FSBO and REALTORS Showing - Posted by Christy (TX)

Real Estate Investing
#1

Posted by Houserookie on July 15, 2002 at 02:12:02:

Tim,

I’m dead serious…and living it.

My strategy in selling real estate incorporates a round robbin style auction and some fringe benefits to buying from me. I have NEVER had a property where i had to sell, where the sale took longer than 2 weeks.

Me insinuating? Hmmmmm. How about this…

Do you know how many agent listed homes take longer than 30 days to sell? I betcha it’s over 50%. That’s what I mean by most. Compare to my 2 weeks.

Now I’m not saying that most agents can’t talk themselves out of a restroom, all I am saying is that
unless you don’t have a clue about real estate, I would not use any agent.

I hear that lawyers can do just about everything that agents say they can. Maybe more…

Secondly, I am not a subscriber to the theory that FMV is what similar homes are selling for in the area.
My house is different from the other homes, and the cirscumstances that my buyers are in might be differnt from ones that purchased similar homes. And I’d like to think that I have a few more resources to get homes sold than most sellers and agents.

What that means is that I can offer things that others can’t. If the other sellers can’t offer what I offer, how is my property “comparable” to the others in FMV?

I have different carpet, different door knobs, and heck I might even throw in two free mortgage payments which most other agents and sellers don’t offer.

If course, if you sell like everyone else, and offer the same mumbo jumbo like everyone else, then by all means follow your FMV guideline.

Personally, I shoot for the higher numbers and not FMV. Who really does determine FMV? You? The agent? Another seller? Some guy across the street?

Or the actual buyer?

Austin

#2

FSBO and REALTORS Showing - Posted by Christy (TX)

Posted by Christy (TX) on July 13, 2002 at 22:53:16:

In trying to sell my home FSBO, I have been of course contacted by REALTORS who want my listing. I had already visited each REALTOR in town and handed them a flyer with the house info and my willingness to pay 3% to one who brought a buyer.

Today I was contacted by another REALTOR and they offered a “one time showing listing”. Upon asking exactly what that entailed, she responded that if she showed the house and it sold to that buyer, then she would be entitled to her 6% commission.

Whoa, wait a minute! If I list the house, I have to pay 6%. If I don’t list the house and you show it once, I have to pay you 6%? I said I would pay 3% and she quoted “office policy” would not allow her to do that.

Frankly, I am getting tired of all the runaround. This is an excellent house in a desirable neighborhood. My FSBO signs have been stolen from the neighborhood corner and my flyers at Walmart are mysteriously disappearing. I smell sabatoge here. It’s as if they are circling and just waiting for me to give up the ghost.

Why doesn’t one of them show the home to a legit buyer, sell the house, get their 3% on go on? That’s all they would split if they were not the listing agent anyway.

Maybe I’ll chuck it all and sell on a lease purchase. I tried lease option a year ago and the TB changed their minds and left me with an empty house right after 9-11.

Any comments, suggestions or consolations?

#3

Correction to FSBO time on market - Posted by Christy (TX)

Posted by Christy (TX) on July 15, 2002 at 14:24:47:

While it is true my L/O moved out around 9/11, I immediately re-rented it for the market value rent in our area until I could paint and put on the market when things calmed down. This home has only been for sale three weeks now. This was originally my home but has been rented twice now and needed sprucing up for the buyer market.

Thanks to everyone for all the responses, I will take it all in and get creative again.

#4

Re: FSBO and REALTORS Showing - Posted by Houserookie

Posted by Houserookie on July 15, 2002 at 24:09:38:

Why dont you post a little more info about your property. Perhaps a local investor in your area can
do an option with you. You tell the investor what you want, and he keeps the difference between the sale price and your option amount.

This is in effect similar to a net listing only you will be dealing with investors that flips and/or assign his interest to a buyer.

The investor may even decide to let you sell directly to his buyer, for a small profit.

You know, some of the investors on this board actually know how to sell real estate. We use techniques that most FSBOs don’t know, or will take years to learn.

Just a thought.

Austin

#5

Re: FSBO and REALTORS Showing - Posted by Dave T

Posted by Dave T on July 14, 2002 at 15:04:54:

Do you have a Help-U-Sell or similar service in your area? I went through Help-U-Sell in Virginia when I sold my property FSBO a few years ago.

I paid a one time fee of $400 to put my property in the local MLS and stated that the co-op fee was 3%. The “listing” agent used my picture of the property for the MLS, and I worked with the agent on the exact wording I wanted in the comments section of the listing. The deal was structured so that if I found my own buyer, I paid no commission to anyone. If I sold to a buyer found by another real estate agent, then I would pay only a 3% commission to the buyer’s broker and nothing to Help-U-Sell. If the Help-U-Sell folks found the buyer, then I would owe them a 6% commission.

I had several agents (and their clients) tour the property. When I received an offer (low and with seller concessions) I worked with the agent and suggested financing sources that allowed his client to make a full price offer and bring less money to the settlement table than his initial offer required.

I met the appraiser and provided the appraiser with comparable properties and their sale prices that he might consider for his report. I took care of the pest inspection, and secured the property owner’s association documents and certification of dues.

All I had to do next was show up at the settlement table on the appointed day. I had been told that some agents in the area boycott the Help-U-Sell listings, but my property sold at my price in seven weeks. Incidentially, seven weeks was the typical length of time for a property in my area and price range to stay on the market. So much for the boycott.

You might try this approach in your area. Getting your property in the MLS does dramatically increase your exposure to the home buying public.

#6

what about a Net Listing? - Posted by Joe - Austin, TX

Posted by Joe - Austin, TX on July 14, 2002 at 10:59:52:

Here’s one more idea. Try doing a Net Listing with an agent. Basically you give the price that you want the home to sell for, be sure you figure in all costs to you,or that you are willing to pay,but do not include commission, when figuring this amount. What the agent then must do if they want to make money on the contract is sell it above your price. For example you what $150000 for your house, if the agent wants a 6% commission then they will need to sell it for about $159500. So in other words they get anything above the $150000. Jim and Scott also bring up a good point, negotiation. No commission is set in stone. Also,and I think they touched on this, is the time-to-money ratio. By paying a mortgage on a empty house the last 11+ months you may have already given up 2 6% commissions. Anyway think about what you have to offer, your are willing to pay 3% and have an great house, so now you just need to find a relator willing to come down on their commission. Think of it like RE investing, your first 20 calls may go no where but your 21st you score. Oh, one other thing you may ask a realtor is can you list it with them but reserve the right to sell it yourself and if you sell it before the agent you pay no commission. Hope this helps good luck!

#7

Re: FSBO and REALTORS Showing - Posted by Mark W-MD

Posted by Mark W-MD on July 14, 2002 at 09:46:29:

You could always list it with a discount or fixed price real estate company. Help-U-Sell is a good alternative in our area and thier fees are reasonable and your property gets on the MLS. Everything is negotiable, if they won’t come off their 6% just tell them ‘Thanks - but No Thanks’ and move on. Way too many realtors to deal with these types of short-sighted agents & roadblocks.

Good Luck, Mark Williams

#8

Re: FSBO and REALTORS Showing - Posted by Larry In.

Posted by Larry In. on July 14, 2002 at 09:14:21:

What if you raised your price by 3%?!? As long as you get your NET who cares what else it costs. Just a thought. Good luck.

#9

Re: FSBO and REALTORS Showing - Posted by Rick(MD)

Posted by Rick(MD) on July 14, 2002 at 08:04:29:

Christy,

You have had the property vacant since September, 2001 and you are not trying to at least negotiate with the REALTOR??? How much have you lost in monthly payments payments since then?? In the beginning you probably could have paid a 10% commission and still be ahead.

The simple truth is this. If you are gonna sell it FSBO then you have to realize that you will have to spend a lot of dollars to get the kind of exposure a REALTOR can get through the MLS.

If you want to spend the dollars and your time, then also realize that the buyer looking at FSBO also wants a good deal and is usually only shopping FSBO because he believes he can find a better deal than going through a REALTOR.

If you are in a strong market then by all means give it a shot, but if it ain’t moving, then you have to either price it competitively or get help!

Good luck.

Rick(MD)

#10

Re: FSBO and REALTORS Showing - Posted by Scott Ewing S.W. Mich

Posted by Scott Ewing S.W. Mich on July 14, 2002 at 05:34:22:

Commissions are always negotible by law. There can be no “office policy” However real estate agency has tremendous overhead. It is not unusual to only clear 1% on a co-broke (2 office) deal. Even though there would be no marketing costs with this deal, there would still be the running around that needs to be done. Your signs are probably being picked up my your city according to ordinance. Mine has a 3 day limit for corner signs. Same with your flyers. Most stores pull down flyers after a period of time. Jim was correct about a one time showing agreement. I used 1 week listings when there was no other way. Now I just concentrate on REI. Much more fun/lucritive. You mentioned a possible L/P and L/O from a year ago. Your buyers probably would have pulled out anyway. 9/11 wouldn’t have detered a serious buyer unless their job was directly connected to the fallout from it. If you don’t need the money up front, try the L/O format again. You’ve been doing this for 3/4 of a year at least. You’ve paid through the nose, I bet, when you want to get rid of the thing. Ads like low down, no BANK qualifying, always get calls. Hope this helps. Scott

#11

One Time Showing Listing - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 14, 2002 at 24:26:42:

Christy,

How badly do you want to sell the property? Would it be worth it to pay the 6% to get the place sold? Only you can answer.

Understand that almost everything is negotiable, regardless of “office policy”. In most instances, “office policy” is dictated by the designated broker - her boss. Set a meeting with the agent and her broker and negotiate a “one time exception” to the office policy. Would the agent and broker be happy with 4% or 5%? Would you be willing to pay more than 3%? They want to charge 6% - you want to pay 3%. Would all parties be willing to split the difference - 4.5%? Keep in mind that every day the property sits unsold, it costs you money. (Oh, BTW, sometimes “office policy” is a myth that the agent dreams up to negotiate a full 6% commission. There may not really be any such office policy.)

If you decide to grant a “one time showing listing”, be sure that the listing agreement specifies that you only have to pay the commission if the agent brings you a full price offer with no contingencies. Make sure the buyer is pre-approved - not just pre-qualified. If they bring you anything less than a full price offer with no contingencies from a pre-approved buyer, you would have the right to reject the offer and owe no commission. But if you decide to accept the offer, regardless of the terms, you’d owe the commission.

Christy, you didn’t mention your asking price, but you can even negotiate a “sliding scale” commission. For example, 6% for full price, no contingencies; 5% if the offer is within $5K of your asking price; 4% if the offer is within $10K, etc.

When you negotiate with someone, you should always try to understand where they’re coming from in the negotiation process. One point to keep in mind is that if an agent brings a buyer to the table for a property listed with another agent, the listing agent (or someone in his/her office) is going to be responsible for taking care of all the little details on the seller’s side, necessary to get the deal to closing. The buyer’s agent will be responsible for taking care of all the little details on the buyer’s side of the transaction. In THIS situation, since there is no listing agent, the buyer’s agent will have to do ALL the work, unless YOU do the work normally done by the listing agent. Do you even know what has to be done? Can you assure this agent that she’s not going to have to worry about you handling all those pesky little details?

BTW, while obviously not the norm, one time showing listings are not all that uncommon. In fact, it’s how I generally counter the standard “I’ve got a buyer for your house” when I suspect it’s just a ploy to get a regular 3, 6, or 9-month listing.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX

#12

just an idea… - Posted by Joe - Austin, TX

Posted by Joe - Austin, TX on July 15, 2002 at 10:19:28:

Hey guys I agree a net listing is tough to get, it was just a suggestion. As far as I know net listings are not illegal in Texas. Austin, I agree fmv doesn’t always determine what a home will sell for but it is a guide,an estimate, ballpark figure with which to start at.

The net listing suggestion was to let her know she has some options. Did you finish reading the post? What about, reserving the right to sell part? Anyway, Austin, sounds like you do well and selling your homes in two weeks is outstanding. Maybe you can sell Christy’s house? Are you in Texas?

#13

Isn’t “Net Listing” illegal?? - Posted by Michael_NJ

Posted by Michael_NJ on July 14, 2002 at 11:33:32:

Isn’t “Net Listing” illegal??

#14

Re: what about a Net Listing? - Posted by Houserookie

Posted by Houserookie on July 14, 2002 at 11:05:05:

Most agents don’t take the net listing route because they would make a lot less money…if at all.

#15

Re: FSBO and REALTORS Showing - Posted by Houserookie

Posted by Houserookie on July 14, 2002 at 10:45:53:

I agree on your point that she could have paid 10%,
sold months ago, and still be ahead. I see this in FSBOs all the time. They set their price, yet they wait for the market to decide. LOL…this is too funny.

HOwever, I do disagree on your point regarding buyers shopping FSBOs for good deals. Although this may be one of the many reasons, the fact is, most buyers also shop the local newspapers.

In only logical reason that I can think of for using agents to buy is to locate expired listings.

Why do you think agents advertise in the local papers?

Because it works…

Austin

#16

Net Listings in Texas. - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on July 16, 2002 at 24:06:22:

Here’s an excerpt from the Rules of the Texas Real Estate Commission:

§535.16. Listings. [Amended April 14, 1998 and July 1, 1999; Ref: §2(2)(D)]

(b) A ?net listing? is a listing agreement in which the broker?s commission is the difference (?net?) between the sales proceeds and an amount desired by the owner of the real property. A broker may not take net listings unless the principal requires a net listing and the principal appears to be familiar with current market values of real property. When a broker accepts a listing, the broker enters into a fiduciary relationship with the principal, whereby the broker is obligated to make diligent efforts to obtain the best price possible for the principal. The use of a net listing places an upper limit on the principal’s expectancy and places the broker’s interest above the principal’s interest with reference to obtaining the best possible price. If a net listing is used, a broker should modify the listing agreement so as to assure the principal of not less than the principal?s desired price and to limit the broker to a specified maximum commission.

Best of Success!!

Jim Kennedy,
Houston, TX

#17

Re: just an idea… - Posted by Houserookie

Posted by Houserookie on July 15, 2002 at 12:42:55:

I agree fmv provides a good ballpark for people to pay in and yes i read the entire post about this being simply another option for her.

No I am not in Texas, but it looks like you are, so offer her an option and lock in what she wants. It’s just like a net listing.

My method of selling is a combination of the 5-day sale method by Bill Effros and the no disount selling method by Kosol P. Sek.

Try it out yourself a few times and you’ll see what I mean that FMV is a sit and wait method of selling.

Austin

#18

Re: Isn’t “Net Listing” illegal?? - Posted by Paul V. Xavier

Posted by Paul V. Xavier on July 14, 2002 at 12:22:47:

Yes, in some states Net Listings are illegal.

#19

Re: what about a Net Listing? - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on July 14, 2002 at 17:20:57:

Don’t you mean the opposite?

A net listing is what would be left after what the seller wants. Wouldn’t they make ‘more’ money because they would not take a net listing with a loss on it if they knew the market.

Example
FMV $200k, Seller wants $190k, take a regular listing.
FMV $220k, Seller wants $190k, take a net listing.

I don’t think an agent would take a net listing if the amount would be less than the full commission direction.

BTW, net listings are illegal in most states; and I don’t know which states still allow them if they do.

#20

Re: FSBO and REALTORS Showing - Posted by Nate(DC)

Posted by Nate(DC) on July 15, 2002 at 15:53:38:

I would agree with Rick. Most home buyers are savvy enough to know that a FSBO seller has no agent to pay, and they expect that at least part of that savings go to them in the form of a lower price.

NT