For Sale By Owner. A Licensed Real Estate Agent Might Be Better?

The “For Sale By Owner” (FSBO) Challenge: Practical Advice for Agents
I. What is a FSBO?

For Sale by Owner sign
A For Sale By Owner can have negatives a seller might not think of.

A for-sale-by-owner transaction happens when a seller offers his or her property for sale without the assistance of a licensed real estate agent or broker. Usually this is because the seller wants to avoid paying a commission on the sale, but it also means that he or she has to assume all responsibility for completing the transaction without seeking the services of a professional with a real estate license.

II. Understanding the pros and cons

The Pros: Because a licensed agent is not involved in the marketing and selling of the property, sellers reap the financial benefit of retaining the percentage of the sale that would have otherwise been paid to a brokerage. In addition, many sellers enjoy the freedom of handling and marketing the transaction themselves, without the need for interviewing and choosing a licensed agent and brokerage with whom they can feel secure.

The Cons: Without a licensed agent, sellers must become real estate savvy. Pricing a home appropriately requires research and market analysis. An overpriced home can take months longer to sell than expected. An underpriced home devalues neighboring homes and, of course, leaves the seller financially short. And there are several reasons why agents are required to get a real estate license, including understanding the legal and financial risks, and how to best protect the seller through contract negotiation. This alone could be worth hiring a licensed professional.

In addition, agents are businesspeople who thrive on clientele – which means they have close relationships with potential buyers and know their desires in the real estate market. This advantage, along with custom advertising and marketing, can create the exposure needed to sell quickly and for the right price.

III. Approaching a FSBO seller:

For a new agent who has recently received his or her real estate license, FSBOs may seem like the ideal place to start drumming up business. However, be cautious in your approach. Typically, newly licensed agents are so eager to convince sellers to list that they unwittingly wind up using scare tactics: flashing intimidating documents, focusing on financial risks, and warning of the dangers of letting strangers into their home. It’s important to remember that while you may truly be more clever and knowledgeable, it isn’t professional to make a seller feel less so – your job is to empower, not intimidate. Granted, holding a real estate license does make you the expert, but being a straight shooter will garner more trust. FSBO sellers are smart, and they know why you came knocking on their door. They’ll see through intimidation attempts, and you don’t want to be “just another salesperson” in their eyes.

IV. How to be a professional

1. Be straight. Give an honest evaluation of the seller’s FSBO situation, be genuine in your offer to help, and provide authentic resources. Don’t just tell them what you think they need to hear.
2. Be eager, but not overeager. Don’t overwhelm FSBO owners in your effort to convert them. Persuade, don’t coerce.
3. Be flexible. A professional understands when the old adage “always be closing” isn’t appropriate. Sometimes it’s necessary (and professional) to take no for an answer.

Buyer Misconceptions

Home for sale
Buyers often don’t know the seller is paying the commission.

A frequent misunderstanding I see all the time, even from people who have bought homes in the past and were simply in an information overload coma of sorts, simply don’t recall when they go to buy a house from an agent with a West Virginia real estate license 10 years later, or possibly never really understood the process is “Who is paying for this real estate agent?”… The answer is very likely, NOT you. When dealing with an agent with a West Virginia real estate license the buyer is really getting great services for free.

Question: I want to buy a house. How do I get a good rate when finding an agent with a real estate license?

Answer: If you are the buyer you don’t deal with paying for any of it!!! So fret not, your ride is most likely free.

The Buyer Doesn’t Pay

The buyer doesn’t pay ANY commission to an agent with a West Virginia real estate license. The SELLER pays for this service. Read more about this highly overlooked fact:

Overlooked facts when a buyer deals with an agent with a real estate license:

There’s a LOT of confusion on who is paying for what when dealing with a real estate agent. Let’s start by simply saying

the SELLER almost always is paying for the services of a real estate brokerage NOT THE BUYER Click to Tweet

How can this be? Why is this, you might ask? Well, stripped to the bare basics, the seller is using the real estate brokerage and their network of the agents with a real estate license as advertising for their property. Advertising costs money. Good advertising gets your home sold. So the SELLER pays a commission to the varying real estate brokerages for advertising their home and getting it sold. The buyer has nothing to do with this advertising cost. The buyer is just looking for a home and has enough coming out of their pocket, right? They’re shelling out the cash for a house! So let’s just let the seller deal with the bill for the licensed real estate agent, since the seller is the one actually getting a service. That’s hopefully VERY GOOD ADVERTISING through a network of agents and brokerage companies introducing the sellers property to thousands of potential buyers. Kind of beats a “for sale by owner” sign in the yard and yes, it’s costly to the SELLER for that fact. Go ahead and price good advertising some time and you will see it isn’t cheap. Also realize that a buyer wouldn’t need advertising. A buyer is simply looking for a property. So when they find one why would they pay for “the sellers advertising” . The obvious answer is they wouldn’t. You don’t pay NBC when you buy a pair of Nike shoes. You pay Nike for your shoes and Nike pays NBC for their glamorous ads. Start to make sense? BUYERS DON’T PAY A REAL ESTATE AGENT’S COMMISSION. BUYERS BUY A HOME 🙂 So if you’re looking for a home, don’t get all weirded out thinking you are going to have to pay some huge commission for finding a home with an agent holding a real estate license. Go on out there and look at some homes and don’t worry about your buyer agent’s commission. Chances are you’re not paying a single cent for it. The seller is most always paying the commissions and for good reason!