FSBO: First, the research
25 January 10
We’re in the final countdown. Our property will be “on the market” from the beginning of February with the launch of a marketing campaign that includes mail-outs, internet advertising, flyer drops and posters. So David and I have been working each day to bring the house up to an impressive standard and hold it in this very tenuous state until we have a buyer signed up.
When David and I became serious about selling our property, we spent some time researching the possibility of marketing and selling our house without a real estate agent. At the library, I found this book, and it convinced us to give FSBO a go.
FSBO is shorthand for “For Sale By Owner”, a term used in real estate markets to indicate that no agent is involved. Although FSBO is quite common in the U.S., in Australia it’s relatively rare. (Although I can’t find the stats again, I think the numbers were something like 18% FSBO sales in the States and only 2% FSBOs in Australia.)
And why should anyone try to avoid real estate agents?
The dollar. Agents in Queensland usually charge a commission (the maximum was legislated by the government) that would mean we would fork out close to $20,000 for something that we could do ourselves. I could stop there, but there are other good reasons.
Agents have conflicts of interest. Because agents work on a commission, a difference in the sale price of, say $25,000, would mean a difference of only $100s in the agent’s pocket. So why would they work hard to raise the buyer’s bidding price when it’s easier to talk down your property to get you to accept a lower price and thus close the deal. The lower the house price, the faster the house sells, and agents just want to get paid — they don’t necessarily want to get the vendor their original asking price. Agents say they work for the seller, but they really work for themselves.
You still have to pay for advertising. With such a generous commission coming their way, you’d think the agents could give you some advertising, but no, you still have to pay for it. Plus the agencies charge the seller more than it costs for them to place the advertisements (because they buy in bulk and receive discounts), so they make a profit on your advertising dollar as well!
Agents promote themselves. If someone comes to an agency wanting more information on your property, they will also be shown a string of similar properties in the hopes that the buyer will pick one. Wouldn’t you prefer someone to just show your house without any immediate competition?
Agents aren’t more qualified that you. Agents call themselves “skilled negotiators” and “professionals”, but the reality is that in order to become an agent (in Queensland, at least), you just have to attend a five-day course run by the real estate agents’ chief lobby group. If you can talk a four-year-old off the playground when they don’t want to go home yet, you are a skilled negotiator.
You know your property best. If you walk an agent through the house, explaining its features, are they going to know enough to describe the delight you feel at watching the parrots feed in the umbrella tree while you have a morning cuppa outside? Many house purchases are emotional decisions, and you are the best person qualified to share the love you feel for your house (and hide the disappointments).
There are other reasons as well, and all combined, they make a solid argument for selling your own house without engaging an agency. We have nothing to lose.
If you sold your property without an agent, how did it go?