Fewer people selling a home without a real estate agent Agent: FSBO attempts are often unsuccessful.
Mithun Mansinghani had a pretty good understanding of the District of Columbia real estate market. Having bought three houses in Washington, he was familiar with the process, and as a lawyer, he was undaunted by the legalese.
So when it was time to sell his semidetached house last year, Mansinghani thought, "I can do this on my own." After all, given D.C. housing prices, the 6 percent commission normally paid to real estate agents could amount to $40,000 to $50,000 a pretty hefty savings if he didn't use an agent.
So he gave himself a challenge.
"I decided to get the house ready for the market as much as possible," he said, "put it on the market and spend 30 days trying to sell it on my own."
If it didn't sell in a month, he'd enlist the help of a real estate agent.
In real estate parlance, Mansinghani was doing an FSBO, short for "for sale by owner." It's the do-it-yourself way of selling a home, which involves prepping, pricing and marketing a home plus negotiating with buyers and conducting the closing all without the help of a real estate agent. In the process, sellers save some or all of the 5% to 6% commission typically paid to agents.
FSBO transactions have been declining in recent years. The National Association of Realtors estimates that about 7% of home sales nationally are FSBOs, down from 14% in 2004. And in a setting such as Washington, where real estate marketing is sophisticated and aggressive, it's particularly uncommon.
But that doesn't mean it's not worth trying, said Doug Seabolt, CEO of Rocket Homes, which runs the website ForSaleByOwner.com. Given the popularity of sites like eBay and Craigslist, he said, "people are used to selling things on their own. There's a growing population of people who feel that they know their home as well as anyone and can sell that home better than anyone else."
And if that means they'll save a bundle in commission fees, why not give it a shot?
An enormous amount of information is available online about how to do it tips on how to give a house more curb appeal, for instance, and assistance from Zillow and other sites on pricing a house accurately and competitively. Sellers can also pay a real estate agent a flat fee, often $500 or less, to register a house on the multiple listing service (MLS) so that buyers' agents will become aware of it.
Pricing a house can sometimes be a challenge for sellers without serious real estate experience, said John Young, an agent with RE/MAX Excellence Realty. "My experience with FSBO people is that they price their homes too high," Young said.
Like many other real estate agents, Young said, he has often encountered sellers who, after failing to succeed at FSBO, sought the help of a licensed agent.
Ultimately, that's what happened to Mansinghani. But first, the lawyer who now lives in Oklahoma and is that state's solicitor general fixed up his D.C. house and yard, spent time researching comparable properties to price the house accurately and had the house listed on the MLS.
He held open houses, "but they weren't as busy as I thought they might've been. They had only a trickle of people," he said.
In retrospect, Mansinghani said, he would've done one thing differently. On the MLS listing, he had stated that he would pay only a 1% commission to the buyer's agent, rather than the usual 2.5% to 3%.
"I suspect part of the lack of interest in the house was because agents saw they
wouldn't make any money on the house," he said. "Were I to do this again, I'd probably say I'll pay a 3% buyer's agent fee."
In the end, only a couple of people expressed interest in the house, and no one made an offer. After 30 days, Mansinghani hired an agent, Chris Jones with Long and Foster in Washington. Jones said Mansinghani's original price was a good one.
A few weeks later, a couple who had come to one of the early open houses approached Mansinghani and made an offer. That's when having a real estate agent turned out to be most useful.
"Chris was very helpful in the negotiating process with the buyers and their agent. Where my instinct was to compromise, his was to hold firm," Mansinghani said. "So Chris paid for himself, and I ended up getting full asking price."
All of which isn't to say that FSBO doesn't work. It may well be worth trying but if it doesn't succeed, there's no shame in calling a professional.
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|Title Annotation:||Real Estate|
|Publication:||Daily Herald (Arlington Heights, IL)|
|Date:||Jun 28, 2019|
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