The Deals and Duds of Westchester's Real Estate

Jan 22, 2009

03:00 AM

Ditching Your Realtor

Realtors may roll their eyes at the topic but there are alternatives to enlisting a member of their ranks to sell your property. There are two main options, each with advantages and disadvantages.

1) FSBO. No, this isn’t the latest in text speech your teenager won’t explain the meaning of but an acronym: For Sale By Owner. This method enables you to save half on the commission money (all if you meet a buyer directly) but of course you are doing all the work a realtor would have done.

Advantages:

--You’ll save on commission fees. A realtor will take approximately 5 percent commission to sell your home (e.g., a 5 percent realtor’s commission on the sale of an $800,000 home would be $40,000).
--With one less middleman (two if you find a buyer directly) information is more readily communicated between the buyer and seller and thus the sale process of a FSBO home is likely to be quicker.

Disadvantages:

--Your marketing reach won’t likely be what a realtor’s is; they tend have more time and access to better resources such as Multiple Listing Service (MLS) and in-house legal and financial departments that facilitate transactions.
--Unless you have a lot of free time on your hands (i.e., no kids, no day job), marketing your home may be unmanageable. You have to have open houses as well as show your property at times that may not be convenient for you.
--A realtor is more likely to look at your home with a critical eye and realistically assess its value. Your asking price may be based on emotion or needs, not reality.
--In negotiation, buyers sometimes use the fact that if a seller is avoiding paying a selling agent’s commission it should be taken off price.

2) Limited Service Realtors (LSR). Agencies that provide this service (aka a flat-fee MLS) operate at a midway point between doing FSBO and hiring a full-service realtor. The LSR will offer some important marketing services a realtor would provide (namely listing your home on the MLS and realtor.com) while you have to do much of the rest of work. Instead of charging you a commission on the sales price of your home, the LSR will charge you a smaller fixed fee.

Advantages:

--The home seller gains access to the most important real estate sales tools, the MLS and realtor.com.
-- This service is much cheaper than using a traditional real estate selling agent. The listing fee for a "flat fee MLS" can range anywhere from $200 to $500, depending on the area. Also, when a property is listed in MLS using a LSR, the seller must offer a buyer's agent commission, but it’s typically less than the usual 5 percent.

Disadvantages:

-- Using a LSR, you remain as the contact/agent for your home. You still handle many of the usual trappings of an FSBO sale (i.e., objectively evaluating your home’s value, showing your home).
--A small percentage of realtors (the unethical ones) may be reluctant to show your house to buyers if you use a LSR. They’d rather show a house where the seller is using a traditional realtor so they get full commission.
--In negotiation, buyers sometimes use the fact that if a seller is avoiding paying a selling agent’s commission it should be taken off price.
 

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