listed a little high, and then dropped the price by a few thousand every week or two.  After the second or third price drop, we ended up getting two or three offers, which we then played off each other to get more than the asking price.

When we sold our third home, instead of doing the typical offer/counteroffer/countercounteroffer thing that is common here, we just met them at the local Starbucks with a MLS contract and talked it over with them about what was important to them (a quick and clean deal, IIRC) and what was important to us ($$$, IIRC), and we were able to strike a deal and have the contract filled out and signed in about 20 minutes.

Use your common sense, consider the motives of the various people involved, and you'll do just fine.

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Re: Setting Asking Price for FSBO
« Reply #19 on: May 06, 2013, 09:17:34 AM »
FSBO works in situations where you have a high turnover of tract homes, such as near a military base, and relatively steady values.  Recent sales and listings are readily available, there is a large pool of qualified buyers moving into the area, and apples to apples comparisons are easy.  It also takes the right personality to sell a property without becoming emotionally involved with the house or the transaction, which Nords seems to have.

I wouldn't consider selling a house in Silicon Valley right now based on closed sales.  There is zero inventory.  The next listing is going to be priced higher, possibly a lot higher.  The skill is in figuring out what the house is worth.  What is the true effective demand and how flexible are the buyers on price?  If every house is getting 20 offers and selling for 10 percent over list, you have to be cautious in setting your price.  Getting a bidding war started means you have to get a lot of interested parties willing to make offers.  Price it high and FSBO may mean you net less in the long run because you lose the auction advantage.

I think broker services are overpriced and over time compensation will drop.  However, sometimes you get a better result with a broker. 

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Re: Setting Asking Price for FSBO
« Reply #20 on: May 06, 2013, 06:28:37 PM »
You may be right about the value.  In my limited experience (4 purchases, 3 sales) it really hasn't been worth it to use an agent.

I meant to add that when I did FSBO it was through a (the?) FSBO franchise operation so it wasn't me alone sticking a for sale sign in the yard.  And I think one does need the right personality and some experience to do it yourself.

Hamster

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Re: Setting Asking Price for FSBO
« Reply #21 on: May 07, 2013, 11:11:42 PM »
and bought the fourth by working directly with the listing (selling) agent, also with no issues.

Hmmm. As a buyer, i'm not sure what advantage this gives you. Did you look at the HUD1 form to be sure that the listing agent (representing the seller) only collected 3%, or was it considered dual agency and the listing agent collected both the listing and buying agent's commissions? It would be unusual for them to work directly with you without getting part of both commissions or feeling that they are getting some other benefit - either they are desperate or feel they can take advantage of the buyer's naiveté on price, contingencies, or something making such a situation worth their while.

When they sign a contract with the seller to list, the contract sets both the listing and buyer's agents' commissions. So, as a buyer, contacting the listing agent directly usually means you have nobody representing you and you don't save any money. Lose-lose.

secondcor521

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Re: Setting Asking Price for FSBO
« Reply #22 on: May 08, 2013, 08:39:34 AM »
and bought the fourth by working directly with the listing (selling) agent, also with no issues.

Hmmm. As a buyer, i'm not sure what advantage this gives you. Did you look at the HUD1 form to be sure that the listing agent (representing the seller) only collected 3%, or was it considered dual agency and the listing agent collected both the listing and buying agent's commissions? It would be unusual for them to work directly with you without getting part of both commissions or feeling that they are getting some other benefit - either they are desperate or feel they can take advantage of the buyer's naiveté on price, contingencies, or something making such a situation worth their while.

When they sign a contract with the seller to list, the contract sets both the listing and buyer's agents' commissions. So, as a buyer, contacting the listing agent directly usually means you have nobody representing you and you don't save any money. Lose-lose.

As a buyer, it gave me the following advantages:

1.  No wait time and no filtering of data between the listing agent and me.
2.  3% off the purchase price.  When making my offers, I specifically started with their asking price and adjusted it for the buyer's agent commission, a square foot adjustment, and some other things that made sense to me.  I also discussed the situation up front with the seller's agent and assured her I would be as easy (if not easier) to work with than a buyer's agent.

I did look at all of the paperwork to ensure that it was in order.  There was no commission paid to the listing agent, but honestly, I didn't care.  I was offering to buy the house for $X in Y condition from the sellers, and I didn't pay the agent anything directly.  What happened at closing between the sellers and the agent was their business.

It turns out it was the listing agent's first sale of her career, so perhaps she was a little naive.

As far as being naive on price goes, I had lived in the area for a decade, bought three prior properties in the city, had been watching the market in my price range and area for a few months, and had looked at dozens of comparable properties on the market and this house was the best in terms of fit and price.

For what it's worth, the agent in question and I became good friends through the process.  I checked with her years later and she said that my deal was very smooth and that she was compensated well for what she did for the sale.

Again, I am probably unusual in this respect, but I actually believe that the "representation" an average real estate agent gives me is worth less than $0.  YMMV.

Nords

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Re: Setting Asking Price for FSBO
« Reply #23 on: May 08, 2013, 11:47:15 AM »
I think that there must be a demand for realtors and that overall they're probably doing a pretty good job, otherwise they wouldn't be breeding so quickly.

However it's just like most of the other topics on this forum-- whether it's worth DIY or better to hire an expert.  That varies with the buyer/seller as much as with the realtor, and there's never a clear answer to the question.  I think realtors can bring a measure of objectivity to a seller who's laboring under a fantasy, but again if you're able to be rational & objective about real estate then you're probably more oriented toward DIY.

Here's some interesting data to consider.  Realtors may make the transaction by happen faster, but they don't necessarily obtain a higher price.  You might even claim that "faster" only happens for "lower price":
http://www.freakonomics.com/2008/02/26/real-estate-agents-revisited/
http://www.youtube.com/watch?v=17jO_w6f8Ck

Scottma

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Re: Setting Asking Price for FSBO
« Reply #24 on: May 09, 2013, 09:39:40 AM »
Thanks for the links Nords - that's very interesting. I guess if I sit back a second and think about it...the market sets the price, not the realtor. The best realtors are only able to read the market and come back with a price in line with the market...they don't change or manipulate the market, and as such they can't change how much you will get. And if they go read the market and set your asking price a bit below what your house will actually get on the market, then it sells more quickly. And if the asking price is a couple thousand lower than the market, their cut of the deal isn't lowered enough to have an impact on their bottom line.

I think I'm starting to understand the game better...

Just as an update, I've been doing a bit of research on sale prices of homes in my area and hit a huge roadblock. The county I live in has stopped listing selling prices online, so the latest data I have had access to is from August of last year. I cannot fathom why they are taking that service away from us. Maybe the realtors/appraisers/other groups who would benefit in my area are powerful enough to get it pulled down?

Anyway I still have the asking prices of houses similar to mine in my area, and they don't paint a pretty picture. Looks like I stand to lose some money if I go by a $/square foot comparison. All the more reason to cut out the selling realtor.

Nords

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Re: Setting Asking Price for FSBO
« Reply #25 on: May 09, 2013, 11:54:01 AM »
Just as an update, I've been doing a bit of research on sale prices of homes in my area and hit a huge roadblock. The county I live in has stopped listing selling prices online, so the latest data I have had access to is from August of last year. I cannot fathom why they are taking that service away from us. Maybe the realtors/appraisers/other groups who would benefit in my area are powerful enough to get it pulled down?
I could believe that a sinister realtor cabal is conspiring to block access to data that home sellers might want to see, but it might just be that the county doesn't have the employee labor to devote to putting the data online.  Even if it's as simple as copying a database and displaying it, that still requires IT staff effort.  And all of these imply a degree of competence.  If "the real estate listings" guy quit or retired then listings could have stopped. 

Another possibility is that they're trying to turn sales data into a revenue source by selling it, and as part of the contract they're not allowed to give it away.  But the sales data is still recorded and that makes it a public record, so there's still a way to get it from the county office.  You might have to e-mail, phone, or pay an actual visit to the office to access the data.

One action you can take now is to start stalking the current listings and open houses.  Their flyers will give you a source of data for your comps, and you can track down the actual sales price when they close.

Anyway I still have the asking prices of houses similar to mine in my area, and they don't paint a pretty picture. Looks like I stand to lose some money if I go by a $/square foot comparison. All the more reason to cut out the selling realtor.
I'm not sure whether your average retail home buyer will negotiate on the basis of $/sq ft.  You could print out comps in your area (along with their actual sales prices) and show how your house is better.  Comps overlook a lot of factors like renovations, custom features, local street traffic, proximity to shopping/schools/parks, and landscaping.  Pick the factors that skew the price in your favor and let the educated buyers (or their realtors) negotiate with you. 

Precision is not required, and accuracy is not essential.  I'd say that anything within 15% of the real no-foolin' actual sales price will accomplish your goal:  to start a discussion that turns into contract negotiation.  What will really sell a FSBO is curb appeal, an interior that buyers can imagine as "their home", and a seller who can make it easy for buyers to figure out how much they want to pay.

honobob

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Re: Setting Asking Price for FSBO
« Reply #26 on: May 11, 2013, 05:52:59 PM »
So if the buyers save the 6% commission AND the sellers save the 6% commission.................?

Hamster

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Re: Setting Asking Price for FSBO
« Reply #27 on: May 12, 2013, 10:19:03 AM »
So if the buyers save the 6% commission AND the sellers save the 6% commission.................?
Generally the seller pays the commission which is typically 6% total, not 6% to each party.

tryan

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Re: Setting Asking Price for FSBO
« Reply #28 on: May 16, 2013, 12:29:20 PM »
Quote

 I offered a little over $400 and they would not even counter.  i told them I would pay whatever market value they could support but they only had comps from much better buildings that of course sold higher but it was comparing apples to oranges.

They never sold it, the owner listed with a full commission agent and sold for $370,000 about 9 months later.


Hono, 
What are these "gems" renting for?  Looks like the owner did you a favor ... protecting you from yourself.

honobob

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Re: Setting Asking Price for FSBO
« Reply #29 on: May 16, 2013, 09:00:44 PM »
Quote

 I offered a little over $400 and they would not even counter.  i told them I would pay whatever market value they could support but they only had comps from much better buildings that of course sold higher but it was comparing apples to oranges.

They never sold it, the owner listed with a full commission agent and sold for $370,000 about 9 months later.


Hono, 
What are these "gems" renting for?  Looks like the owner did you a favor ... protecting you from yourself.
Rent?.......!!!........?  oh you mean that taxable monies my tenants direct deposit into my accounts BEFORE the first.  Yeah, I'm so old school that I do collect rents.  A lot of people just collect the appreciation, about $100,000+ on these units in two years!

But rents were $2500 but are increasing so dramatically that it is hard to commit to more than a 6 month lease.  Wheeeeeeeeeeeeeeee!

does my equity make my butt look fat?

tryan

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Re: Setting Asking Price for FSBO
« Reply #30 on: May 17, 2013, 05:16:45 AM »
I am under-whelmed ... the rents bearly cover the mortgage (stretching this thing 30 years).  So your day-job pays the condo fees, insurance, maintenance, water/sewer, property taxes ... and god-forbid vacancy.  This one looks like a 30 year trap.

As I've said ... If I want to subsidize someone's housing, I'll donate to a homeless shelter.

honobob

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Re: Setting Asking Price for FSBO
« Reply #31 on: May 19, 2013, 10:47:55 AM »
I am under-whelmed ... the rents bearly cover the mortgage (stretching this thing 30 years).  So your day-job pays the condo fees, insurance, maintenance, water/sewer, property taxes ... and god-forbid vacancy.  This one looks like a 30 year trap.

As I've said ... If I want to subsidize someone's housing, I'll donate to a homeless shelter.
Tryan
You're not seeing the forest for the trees.  The MARKET determines things like cash flow and appreciation.  Now if you don't have the resources to cover initial negative cash flow then you can not participate in this market successfully.

Now if you'd read my book, you'd know that my first property was bought with negative cash flow, partly because I could only get a 15 year mortgage but also because that was the market.  Anticipated rent increases and appreciation plus just excess demand over supply cause the market to be willing to accept negative cash flow.  Now that little $2,000 investment that you would have mocked has returned over $400,000 in rents PLUS over $400,000 in equity!!  OK, I threw a hundred or so a month for a few years but with annual rent increases of 6%, negative soon became positive.  That little rental then funded each negative cash flow purchase afterwards.  Like a little snowball rolling down a mountain.  All my properties are fungible, in that although recent ones are not throwing off cash, the portfolio is. 

Now my real estate experience has been very positive, no vacancies or evictions, 6% rent increases and 9-11% appreciation.  Great people from Chicago Playboy bunny from the early 70's to grad parties for state champions and dinners with some of Hawaiian music royalty and just some great people.  Your experience seem so negative but hey if it's working for you great.  I'm not putting down your style.  It's just not the type of real estate investment that I would be interested in. 

So in your case, what would the typical deals be that would generate $800,000?  I would rather have $400,000 in equity than a hundred or two extra in rent a month.  Why don't you start a thread where people can compare their real estate styles?


b_girl

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Re: Setting Asking Price for FSBO
« Reply #32 on: May 20, 2013, 06:37:03 AM »
I am in the middle of selling my home FSBO right now. This will be our third home purchase and first sale by FSBO ( one previous buy FSBO but the seller was an agent). I have a RE attorney ( used in previous sales). My dh and I work at home so we didn't see a lot of benefit from a realtor overall.

I had a realtor frien come and give me a listing price and look over my house on issues and staging. Though my friend didn't want payment I gave her a $100 amazon gift card. I didn't want any 'obligations ' between us and wanted to thank her. I think she was being very nice also with the hope that I would list with her if I decided to list.

I am pretty savvy about RE and the noodle prices. I have the nicest house in the nhood also. This makes it slightly difficult because I want top dollar but the nhood isn't as nice as you would expect. Nhood is fine but its harder for the nicest most expensive house. On the other hand my nhood is super hot right now.

I started by creating a simple but great website with address as name. Ie www.123SMain.com. We also did a great job staging home. My dh had been getting home ready for sale over the last year to prepare, but our home shows great. I
Last Nov we listed on CL and I got a two week free trial on FSBO.com. I immediately got an offer from CL, nothing serious from FSBO.com. Offer was from a lawyer.  We ended up doing appraisal first and had a lot of problems with it. Deal fell thru, though ultimately it was because buyer wanted out. But we were ok with it because she was a major PIA. She was a hardcore negotiator and wanted a deal. I felt she thought she could strong arm me because I was FSBO. So, we decided to wait until after Easter to relist. This time I just did CL for the first week and then put on zillow for free a week later. Got another lawyer that came and looked a couple of times the first week and then an offer from a buyer with a realtor the second week. I was paying the buyer commission - but only with a full price offer. I was upfront with realtors when they asked. After the first experience I wasn't playing any games. I knew what I wanted and wasn't taking less. I told the realtor not to give me an offer for less. So now we have just agreed on inspections remedies and are waiting for appraisal to come back this week. I will say that this realtor tried to strong arm me with inspection request and ended up pissing me off highly but ultimately buyers accepted my response. I won't adjust for appraisal regardless. My nhood is super hot and I have an awesome house ( I really do ) and I have no set timeline for moving.

I have received many a phone call from realtors wanting my listing and trying to trick info out of me. My contact cell is an out of state number so I get several calls from realtors in that city that had obviously never seen my listing. They got mean Bobbi after the first two calls and eventually they stopped.

For me CL and zillow worked fine. I used google analytics to see my traffic. Always more traffic on days when I refreshed my listing on CL. My website had all info in order to cut down calls. I had pics, floor plan, propriety disclosure, lead disclosure, termite contract, flyer, house details,etc. it worked so that I only received serious calls ( except for azzhat realtors ). Three showings , two offers.

This is my experience so far. If you aren't comfortable with negotiating than FSBO isn't for you IME.

tryan

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Re: Setting Asking Price for FSBO
« Reply #33 on: May 20, 2013, 08:38:35 AM »
Quote

 The MARKET determines things like cash flow and appreciation.  Now if you don't have the resources to cover initial negative cash flow then you can not participate in this market successfully.


True if you agree to pay full market price ... plenty of ways NOT to pay full price.  I simply won't buy if it won't cashflow positive month to month ... it's not about resources for me.

Quote

, no vacancies or evictions, 6% rent increases and 9-11% appreciation.


... tell that to the ones who bought 2007-20011

Quote

 I'm not putting down your style.  It's just not the type of real estate investment that I would be interested in. 


Probably more about "goals".  I wanted my property to free me from my day-job.  It did that.  I don't see how negative cashflows will ever achieve my goals. Nor would I wager a six figure sum on mythical forcasts of price - or rent - appreciation (the last 5 years are proof of that).

But to each his own.

honobob

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Re: Setting Asking Price for FSBO
« Reply #34 on: March 01, 2014, 06:50:36 PM »
I am under-whelmed ... the rents bearly cover the mortgage (stretching this thing 30 years).  So your day-job pays the condo fees, insurance, maintenance, water/sewer, property taxes ... and god-forbid vacancy.  This one looks like a 30 year trap.

As I've said ... If I want to subsidize someone's housing, I'll donate to a homeless shelter.

Hey Tryan, thought I'd give you an update on the rents you asked about.  I actually thought this was longer ago but in less than ONE year the rents are UP 17.6%.  Actually mortgage lower, taxes up maybe 5% and insurance flat.  Yep, the snowball is rolling and with the about $200,000+ in appreciation the $54,000 buy in is looking pretty good. Vacancy, literally had both tenants in at the same time, on leaving and the next coming in.  Gotta love Hawaii real estate.

arebelspy

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Re: Setting Asking Price for FSBO
« Reply #35 on: March 01, 2014, 07:53:01 PM »
Now if you'd read my book

Bumping a year old thread to brag aside, I'd be interested in reading this.  Link to Amazon listing?
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honobob

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Re: Setting Asking Price for FSBO
« Reply #36 on: March 02, 2014, 09:12:26 AM »
Now if you'd read my book

Bumping a year old thread to brag aside, I'd be interested in reading this.  Link to Amazon listing?
I'm sorry, I was just updating information that had been requested by another forum member.  Remember I am the investor that touts "rent growth" over immediate cash flow.  This supports my argument.  Is that bragging?  Why you gotta be so mean to Honobob on a Sunday? ;-(

arebelspy

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Re: Setting Asking Price for FSBO
« Reply #37 on: March 02, 2014, 09:19:09 AM »
Now if you'd read my book

Bumping a year old thread to brag aside, I'd be interested in reading this.  Link to Amazon listing?
I'm sorry, I was just updating information that had been requested by another forum member.  Remember I am the investor that touts "rent growth" over immediate cash flow.  This supports my argument.  Is that bragging?  Why you gotta be so mean to Honobob on a Sunday? ;-(

Fair enough.

I don't read anything in the post you quoted asking for an update:
I am under-whelmed ... the rents bearly cover the mortgage (stretching this thing 30 years).  So your day-job pays the condo fees, insurance, maintenance, water/sewer, property taxes ... and god-forbid vacancy.  This one looks like a 30 year trap.

As I've said ... If I want to subsidize someone's housing, I'll donate to a homeless shelter.

But that's fine, it was relevant.  Have you actually written a real estate book?  Or was that just words?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

honobob

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Re: Setting Asking Price for FSBO
« Reply #38 on: March 02, 2014, 09:37:37 AM »
  Have you actually written a real estate book?  Or was that just words?

 
Isn't that what a book is?  You're not still buying those with just pictures are you?  ;-)
« Last Edit: March 02, 2014, 09:42:03 AM by honobob »

arebelspy

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Re: Setting Asking Price for FSBO
« Reply #39 on: March 02, 2014, 09:57:57 AM »
Replace "just words" with "just bullshit" then.  I was trying to be nice.

For the third time:
Have you actually written a real estate book?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

honobob

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Re: Setting Asking Price for FSBO
« Reply #40 on: March 02, 2014, 10:54:28 AM »
Replace "just words" with "just bullshit" then.  I was trying to be nice.

For the third time:
Have you actually written a real estate book?
First you call me a braggard and then you call me a bullshitter.  Where are your Sunday manners?  Is this any way to sweet talk a man?

aj_yooper

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Re: Setting Asking Price for FSBO
« Reply #41 on: March 02, 2014, 01:02:34 PM »
I've sold 2 houses on my own and bought one that way too.  It is not that complicated.  You can make it even easier by hiring a good real estate lawyer. 

I priced based on comps.  Usually, good realtor agents will do a comparative market analysis for you as part of their pitch to get a listing.  Price it so it sells quickly.