What is the stigma behind FSBO?

Question

Hi all. After holding onto and rehabbing 2 investment properties in the Northern Virginia area for a number of years, I am now trying to sell them. I've had little to no response to the MLS posting, but when I posted to Craigslist, I was inundated by realtors calling and trying to convince me to list with them.

I thought by offering a 3% buyer's commission, I would get a better response. Some agents suggested that they can do a more professional job of listing my property, and they are better positioned to leverage their connections to agents who have buyers.

I also heard the full spectrum of opinions; it's easier to negotiate down than up, while others contend that setting my price below the market will stimulate a bidding frenzy.

At this point, I don't know who or what to believe... listing my property at a fair price based on CMA doesn't seem to be working like I expected.

Would love to hear from my fellow BP colleagues to get a sense of their experiences.

Nicholas Crum · Answer

Hi Sam,

If you are looking to just cash out quickly, your best option may be just to hire a realtor and pay the realtor commissions. I am unsure of the state laws but sometimes you can have the buyer pay the closing and commissions as well. That may be a viable option for you.

I hope this helped!

Sam Sharata · Answer

Hi Dawn,

I used an online listing service to post my property to the MLS. The realtor representing the listing service merely acts as a limited service agent.

Sam

Dawn Brenengen · Answer

@Sam Sharata

I'm a little confused.  You say you are listed on the MLS.  You would have had to had a listing agent input into the MLS for you, correct?  Even if it's a flat fee company or something similar, they would still need to be a Realtor.

Sam Sharata · Answer

Thanks for the feedback Dev & Gilbert. I actually listed only 1 of my 2 properties on the MLS and made no mention of a FSBO. But it's obviously a FSBO since I didn't indicate that I'm a licensed realtor on the listing.

I priced the property on the MLS based on CMA (what has sold and what's currently on the market), and based on the features and what's presently available, I think it's reasonably priced with very little margin. I did indicate on the listing that I will award a 3% commission to the buyer's agent.

I don't want to participate in any creative financing arrangements; I simply want to cash out on the equity I currently have in the properties.

Perhaps I need to go back and take better photos that don't have all of the tenants' belongings. It's challenging trying to sell a tenant occupied property, and even more challenging when the only people talking to me are simply interested in positioning themselves for a guaranteed commission once a buyer comes along. I simply don't want to risk being tied down to a contract for 3 months or more with an agent who has no buyers.

Perhaps I may need to lower the price to the point where buyer agents can no longer ignore my listing... I don't know. The property has only been on the MLS since Memorial Day, so maybe I'm being too anxious or ambitious.

I think I'll give it another week, then make a decision to either drop the price further, or break down and make a deal with a listing agent.

My goal is to close on both properties by the end of July.

Sonya Stovall · Answer

@Sam Sharata also FYI, I'm not licensed in VA so I'm not trying to get your lisiting; just trying to see if I can help and offer an outside opinion.

Sonya Stovall · Answer

@Sam Sharata what is the property address?  You can inbox me if you prefer.  I would like to see your MLS listing to see if I see anything that suggests what your problem might be.  Thanks.

Dev Horn · Answer

You paid to get the properties on the MLS, right?  If they are priced right and on the MLS, buyers agents should be finding them and showing them to clients.  If that is not happening, either something is not right about the way your props are showing on MLS, or perhaps you are priced too high and agents are deciding not to show them.

Hope you solve that puzzle!

Gilbert Dominguez · Answer

Well you are marketing your properties to retail buyers, right? It is a given that from 90% to 95 % of retail buyers shop for their house in the MLS. Certainly a real estate agent in the area has built up connections to find buyers and its in their interest to find a buyer for you. The down side to that is that once you assign your property to an agent the listing is with them for a given amount of time regardless of the success or lack thereof you will have in selling your house or houses.

Ask yourself two things, What do you want to do and what do you need to do. Would you be open to creative modes of financing such as Owner financing, Lease options, subject to existing financing remaining in your name or do you simply want out and only will consider selling your properties outright? Having an agent help you find  a buyer who will qualify for traditional financing may be the best way to go for you. Is what you are trying to save by doing FSBO vs listing with a real estate agent worth your houses not selling for a long time? I mean you have tried it and it has not proved successful for you at this time. Maybe list your houses for sale on the MLS and do not mention FSBO just give your contact information. You may try adding to contact owner directly and letting the buyer know they need to get and bring a buyer's agent or you can simply try negotiating with real estate agencies to see if they will help you for a 3% commission and if they will what ask what can you expect as a total service to you.

As a FSBO seller do you have access to possible sources of financing for your buyers? Typically real estate agents do have those sources and can direct the buyer's application to their sources of financing. You may try contacting sources of financing and asking if you can direct your potential buyers to them for loan qualification and financing . Are you spelling out the words For Sale By Owner or are you abbreviating it to simply FSBO, perhaps people do not know what FSBO means. You can be surprised.

I really do not know if I have given you any fresh ideas but I do wish you the best in selling your properties.