Selling Privately

[kooki]

Selling Privately - Some Stats

Hi! Just joined...

I have been hunting around the net for info on selling privately as I am shocked at what agent commissions (plus advertising!) amount to these days and found this US info ( http://www.fsbosearch.com/FSBO-statistics.htm ) that might also be relevant to Australian conditions. It has more than convinced me that selling privately is the way to go. As the study was commissioned by agents I think the data is more than likely spot-on.

Food for thought anyway...

Kooki

 

[katy1111]

Interesting. It still seems a very small industry in Australia. Nice to see some figures.

 

[kooki]

Sorry that link is dead now.

Here's the info I managed to rescue out of Google cache:

In March 2003, Realty Viewpoint (an independent research group specializing in trend information to real estate professionals) conducted a random online survey of 3,654 home sellers who had sold their homes in the past year. This was a first of its kind study to determine the needs of sellers and their level of satisfaction while selling their home. Much to even their surprise, they found the following:

SELLING PRICE- ADVANTAGE FSBO!

"We calculated profit as "average selling price-average purchase price". On the resale side, both FSBO and Real Estate Sellers made a lot of money $76,800 FSBO vs $72,300 Real Estate Agents in gross profit. The most important finding here is that FSBO Sellers made 6% more gross profit on their homes than sellers who used a Real Estate Agent."
"This shows that people who sell their home on their own do, in fact, make more money than people who use a Real Estate Agent. This is gross profit and does not include Real Estate Agent fees. So, if you factor in the average of 6% Real Estate Agent fess that would reduce the profit for those who sold with a Real Estate Agent to 42% or $59,400. This data shows that FSBO's actually made 29% more in total on the sale of their home than those who use Real Estate Agents."
Gross Profit: FSBO 59% ...Agent 42%

"Selling your home on your own and making more money has been a common myth for years. This data proves that FSBO's actually make 29% more in total on the sale of their home than those who use Real Estate Agents."

SELLING FASTER - ADVANTAGE FSBO!

"Conventional wisdom suggests that Real Estate Agents who have access to Buyers, Sellers, and a host of other services should be able to sell a home faster than someone who sells on their own. Our research shows that this is no longer true. In fact, FSBO's actually sold their home 3 weeks sooner than those who used Real Estate Agents. The average length of time sellers had their home on the market with Real Estate Agents is 11.5 weeks compared to the 8.1 weeks for FSBO's."

HOLDING FIRM ON YOUR PRICE - ADVANTAGE FSBO!

" The majority of FSBO's don't reduce their original selling price. (81% in this survey) More sellers who list with Real Estate Agents do reduce their price before accepting an offer (37% vs 19% FSBO) Reducing price can also add to the time to sell."

It is important to note that the co-founder of Realty Viewpoint, Steve Leeker is a licensed realtor and member of the National Association of Realtors, so it makes this report all the more compelling!

(See also: Disadvantages of the MLS.)


Think the MLS is the secret to the fast sale of your home? Think again! What agents don't want you to know!

1. The MLS can slow the sale of your home.

FSBO sellers sold on average, twice as fast as homes listed on the MLS in 2004. New national research conducted by agents, for agents, proves that FSBOs sold 3 weeks sooner than those who used an agent.1
2. MLS listed homes sell for less than FSBO homes! According to the same national study commissioned by agents, they found that FSBO sold homes averaged 29% more gross profit than MLS sold homes.2
Another study conducted by a major University, also commissioned by agents, concluded with the same result: "...it is concluded that the decision to use a multiple listing service [MLS] decreases the sale price of a property."3

3. It is expensive to be on the MLS. You must pay a commission to both listing broker and selling broker. Usually this is thousands of even tens of thousands of dollars!

4. You must pay a buyer's agent commission on the MLS. Buyer's agents demand 3% to 4% of your sales price to show your home to a buyer. In addition, you must pay your listing broker another 3%-4% commission.

5. You'll have the broker's phone number on the yard sign. You sometimes cannot have a FSBO sign with your phone number on it in your yard if you're listed on the MLS. You cannot have 2 signs in your yard (yours and agent's). You must have only the agent's sign with the agent's phone number. They get all the drive-by calls and sometimes try to sell them a different home. Discount brokers use your home and yard signs as "bait" to attract buyers so they can snag them and become their buyer's agent. Many times they sell them a different property (not yours!) and they take 3%-4% commission from the buyer!

6. Buyer's agents are working for the buyer. Not you, the seller! You must pay a broker to put your property on the MLS a flat fee or a commission. If you buy a discount broker's MLS listing for say, $200, to be listed on the MLS, rest assured they are not working for you. Don't expect any advertising and plan on spending $50-$75 a week for a small classified ad in the newspaper. Discount brokers use your home and yard sign as "bait" to attract buyers so they can snag them and become their buyer's agent. Many times they sell them a different property (not yours) and they take a 3% or 4% commission from the buyer! They don't make money selling you a discount $200 MLS listing - they make it by stealing your buyers who are calling them off your yard sign or MLS listing and helping them buy a different home.

7. MLS is for agents only. No buyer ever sees the MLS. Contrary to popular belief, MLS is only viewed by agents. The public does not have access to the MLS or its data. Tiny bits of information from the MLS are available on certain national websites.

8. You usually sign a long-term contract to be on the MLS. To be listed on the MLS, you must sign a long-term contract listing agreement with a broker which is extremely hard, if not impossible, to cancel. Once listed, you are trapped with that broker.

9. Home buyers always shop FSBO homes first! Home buyers are smart. They know that every home listed with an agent has an inflated asking price to cover the agent's high fees. Today home buyers always shop private home sales first (FSBO). They know it's a win-win for both the buyer and the seller.
1 and 2: Survey March 2003, Realty Viewpoint, 3,654 nationwide home sellers surveyed. 3A Comparison of Real Estate Marketing Systems: Theory and Evidence, by Mr. Yavas and Colwell.

 

[andrew_de_a]

its not as easy as you think it is, particularly in this market

agents do more than just rely on the internet ads to get purchasers through the door

 

[kooki]

I agree that internet only is not particularly effective. But that is what we have been conditioned to believe represents "selling privately".

There is however a fundamental and universal task that is essential to ALL who want to sell property, be it private or through an agent. And that task is simply... effective marketing. If only a limited number of people actually know your property is on the market or only people with access to the internet and who are web savvy then the odds of finding a buyer are going to be very low. Most potential buyers of any given property are local and look for and find information on properties locally. There are of course exceptions. But if the real goal is to SELL the property for the highest price in the shortest time then you need to expose your property to the widest range of the most likely buyers. Simply put, proper marketing is essential. Without appropriate marketing that is suited to your property (not just a one size fits all internet listing) it’s a bit like throwing a fishing line out without any bait. You’re there fishing, but what are the odds of actually attracting a fish to bite? Why would they bite the hook if they don’t even know it’s there? It simply becomes a low percentage gambling exercise if you try and rely on internet only.

 

[Gools]

Kooki,

Do you also agree that once you have marketed the dwelling properly and have buyers interested that you need to be a good negotiator to get the best price possible? To me it's a false economy trying to save maybe $8k in costs when an agent could have got an extra $20k or more because they weren't as emotional about the sale and know how to get the best price possible. I think it's a real skill to be able to get the best price for a house and is not something I would ever attempt myself even with the supposed "saving" in commision and advertising expense.

No point having a baited hook cast if you don't have the ability to real the fish in once it's on the hook is it..............

Gools

 

[kooki]

Kooki,

Do you also agree that once you have marketed the dwelling properly and have buyers interested that you need to be a good negotiator to get the best price possible? To me it's a false economy trying to save maybe $8k in costs when an agent could have got an extra $20k or more because they weren't as emotional about the sale and know how to get the best price possible. I think it's a real skill to be able to get the best price for a house and is not something I would ever attempt myself even with the supposed "saving" in commision and advertising expense.

No point having a baited hook cast if you don't have the ability to real the fish in once it's on the hook is it..............

Gools

So what do you do when an agent comes to you with a low offer?

 

[kooki]

Oh, and another thing... I assume you are ok and confident with negotiating as a buyer. And I also assume (and apologies if my assumptions are wrong...) that you feel like you know what you are doing when you try and get offers accepted. Are you trying to tell me that all those negotiating skills you possess in the buyer role suddenly and bizarrely leave you when it comes to negotiating a sale? It doesn't quite add up.
And when you say that an agent can get you $20k extra, do you mean over the asking price? If yes, why in gods name was the asking price set $20k to low in the first place? Is the agent just guessing at the true market value and getting lucky? Surly simply guessing at what the asking price should be isn't worth paying someone even single a dollar for seeing as you can "guess" any old price yourself for free...

I am not having a go at you as there are people that genuinely can't cope with the pressure of negotiating and tend go to water, but you honestly don't sound you are that way inclined. For those that are that way inclined getting some help is probably advisable, imo.

If you do your home work (yes a little work is involved...) then you know what the property is actually worth and you don't get into a situation where you have to rely on some clowns "professional" guess work... Great for you if they get it wrong on the plus side (and what are the figures for that rare little scenario...) but seriously stressful and crap on the minus end.

I think you might have been reeled in by the agents standard fairytale, hook, line and sinker...

Assuming you are not agent yourself...

 

[andrew_de_a]

Oh, and another thing... I assume you are ok and confident with negotiating as a buyer. And I also assume (and apologies if my assumptions are wrong...) that you feel like you know what you are doing when you try and get offers accepted. Are you trying to tell me that all those negotiating skills you possess in the buyer role suddenly and bizarrely leave you when it comes to negotiating a sale? It doesn't quite add up.
And when you say that an agent can get you $20k extra, do you mean over the asking price? If yes, why in gods name was the asking price set $20k to low in the first place? Is the agent just guessing at the true market value and getting lucky? Surly simply guessing at what the asking price should be isn't worth paying someone even single a dollar for seeing as you can "guess" any old price yourself for free...

I am not having a go at you as there are people that genuinely can't cope with the pressure of negotiating and tend go to water, but you honestly don't sound you are that way inclined. For those that are that way inclined getting some help is probably advisable, imo.

If you do your home work (yes a little work is involved...) then you know what the property is actually worth and you don't get into a situation where you have to rely on some clowns "professional" guess work... Great for you if they get it wrong on the plus side (and what are the figures for that rare little scenario...) but seriously stressful and crap on the minus end.

I think you might have been reeled in by the agents standard fairytale, hook, line and sinker...

Assuming you are not agent yourself...

In this tough market it will be very hard to sell yourself, unless your property is something that is in demand.

Tell me, how do you plan to market your property other than board and internet?

Oh and I am an agent

 

[pennyk]

Hi Kooki,
I have sold both privately and through an agent... both were successful experiences.
But I'm concerned that you are basing your decisions on an on-line survey, which are generally quite unreliable. To me, it would be like saying you can make a medical diagnosis rather than going to a doctor, because you've read some on-line information about a medical condition.
I also think the US market, and US realty services are so different to Australia that its very difficult to compare. I doubt that those statistics would have any relevance to our market, although I'm sure there are some principles that you could apply here.
I think the times to sell privately are when you have good background information about sales levels in your area and are a realistic/pragmatic person who is willing to position the property at a realistic level. Also, when you have a great house or a fantastic location (not just when you have an ordinary run of the mill house) or when your house is a potential development site. And you need plenty of time to do the marketing/ the showing people around the home - and are close to/ living in the property etc etc.
From my point of view, and with my current lifestyle paying the agents commission is well worth it to save me the time and energy of selling. and I don't have a problem in paying people for their work. I think a good REA can offer a lot of advice and assistance in the sale of the house, apart from just doing open homes etc - they will help with maximising the presentation of the house, the market pricing in the house, how to position the house in the market etc etc.
Obviously it doesn't always work that way, but I still think there is alot to gain from using a REA for most people
Pen

 

[Kevin Hockey]

The US has a high level of Private sales, around 20% of real estate sales in the US are privately completed.

In Oz, this figure is around 4% of real estate transactions are Privately sold. Of the properties listed privately around 80% are eventually sold with an Agent. Many private websites promote the property as Sold on their website but many were actually sold by an agent for varying reasons.

The reason the US is so high is simply because of the commissions charged in the US make it more attractive. In the US you hire a Listing agent who you pay either 3 or 4%. He then makes the property available to all other agents regardless of who they work for and then another agent who has the buyer also gets paid 3-4%. Therefore owners pay 6-8% to sell their property.

In NZ you will pay 4% and sometimes 5% to sell your property.

By comparison, the OZ average is around 3.05%. This will depend on your properties value but 2% is quite common, especially in the states other than Queensland which is still a regulated industry.

Private sales in OZ don't work simply because home buyers are not conditioned to it and changing that mentality is too expensive and time consuming to achieve. Yes, I do understand some people will have done so "successfully", I sold my second property privately, however in the grand scale the stats don't recommend it as primary vehicle for the majority of homeowers.

Also, Aussies are the franchising capital of the world. I'd suggest on the back of our desire for lifestyle and our desire to have the dog, car and house washed, the ironing done, lawns mowed etc etc. We are "time poor" and value the beach, friends and shops more than the time committed to our house sale. Our values are less orientated towrds money and more towards life balance. Our culture will be unlikely to see us go down the Private sale route on any mass scale.

Kev
Kevin Hockey Business Solutions

 

[josko]

There is no way I would sell privately in this market. That is to say, without an agent for backup. There is nothing wrong with an open listing.

In this market you really need the agent more than ever and this is the time when they really do deserve their commissions. I would say most agents are struggling right now.

I have 5 properties on the market ranging from 1mil down to 290k and it is a hard market out there.

If I were buying now, I would not even look at a private FOR SALE sign right now, because 9/10 times the seller would want too much. You also lose 50% of your market from epople that do not want to deal directly with the Vendor. Bargaining becomes so difficult without the third person(agent). Another good reason to pay an agent.

Private Sales are only good in a heated market.

Regards JO

 

[evand]

go on..................

its not as easy as you think it is, particularly in this market

agents do more than just rely on the internet ads to get purchasers through the door

The problem is most people dont know how to market a property. They just pretty much try to copy what agents do and they're pretty useless. They just copy what every other agent does and when that doesnt work, they get the vendor to drop what is mostly an inflated 'bought listing' price.

The only single advantage an agents can offer a seller is access to a market. They dont use marketing to sell houses they just advertise. Its not the same thing and just shows most agents ignorance of this.

oh and by the way, the other advantage agents have is large volume $ rebates from local newspapers for advertising that private sellers cant access. That's kept pretty quiet tho......

Most agents were plumbers, car sales people last year so dont beleive the hype.

I've known 3 or 4, one owned a fruit shop that closed, one was a power tool salesman, the other a car sales guy......you get the idea.......they all decided to become RE agents and they really don't have a clue how to market.

 

[josko]

go on..................



The problem is most people dont know how to market a property. They just pretty much try to copy what agents do and thats pretty useless.

The only single advantage an agents can offer a seller is access to a market. They dont use marketing to sell houses they just advertise. Its not the same thing and just shows most agents ignorance.

oh and by the way, the other advantage agents have is large volume $ rebates from local newspapers for advertising that private sellers cant access.

That's kept pretty quiet tho......

hI EVAN,

I might have to disagree with you a bit there. Some agents are very good at marketing. I have an agent on the coast running around doing letterdrop box drops at the moment, who has bent over backwards to help me. Another has done such a good job of an advertisement for a rpoperty I have , that I have asked another agent to copy it on a dif property.

I guess it's how you define marketing.

I have also negotiated my auction costs down to $700!

Then again, I did have a dud recently that was absolutely hopeless, she sounded like she was going to cry everytime I spoke to her. It was all doom and gloom and she marketed the property terribly. The original agent I signed up mysteriously disappeared and I was "assigned" a dud.

SO, some ARE good, but it's trying to find them.

Regards JO

 

[evand]

Hi Jo

Ok, i should clarify. I have been self employed as a small business marketing consultant (specialise in service business) on and off for a few years (pretty much whenever i feel like doing it)

Anyway, what an agent does is not really marketing, its advertising. Marketing is a huge area and placing ads in papers and letter box drops is a very minute part of it.

By the way...here's a great book.

http://www.jenman.com.au/Books/rewa.php

http://www.jenman.com.au/BS_S_No_Agent.php

hI EVAN,

I might have to disagree with you a bit there. Some agents are very good at marketing. I have an agent on the coast running around doing letterdrop box drops at the moment, who has bent over backwards to help me. Another has done such a good job of an advertisement for a rpoperty I have , that I have asked another agent to copy it on a dif property.

I guess it's how you define marketing.

I have also negotiated my auction costs down to $700!

Then again, I did have a dud recently that was absolutely hopeless, she sounded like she was going to cry everytime I spoke to her. It was all doom and gloom and she marketed the property terribly. The original agent I signed up mysteriously disappeared and I was "assigned" a dud.

SO, some ARE good, but it's trying to find them.

Regards JO

 

[josko]

Thanks Evan,

I thought that's where you were coming from.

Having been on both sides now, I know only too well that there are Buyer's Agents and Seller's Agents. My dud agent was a buyers agent. She was so scared of loosing the client and her sale that she just kept telling me to take the offer. $7000 later I was content (for want a better word) with the price.

In anycase, I detest being on this side of the deal!

It is difficult and the proof is always in the pudding, but would you not agree that now is not the time to try and sell your own home? Maybe in a more buoyant market...even an upswing?

Regards JO

 

[evand]

Yes i would agree with that for 2 reasons. One is as you are suggesting its much harder when there are not a lot of buyers around.

Two is 99% of people don't know how to 'market' their home effectively regardless of the market.

But, of course it would be much easier in a booming market where volume/liquidity is high.

By the way, i think the most important aspect of selling a property is it has to be priced correctly. That's is the biggest hindrance to a property selling easily.

One problem with agents is they 'buy listings' frequently to get the listing and then the house sits on the market for a while as its priced too high.

http://books.google.com.au/books?id...=X&oi=book_result&resnum=1&ct=result#PPA81,M1

The agent relies on conditioning the vendor to lower the price but usually the house has gone stale in the market by then.

Very few properties sell quickly, mostly because they are not priced correctly to start with for the above reason.

If a high priced property sits on the market and then the vendor has to lower the price, usually they end up getting a lower price then if the property was priced correctly to start with.

Also, that's why negotiation is overrated, if a house is priced sensibly, not a lot of negotiation is required.

Tbut would you not agree that now is not the time to try and sell your own home? Maybe in a more buoyant market...even an upswing?



Regards JO

 

[josko]

Yes i would agree with that for 2 reasons. One is as you are suggesting its much harder when there are not a lot of buyers around.

Two is 99% of people don't know how to 'market' their home effectively regardless of the market.

But, of course it would be much easier in a booming market where volume/liquidity is high.

By the way, i think the most important aspect of selling a property is it has to be priced correctly. That's is the biggest hindrance to a property selling easily.

One problem with agents is they 'buy listings' frequently to get the listing and then the house sits on the market for a while as its priced too high.

http://books.google.com.au/books?id...=X&oi=book_result&resnum=1&ct=result#PPA81,M1

The agent relies on conditioning the vendor to lower the price but usually the house has gone stale in the market by then.

Very few properties sell quickly, mostly because they are not priced correctly to start with for the above reason.

If a high priced property sits on the market and then the vendor has to lower the price, usually they end up getting a lower price then if the property was priced correctly to start with.
Also, that's why negotiation is overrated, if a house is priced sensibly, not a lot of negotiation is required.

That is such a true statement Evan.

Regards Jo

 

[wylie]

I believe that these days any advertising kickbacks or discounts that would benefit the agent at the expense of the vendor have gone the way of the dodo. Perhaps one of our agents can confirm this.

 

[evand]

I'm not sure agents would pay the full cost of the huge glossy RE inserts in the papers. They would cost a bomb.

I believe that these days any advertising kickbacks or discounts that would benefit the agent at the expense of the vendor have gone the way of the dodo. Perhaps one of our agents can confirm this.