Advice: I'm trying to do a FSBO in Monterey County, Ca.

Buying & Selling Real Estate
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Advice: I'm trying to do a FSBO in Monterey County, Ca.

Jessie Huffey
Sandpoint, ID · Member since 2015 · 68 posts · 37 votes

Hi All, Although I eventually plan to be much more involved as a real estate investor, my immediate need is for some advice on selling my home quickly FSBO and maximizing profit without paying a 5% commission (amounts to about $25,000 in my case). I have recently listed my home on Zillow for 510k (about 5k below market value) in Prunedale, Ca. (about 1 hour south of San Jose, Ca). I have had a lot of interest from buyers and real estate agents (who balk at my offer to give a 2% commission if they bring in buyer and handle closing process) who are planning to attend the showing, and I believe the level of interest is due to the fact that it is the lowest priced home in the area on the market now given the square footage and lot size. Because I am out of state, I am doing one showing next weekend and am betting this will generate at least one offer. If it does, what should be my next steps? Thanks!

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Colin SmithBusiness Member
Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
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I may be a little biased here but I do believe you should consider using an agent, especially if you are out of state and don't know the process. Selling fast and FSBO also usually doesn't mix. Most people who are looking at FSBO are just looky-loo's who are trying to get a feel for the market but don't have any intention of buying right away. Then there is the evaluation of your property. Why put the house on the market for less than what its worth just so you can avoid the agent fees? Sounds like to me you're spending the money anyways whether its to an agent or by just asking less. A good agent should not only be able to sell your property at market value, but should also be able to negotiate in such a way to maximize the amount of money you can get for your home and take care of the whole process from showings to closing for you. In my opinion, and again I may be biased, I think you are making a mistake by trying to go the FSBO route.

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  • Colin SmithBusiness Member
    Realtor · Colorado Springs, CO · Member since 2013 · 987 posts · 447 votes
    11y

    I may be a little biased here but I do believe you should consider using an agent, especially if you are out of state and don't know the process. Selling fast and FSBO also usually doesn't mix. Most people who are looking at FSBO are just looky-loo's who are trying to get a feel for the market but don't have any intention of buying right away. Then there is the evaluation of your property. Why put the house on the market for less than what its worth just so you can avoid the agent fees? Sounds like to me you're spending the money anyways whether its to an agent or by just asking less. A good agent should not only be able to sell your property at market value, but should also be able to negotiate in such a way to maximize the amount of money you can get for your home and take care of the whole process from showings to closing for you. In my opinion, and again I may be biased, I think you are making a mistake by trying to go the FSBO route.

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  • Robert Musallam
    Investor · San Jose, CA · Member since 2014 · 294 posts · 113 votes
    11y

    @Jessie Huffey

    No surprise here but I'm going to agree with @Colin Smith If for nothing else, purely because you're absent from the area (and thus the immediate attention the sale requires), I'd consider listing with an agent.

    But if you're dead set on doing it yourself, please feel free to reach out and I'll be happy to help where I can.

    Best of luck!

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  • Jessie Huffey
    OP
    Sandpoint, ID · Member since 2015 · 68 posts · 37 votes
    11y

    Thanks Colin and Robert. Yes, I decided before I listed the house on Zillow that if I am unable to get a good offer on my own I would list with a specific real estate agent I know that has an excellent track record in August. The truth is, however, I would rather have the buyer pocket some savings than pay a $25,000 commission which I believe is too high for the amount of work involved. I think it is totally fair to pay a 5% commission on a 100k home but don't think a 500k home is 5 times more work to sell and if I can avoid paying a $25,000 commission, I will.

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    11y

    @Jessie Huffey, I am a licensed agent now, and have sold two homes FSBO before I got my license. They were difficult houses to sell, and I offered a higher commission than the typical to entice the agents to my house. (The typical rate in my location at the time was 6%, and I offered 4% to the buyers agent. More for them, but still less for me.) It took me 18 months to sell each. I was not in a hurry, and they were difficult homes to sell with unique features.

    It sounds like 5% is the typical rate (It is a violation of the Sherman Anti-trust Act to say there is a going rate.) in your area, and you are offering less than the traditional 50-50 split for the buyers agent.

    If your market is red hot, you should be able to sell this property FSBO. If your market is not red hot, I would agree with the previous commenters to list it with an agent.

    The commission you pay an agent is negotiable and you should be able to find an agent who will negotiate with you.

    My market is so hot that anyone can plant an FSBO sign in their yard and sell the house almost instantly. I have never seen a market so hot in my entire life. Makes me wish I did a few things differently two years ago when I moved here... Sigh.

    Good luck.

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  • Peter K.
    Investor · San Jose, CA · Member since 2013 · 115 posts · 76 votes
    11y

    hi @Jessie Huffey  I totally agree with @Robert Musallam and @Colin Smith  

    Disclaimer:  I am licensed but don't do transactions for others.  I only list my own properties.  So I'm not a good candidate to list your property.  And I'm not giving legal or professional advice.  

    You definitely want the exposure that the MLS will bring, along with the network and exposure that a good agent will bring to the table. I was taught very early on in my investing career from a multi-Millionaie real estate investor that thinking "that's expensive" is a consumer mentality. An investor should ask themselves a follow up question "compared to what?" 5-6% to a broker in your case is very inexpensive compared to the exponential expose, expertise, avoiding potential legal issues, holding multiple open houses, quick access to the property, qualifying buyers, potentially avoiding escrow fall out, etc that a GOOD or great agent brings to the table.

    When I list my own properties or make offers on properties listed on the MLS, it still amazes me how much the sales price gets bid up to, usually way over what we initially thought. If the property is appealing to a typical owner occupant, you will likely cost yourself much more than 6% by trying to sell it yourself, especially remotely.

    No offense.  I say this with your best interest at heart.  If I were in your shoes, I would get out of my own way, do what I do best and what makes me money.  Let a professional do what they do best.  Like a wise man named Jerry Macguire once said, "help me, help you".  ;-)

    I often follow my own advice, by offering other agents that bring me deals to list my rehabs on the back end.  And I pay full commission, assuming there is room in the deal. 

    Best of luck on whatever you decide. 

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