Follow-up On Last Week’s Column About Off-Market Real Estate Sales

In last week’s column, I demonstrated statistically that when sellers allow their listing agent to sell their home without putting it on the MLS, they could lose 2% or more on the sales price of their home. A reader pointed out that I ignored one way in which sellers can save even bigger — by not employing a listing agent at all.

That reader’s email betrayed two misunderstandings that lead many sellers to try for-sale-by-owner (FSBO).  First, that the typical listing commission is 6 or 7%, when it really averages about 5.5% according to the National Association of Realtors; Second, that a FSBO seller can sell their home for as much as they could if they employed a listing agent.

Selling without an agent might be somewhat effective in ordinary market conditions, but it makes little sense in a seller’s market. That may sound counter-intuitive, but it is absolutely true. It’s one thing to manage your own negotiation with a single buyer, but do you really have the time (not to mention the skill-set) to negotiate with, potentially, multiple buyers?  How do you vet prospective buyers, safely handle showings, and properly analyze the strengths and weaknesses of competing offers?  Even if you’ve sold your own homes in the past, it’s pretty unlikely you’ve done so in the type of market we’re in now.  Indeed, I’ve even had licensed real estate agents hire me to sell their own property. Why?  Because they recognized that I had more tools and was better suited to navigate the tricky waters of our current market than they would have been.

In addition to overestimating what they’d pay to a real estate professional, FSBO sellers often overlook the fact that most buyers are represented by their own agent who will be expecting to earn 2.8%. Because of that, smart FSBO sellers will offer to pay a co-op commission, reducing their savings from, say, 5.6% to 2.8%. With MLS listings selling for more, as I demonstrated last week, what is the gain?  And do you really want to be the only party in the transaction without professional representation?

Recognizing that a FSBO seller will sell their home for less than they would have if they’d had professional representation, chances are good they will ultimately net less money. So, by going it alone, they get to deal with all the pitfalls and difficulties that can accompany a real estate transaction, they get to do more work than they expected, and they end up with less money – all to avoid paying a commission.

Call us, and we’d be happy to address other concerns and considerations and show you how Golden Real Estate’s agents earn what sellers pay them.

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is solar powered and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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