Do you ever For Sale by Owner (FSBO)?

Rehabbing & House Flipping
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Do you ever For Sale by Owner (FSBO)?

Cody McGuffie
Investor · San Diego, CA · Member since 2016 · 9 posts · 0 votes
Hi Everyone! Background: - Investor for 3 years (multifamily and sfr flips) - unlicensed (nor do have any desire) - San Diego, CA Market Quick question for you, have you ever FSBO? If so, how’d it go? Did you offer the buyers agent a commision? Would you do it again? What we’re the biggest challenges? If you haven’t FSBO - why not? What makes agents so valueable that it’s worth 20-30k of your equity? (500K AVG PRICE) THANK YOU FOR ANY RESPONSE (FROM AGENTS/BROKERS TOO)! (ALSO, I VALUE AGENTS VERY MUCH AND DONT MEAN TO OFFEND, JUST CURIOUS THANK YOU!
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Bob B.
Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
7y

I sold a house a couple of months ago without an agent for retail and no concessions.  Appraisal came in $2,000 higher than the sales price.  Agents usually earn their commissions but I've sold most of my properties without one.   Most buyers are under the impression they need an agent and others discount the purchase price when an agent isn't involved.   

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Well I am an agent, but I also buy and sell properties in states where I am not licensed. In those states, I still hire an agent. I do so because I know with the complexities that exist in the state Im licensed in, I dont want to run into some gotcha in a market Im less familiar with the complexities of.

    I also in the markets I am licensed in hire one of my colleagues to represent me, but that is for an entirely different reason.  My e&o insurance will not cover me when Im a principal to the transaction, so Im not willing to risk the liability against my license, as my licenses are the most valuable assets I have.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Reagardless of what sites you’d get it on, you’ll miss 80% or so of the buyers out there without it being on the mls with the typical commission going to the buyer agent.....not good odds for getting the best price.

    2Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Based on my experience getting the right agent to list and sell your house is worth the commission. The money you spend on the correct agent will be made up with time saved, final sale price you get, and having the correct disclosures prepared for the buyer. I notice FSBO sit longer on the market, listings look like crap, and the price is always wrong.

    What makes the right agent worth $20-30k.  They get it done and make your life easy.  

    2Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    FSBO using a flat fee agency works wel for some investors (I used to only sell my houses this way). I have/use a realtor now but never had any issues or hiccups I couldn't get passed when selling by myself.

    With that said it must be on the MLS, and you have to offer standard buyers agent split (2.5-3% normal).

    1Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    I sold a house a couple of months ago without an agent for retail and no concessions.  Appraisal came in $2,000 higher than the sales price.  Agents usually earn their commissions but I've sold most of my properties without one.   Most buyers are under the impression they need an agent and others discount the purchase price when an agent isn't involved.   

    4Reply
  • Cody McGuffie
    OP
    Investor · San Diego, CA · Member since 2016 · 9 posts · 0 votes
    7y

    Thank you for the responses everyone - all very good points! I really appreciate it!

    @Bob B. - did you offer the buyers agent a commission? How did your buyer like the process? Why don't more people do this? What were your biggest hurdles - paperwork? 

    @Brian Pulaski

    @Brian Pulaski - Thanks for the feedback! Why not just use Zillow and bypass the MLS, price it a little lower (justified with no comm)? What do you think would happen if you didn't offer buyers agent fees and plan to have the buyer come direct? What were your biggest hurdles with FSBO sites?

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  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Cody McGuffie I've only sold one house where the buyer had an agent and they added their commission to my price.   

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  • Cody McGuffie
    OP
    Investor · San Diego, CA · Member since 2016 · 9 posts · 0 votes
    7y

    @Bob B. Perfect - thanks for sharing, that's exactly what I was thinking of doing. Did they throw a fit over that? and any issues with the process you wish was easier? (example - contracts, title/escrow, anything?) Does anything turn you off from doing that again?

    0Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Cody McGuffie No issues. I buy FSBO and sell FSBO like a lot of others here and while some buyers don't understand the process many don't have a problem. I've used an agent with out of state.

    1Reply
  • Cody McGuffie
    OP
    Investor · San Diego, CA · Member since 2016 · 9 posts · 0 votes
    7y

    @Bob B. Thanks for the great feedback!

    0Reply
  • Alex Kim
    Lender · Irvine, CA · Member since 2018 · 71 posts · 15 votes
    7y

    @Cody McGuffie

    When you are selling FSBO and paying the buyers agent, the agent is kind of taking on a double job to close the deal. Not the ideal for the agent but that's just what it is if the seller/buyer is new to RE transactions. It's more money but less risk and less headache.

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y

    I'd much rather deal FSBO as a buyer or seller. I got my re lic so I'd have to deal with agents less.

    The brokers who provide value are the ones that find a buyer and seller and put them together. The ones that simply try to get listings so they can put them on the MLS and host an open house with cookies are a dying breed. The sooner that happens the better. Tech is already killing that model.

    4Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    @Cody L. You are right in this . Your not only going to get a better deal, but you can avoid a lot of shady realtors that lie cheat and steal to dump a house. NothIng Is more aggravating to me than taking time out of my day to drive out to a property for a tour and realize the realtor lied about the condition of the house ,the neighborhood and the taxes .had this happen so often I just look off market now . Tired of the games . I’m sure there are professional experts but they are far and few between
    1Reply
  • Ed Tamayo
    Investor · Sugar Hill, GA · Member since 2014 · 168 posts · 97 votes
    7y
    @Cody McGuffie In my experIemce there Is not a sIngle, cover all, answer. I have sold properrIes In multIple ways: craIglIst, With no agents on eIther sIde, usIng a MLS lIstIng only agent ( you pay a couple of hundred dollars to be lIsted but the agent does nothIng else for you,) usIng a dIscount agent and a tradItIonal agent. I also have gIven optIons to buy and I have worked wIth wholesalers. My inclination, In general, Is to use a dIscount listing agent as you do need to be on the MLS. i decIde how I am goIng to sale each property based on how much work It mIght take me versus how much i would pay a lIstIng agent. If I have a 200k house In a very good shape, In a B area, I most definitily don’t see the need for a full service lIstIng agent.
    0Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    7y

    OMG...my agents are worth there weight in gold( kidding ) but so valuable. I've used one agent for years on my lower end properties and rehab's purchases. I use one agent specifically for the new construction homes. Yet he has a team of 60 folks under him. I explain to some new partners of mine. I don't mind paying 6,7 even 8%. With the speed efficiency and his team this agent has built. I consider him part of my team. Again the concept of building a team around my projects. An agent sometimes multiple agents are very important part of my team. Have I sold houses without agents absolutely. Have I purchased houses without agents absolutely. As somebody mentioned before there's so many different forms and things that you need to know or do. That having an agent in your corner is very helpful. Please bare with spelling and grammar I'm typing this from my phone.

    Alex

    1Reply
  • Bruce May
    Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
    7y

    @Cody McGuffie when I was flipping I used a flat fee agent for about $400 to get the home on the MLS and offered a 2.5% commission to the buyer's agent. I did this several times and it worked out well. The key is to have it on the MLS so it get pushed out to all the services that feed from it and that usually means you have to pay a buyer's agent to bring the buyer. However, with all the new apps and technology in the past few years you might be able to attract buyers from the MLS who are not using an agent. The main issue then would be the paperwork, but I'm confident that you know how to create a sales contract.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    As the market changes from white hot to balanced like what Is happening now.. Good agents can make a difference for sure. and MLS in my experience for SFR's is mandatory to sell..

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    7y

    My experience with FSBO has been they are overpriced and underdisclosed and the sales pitch from the owner is tedious. I don't even look at them today. As for selling, a good agent works a lot harder than I would be willing to do, and I do not have an agents rollodex.

    3Reply
  • David H.
    Madisonville, LA · Member since 2018 · 125 posts · 71 votes
    7y
    The real estate system is set up where it seems difficult to justify not using a realtor due to the MLS. I find in a normal market it's hard to get the best price unless you pay to get on the MLS and offer a commission. So then it's down to only saving 3percent. At that point it becomes a toss up whether its worth the extra effort to save that. And a good realtor is leaps and bounds worth that but I've not been able to find a good one for me. And I think it kind of sucks just paying a person that isnt that great just to get on the MLS... Maybe as things progress technologically it'll get easier to just do it on your own... which I hope
    0Reply
  • Pratik P.
    Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    7y

    I really don't see the value in agents who just list properties on the MLS and then host open houses. I do think buyer agents bring value though. My go-to strategy would be to use a flat fee service to list the house and offer 2.5% to buyer agent.

    1Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @David H.:
    The real estate system is set up where it seems difficult to justify not using a realtor due to the MLS. I find in a normal market it's hard to get the best price unless you pay to get on the MLS and offer a commission. So then it's down to only saving 3percent. At that point it becomes a toss up whether its worth the extra effort to save that. And a good realtor is leaps and bounds worth that but I've not been able to find a good one for me. And I think it kind of sucks just paying a person that isnt that great just to get on the MLS... Maybe as things progress technologically it'll get easier to just do it on your own... which I hope

    Plenty of 'self service' agents that for a low fee, they simply toss your property on the MLS and direct calls to you. I'd still consider that an FSBO deal.

    1Reply
  • David Friedman
    Property Manager · San Bernardino, CA · Member since 2014 · 473 posts · 238 votes
    7y

    I sold my personal house in San Bernardino FSBO and it worked out great. The neighbor a few houses down had their house listed on the MLS and people who went to see that house would see my FSBO sign and make offers on my house. I did end up paying a buyer's agent because he brought the best buyer to me. It really depends on your negotiating skills.

    1Reply
  • Alvin Sylvain
    Los Angeles · Member since 2018 · 464 posts · 471 votes
    7y

    Roughly 30 years ago, my wife and I bought a HUD foreclosure. We tried selling it through the agent that helped us buy it. They brought prospect after prospect, none of whom panned out, and the prospects started getting few and far between.

    So about a year or so into it, we said "screw it" and put an ad in the local throwaway paper ourselves. We got dozens of calls, quite a few who came to look at it, and two offers.

    We mentioned to the agents that we were selling it ourselves, and they were surprised at the response we got. How did we generate so much interest? they wanted to know. So we told them.

    You could see a light come on -- advertise! in the newspaper! Whoa!

    Lesson learned -- if you get an agent, or probably any other specialist, make sure they know more about the subject matter than you do.

    1Reply
  • Cody McGuffie
    OP
    Investor · San Diego, CA · Member since 2016 · 9 posts · 0 votes
    7y

    Wow! Thank you for all the great responses - very helpful. 

    Curious - if you sold your house FSBO and DIDN'T offer to pay buyer commissions, (buyer would need to add the agnet fee onto my PP) what do you think the result would be? Do you think buyers would really care? Do you think agents would steer their buyers away from the home?

    (Assuming A-B+ location, pretty high demand (SD), affordability (400k-500k)) 

    I'd imagine market conditions would dictate..

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  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Cody McGuffie:

    Wow! Thank you for all the great responses - very helpful. 

    Curious - if you sold your house FSBO and DIDN'T offer to pay buyer commissions, (buyer would need to add the agnet fee onto my PP) what do you think the result would be? Do you think buyers would really care? Do you think agents would steer their buyers away from the home?

    (Assuming A-B+ location, pretty high demand (SD), affordability (400k-500k)) 

    I'd imagine market conditions would dictate..

     In theory, the agents are obligated to their clients best interst.  So they shouldn't steer them away from a deal just because of the commission amount.   However, in most representation agreements, the buyers agree to pay the agent 3% -- it just so happens to state that the fee will normally be paid for via the split between the two brokers (most sellers agree to pay the selling broker 6%, which is normally written to state it'll be split with the buyers rep)

    So yes, you're free to list for $0 buyers agent commission.  I do.  And yes, agents will steer them away.  They'll say "Well, this isn't in my clients best interest because then they'll have to pay my 3% fee"


    But in 2018 are buyers REALLY still using agents?  Just go on zillow, type in what you want, start making calls. 

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