# "House For Sale By Owner" - real estate question...



## jargey3000 (Jan 25, 2011)

We live in one of the more "sought-after" or "desirable"(to use real estate advertising lingo) neighbourhoods in our city. The oldest houses in the area are 12-15 years old, & brand new ones are still being built.
The listing activity for the established homes is steady, and I've occasionally seen the "for sale by owner" signs pop up on the lawns - right now there are 3 FSBO properties within a stone's throw. But, what I've also noticed is that more often than not (maybe always?), these signs disappear after a while, without the house being sold, or, they disappear & shortly after you'll see a realtor's sign on the lawn ( & likely the house will sell).
We all know the motivation for going the FSBO route - I'm thinking about it myself.
But, what are the pitfalls? Why does it seem not to work that often? And are there any tips, tricks, methods used to make it more successful?
Any of you RE moguls care to chime in? Anyone actually sold (or bought) privately?


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## dotnet_nerd (Jul 1, 2009)

One pitfall you need to be prepared for is pesky realtors.
You will be swamped with calls from them attempting to get you to list. _Absolutely swamped_

We tried to sell our condo many years ago by FSBO and it didn't work. So we listed with a top-notch agent and got a decent price.

Another thing... buyers will lowball you reasoning that you're saving the commission, so they'll want a piece of that.


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## sags (May 15, 2010)

Pitfalls......people call and make an appointment and don't show up. People call and make an appointment, view the home and then you discover they don't qualify for a mortgage.

People view the home and start dissing everything about it to lower the asking price. We hate the kitchen.......who put up the ugly wallpaper.......I hate carpet......

If someone likes the home and wants to put in an offer......who writes up the offer ? Lawyers don't work for free.

Someone buying the home may want a lower price since you aren't paying a realtor commission.

Realtors won't show your home to prospective buyers. They will avoid driving clients down your street. They will say your house has "problems".

You have to set up and pay for all the advertising and may have to deal with multiple offers.

Those are common reasons that most people who go FSBO end up with a realtor.

Often the owners take the home off the market for awhile because they can't immediately jack up the price to cover realtor fees or people would notice.

So they wait a bit and then put the home up for sale again with a realtor at a higher price to cover realtor fees.


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## Mortgage u/w (Feb 6, 2014)

I've sold and bought privately. Its not for everyone so you need to have a good understanding of RE and the processes involved - both as a buyer and seller.

Those that list privately will automatically get hundreds of calls from hungry RE agents. They all use their own technique to convince the seller to list with them instead. When I was selling, I heard all the excuses: "I have buyers waiting to buy your house", "I can get you more money", "It wont cost you anything to list with me", and so on. Once they heard me speak, they would quickly give up - I could confidently state that I knew more than them.

If you list privately, you need to be prepared, understand the legal implications and act as an agent would. You're not selling a carpet on Kijiji. You also need to be committed to sell and involved in all activity surrounding the interest of your home. Some people just list with the intent of saving a commission and then sit back and hope to sell. This wont work.

As a seller, I organized open houses - these worked best and drove interest. When buyers see other buyers present, their sense of interest is heightened. It was also simpler to manage. No sporadic visits and was easy to tidy up the house for the one time event. Keeping the house tidy is very important.

Don't negotiate verbally. Insist on written offers. I always provided the required docs. The buyers need to feel comfortable buying from you. If you are not confident, they will sense that and shy away.

Some buyers worked with agents to represent them. I would work with the agent but I would advise that any commission would have to be negotiated directly with their client - not me.

So all those that list privately and then sign with an agent are simply people that do not have the knowledge to sell on their own.


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## MrMatt (Dec 21, 2011)

My agents did a great job and easily saved me more than their commissions.

It's a hot market, but a good agent can make a lot of things smoother. It's up to you if that work is worth the trouble.


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## newfoundlander61 (Feb 6, 2011)

Not exactly what you are doing but we sold our house directly to my daughter and paid no real estates fees. Legal fees were $1k or so can't remember exactly. Her bank sent an appraiser over before giving her the mortgage.


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## Bananatron (Jan 18, 2021)

In a sellers market it's easy to sell fsbo if you're smart. Most people try to get top dollar - that doesn't work without the exposure of an agent. 

We sold our house privately a few years ago. The house would have listed at $440k or so with an agent. I figured an sale price of $430k less listing fees would have netted me about $410-$415k.

So we listed it privately at $425k. Comfree at the time, I'm not sure if something similar still exists. 
The price was immediately attractive and I had lots of interest. I scheduled 4 viewings per day around our schedule. 

Sold within days for 420k. I netted a bit more than I would have with a realtor and the buyers saved a bit too. The important thing was that nothing went to the parasitic real estate agent. 

Any house will sell quick, if it's priced correctly.


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## Rusty O'Toole (Feb 1, 2012)

I have bought and sold property without an agent or broker, my favorite method is the 5 Day method. Sell any property in 5 days. But usually I buy and sell through an agent and I don't cheap out on the agent either. I don't mind paying someone for their knowledge and to do the paper work which has gotten very complex over the years. The hard part is finding a reliable agent.


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## jargey3000 (Jan 25, 2011)

good input so far thanks!

Is there any way for a private seller to get onto the MLS service? probably not?

Mortgage u/w: thanks for the comments.yes, I already thought about the open house vs individual showings.
where / would one get the "required docs"? I would assume lawyers are brought in, at some point?


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## Bananatron (Jan 18, 2021)

jargey3000 said:


> good input so far thanks!
> 
> Is there any way for a private seller to get onto the MLS service? probably not?
> 
> ...


Purple bricks I belive but it's not cheap


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## Spudd (Oct 11, 2011)

To get on MLS you need to use a service such as propertyguys.com or whatever private sale listing service you have out there. I'm in Ontario so don't know if the services I'm aware of are out there but if you google you can find them. 

They will generally sell you a package for $500-1000 that includes MLS listing and assistance with the paperwork. 

Have never done it myself but that's a heck of a lot cheaper than a real estate commission so it might be worth looking into. The hard part though is figuring out what to list your place at, as an individual you don't have access to the database with the comparables. You could use a realtor and say you're thinking of listing and wondering how much it would go for, and then end up not hiring them, but that's a little slimy.


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## jargey3000 (Jan 25, 2011)

thanks spudd, ya, we have property guys here.


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## Mortgage u/w (Feb 6, 2014)

jargey3000 said:


> good input so far thanks!
> 
> Is there any way for a private seller to get onto the MLS service? probably not?
> 
> ...


The site I used to list my property was DuProprio - the equivalent to Comfree which is now Purplebricks. They list on their web-site, come take professional pictures, provide a sign and all the necessary documentation. They also have legal advisors ready to answer any questions and offer quick tips to help you sell. Appraisal services are also available.

If you do not have access to a similar service, I recommend contacting a lawyer to assist with the legal aspects. I'm not sure if they can provide any purchase docs.

I think the cost of listing on Purplebricks (or equivalent) is worth it. Having professional documentation and consultation will ease any hesitations a potential buyer may have. Personally, I would feel more comfortable signing a legit purchase offer vs a handwritten or email offer.


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## Bananatron (Jan 18, 2021)

Spudd said:


> You could use a realtor and say you're thinking of listing and wondering how much it would go for, and then end up not hiring them, but that's a little slimy.


 I wouldn't feel too bad about that. Most agents offer free home evaluations, its a super easy way for them to get business. Its part of their job to look at homes, they don't need a commission every time. Get 2 or 3 to take a look at your house, and if you have trouble selling it privately pick your favourite agent from the pile.


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## jargey3000 (Jan 25, 2011)

a few years ago we were thinking of selling. I got 2 agents to come have a look, gimme an idea of what I could get for the place.
They both put together a very long, professional-looking booklet showing all the recent sales in the area etc. etc. tons of data ( most of which i cud easily get on my own if i toddled down to the deeds registry office).
Had me come into their office, and go over the report page, by page, by page...
The only piece of information missing? a suggested list price for my place! hoh boy! lol
After a bit of prodding & discussion we arrived at a figure, ....the price I had in mind right from the beginning.lol

Another thing to think about is that the agent is prob. more interested in getting "a" sale (read: commission) than seeing that you get absolute top dollar for your house...So, its in their better interest to list lower rather than higher.....no?


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## Mortgage u/w (Feb 6, 2014)

jargey3000 said:


> ...
> 
> Another thing to think about is that the agent is prob. more interested in getting "a" sale (read: commission) than seeing that you get absolute top dollar for your house...So, its in their better interest to list lower rather than higher.....no?


An agent is only interested in getting a listing. Someone else will sell the property for them, ie; another agent or a potential buyer scanning MLS.

They try to read their customer. If they think they are in competition with another agent, they will probe to see what is more important for you - is it a higher price or a quicker sell. Their ultimate "sell" is themselves to you. 

They definitely prioritize their commission so they will say anything for you to accept an offer. That's their second "sell" - getting you to accept an offer.

Personally, I have zero patience for RE agents. I know all their tactics and I don't buy any of it. I don't care how successful they are - they are all playing the same game. Most suck at it. Very few are good at it. None are worth the commission they get.


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## jargey3000 (Jan 25, 2011)

yes, getting the listing is the key....an old retired agent's daughter told me that many, many years ago


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## Beaver101 (Nov 14, 2011)

^ Can't you print your own flyers? Something with headline "House for Sale - No Reasonable Offer Refused"?


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## Bananatron (Jan 18, 2021)

jargey3000 said:


> Another thing to think about is that the agent is prob. more interested in getting "a" sale (read: commission) than seeing that you get absolute top dollar for your house...So, its in their better interest to list lower rather than higher.....no?


I see most "top" agents in my area do the opposite. Suck the customer in with the promise of a higher list price. Then 2 or 3 weeks into the listing give them the old "market conditions changed, we might have to lower the price". Most sellers have a timeline where they need to sell and have no other option than to reduce the price.

But you're right, 20k less in your pocket doesn't make much of a difference on their commission.


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## sags (May 15, 2010)

Around here people are paying hundreds of thousands of dollars OVER the asking prices.

The asking price is considered an "opening bid" like at an auction.


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## Money172375 (Jun 29, 2018)

With the rising price of real estate over the last 10 years, the commissions agents charge are ridiculous. Their income has probably doubled and the effort to sell A house has gone down by a similar margin. I’m shocked the inevitable disruption of this industry is taking so long. I regrettably paid over $60k in commission for our last house. Agent knocked off a bit because I paid a portion in cash. What a racket!


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## Beaver101 (Nov 14, 2011)

Money172375 said:


> With the rising price of real estate over the last 10 years, *the commissions agents charge are ridiculous. * Their income has probably doubled and the effort to sell A house has gone down by a similar margin. I’m shocked the inevitable disruption of this industry is taking so long. I regrettably paid over $60k in commission for our last house. Agent knocked off a bit because I paid a portion in cash. What a racket!


 ... these same agents would say this no different than mutual funds dealers, lawyers, or any commissioned based job. The "real" problem I say, you pay a premium for incompetency.


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## Kilbarry20 (Aug 19, 2020)

In my hood, in the past 3- 5 years, if the House isn’t sold Over the Listing price and in a week, something is terribly wrong with it!


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## sags (May 15, 2010)

There are a lot more agents than listings, and most agents are lucky to sell one house in a year.

From that commission they may have to pay another agent, their broker, and all of their expenses.

A very few agents earn high incomes, but most are struggling day to day. Many rely on their spouse's income to get by.


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## Mukhang pera (Feb 26, 2016)

Beaver101 said:


> ... these same agents would say this no different than mutual funds dealers, lawyers, or any commissioned based job. The "real" problem I say, you pay a premium for incompetency.


I did not realize that being a lawyer meant one was working in a "commissioned based job". Apart from contingency fees charged by some lawyers in a few matters, such as personal injury lawsuits and collections, are legal fees by and large "commissions"?


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## Beaver101 (Nov 14, 2011)

^ Technical term is "billable hours" which is commissions-based (good enough) to me.


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## Mukhang pera (Feb 26, 2016)

Beaver101 said:


> ^ Technical term is "billable hours" which is commissions-based (good enough) to me.


Then are all hourly-paid employees paid on commission, in your view? I take earning on "commission" to refer to being paid a percentage of a price obtained for an employer or client, or a percentage of an amount recovered, and such.


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## Beaver101 (Nov 14, 2011)

Mukhang pera said:


> Then are all hourly-paid employees paid on commission, in your view?


 ... not "all". In fact, probably most don't get a commission. It would depends on the type of occupation they're in. Eg. I highly doubt an hourly fast-food worker would get a commission.


> I take earning on "commission" to refer to being paid a percentage of a price obtained for an employer or client, or a percentage of an amount recovered, and such.


 ... yes, that would seem to be the conventional definition. My point of lawyers (non-partners of the firm) with having a commissioned-based (type) of compensation is "no billable hours, no pay". Or maybe I'm mistaken/outdated, lawyers (non-partners) are paid a base salary plus billable hours these days?


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## Mukhang pera (Feb 26, 2016)

Beaver101 said:


> ... Or maybe I'm mistaken/outdated, lawyers (non-partners) are paid a base salary plus billable hours these days?


Lawyers working for private firms, who are not partners, in BC at least, are generally referred to as "associates". They are normally paid a fixed salary, regardless of hours billed. 

When I was part of a law firm, both as an associate and later as a partner, the usual expectation of associates was "You should be billing twice your salary, plus something for the firm". So, a high-billing associate could expect a higher salary. A low biller could expect not to make partner and perhaps not be retained for long as an associate. Associates did not, in my experience, get paid a % of their chargeable time or see their pay check vary depending on billings. Some firms paid performance-based bonuses, maybe once a year. I never heard of "no billable hours, no pay", but then I never heard of any lawyer having "no billable hours" at all, except while on vacation.

What firm partners took home would usually vary with billing. The partners would agree from time to time on the "draw" allowed to each partner, usually based on past performance. At year end, a partner might be entitled to more or less than drawn based upon how their billing for the year squared with what they drew.

Then there are a lot of lawyers out there not working in private practice. They work for government, corporations, banks, etc. Usually for straight salary.


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## Beaver101 (Nov 14, 2011)

Mukhang pera said:


> Lawyers working for private firms, who are not partners, in BC at least, are generally referred to as "associates". They are normally paid a fixed salary, regardless of hours billed.


 ... interesting. Isn't this form of compensation, contrary in practice to the bolded part of your next paragraph? Because is the associate's salary actually placed at 100% of their billable hours?



> When I was part of a law firm, *both as an associate *and later as a partner, *the usual expectation of associates was "You should be billing twice your salary, plus something for the firm".* So, a high-billing associate could expect a higher salary. A low biller could expect not to make partner and perhaps not be retained for long as an associate. Associates did not, in my experience, get paid a % of their chargeable time or see their pay check vary depending on billings. Some firms paid performance-based bonuses, maybe once a year.


 ... that would seem to be the case in lieu of my "commissions-based" concept.



> I never heard of "no billable hours, no pay", but then I never heard of any lawyer having "no billable hours" at all, except while on vacation.


 ... well, yeah.



> What firm partners took home would usually vary with billing. The partners would agree from time to time on the "draw" allowed to each partner, usually based on past performance. At year end, a partner might be entitled to more or less than drawn based upon how their billing for the year squared with what they drew.


 ... that's a new concept to me. Is that draw from a pool? Are partners not paid a salary even?



> Then there are a lot of lawyers out there not working in private practice. They work for government, corporations, banks, etc. Usually for straight salary.


 ... the non-independents I gather.

Challenge(?) question: What do you do if a client has a billing dispute with you? Example, I don't agree with the $10K bill (after deducting the $5K retainer) with you and I'm not paying. Then what?


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## Mortgage u/w (Feb 6, 2014)

Money172375 said:


> With the rising price of real estate over the last 10 years, the commissions agents charge are ridiculous. Their income has probably doubled and the effort to sell A house has gone down by a similar margin. I’m shocked the inevitable disruption of this industry is taking so long. I regrettably paid over $60k in commission for our last house. Agent knocked off a bit because I paid a portion in cash. What a racket!


Actually, their incomes have not doubled. As far as I can remember, an agent commission was roughly 7%.....today, they're closer to 4%. As home prices increased, agents had no choice to lower their commissions. 

Some agencies were actually formed on the basis of 'low' commissions. Their pitch was "1.95% if sold without a collaborating agent or 3.95% with a collaborating agent". Companies like Re/max soon followed and those rates eventually became the new standard.

I keep advocating that agents should be paid a flat fee rather than a commission. Regardless the sale price, it takes the same effort - in most cases, zero effort!


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## Mukhang pera (Feb 26, 2016)

Beaver101 said:


> ... interesting. Isn't this form of compensation, contrary in practice to the bolded part of your next paragraph? Because is the associate's salary actually placed at 100% of their billable hours?
> 
> ... that would seem to be the case in lieu of my "commissions-based" concept.
> ...
> ...


I don't see the contrariness. As I said, when I was in private practice, associates were paid a salary. It was paid regardless of their billings. There would usually be a year-end review and salaries adjusted. An associate who had rising billings could expect a rising salary. But it was certainly not adjusted every month.

As for partners, yes, their draws came from a pool, but not a pool segregated from other firm funds. They would receive agreed monthly draws from the firm's "general account". Most firms maintained a general account, an expense account and a trust account. There were no "salaries" for partners, just draws, with draws agreed among partners according to billings. Again, there would be an annual meeting and review. Partner draws were generally set as a % of the partner's billing for the previous year. If it turned out that a partner had much higher billing than expected, the partner would receive an adjustment payment. I should add though, that it was not altogether a function of gross billings. How much was collected was important. There were also other considerations, such as rewards to partners who attracted major clients to the firm (you could be a low biller, but if you bring in Amazon as a firm client, and Amazon pays millions in fees to the firm annually, you just might ask for some recognition, then head back out to the golf course), compensation for services to the firm not reflected in billing, such as acting as managing partner, etc. And, of course, there were variations from firm to firm in how they handled these things.

As for the bill dispute, the lawyer is free to sue the client to collect and the client can argue the matter in court. But that seldom happens. In BC, we have provision in the Legal Profession Act for resolving fee disputes. Either lawyer or client can apply for a "review" of the bill before a Supreme Court registrar. The registrar will decide what would be a fair and appropriate fee plus allowable disbursements. The registrar will issue a certificate which can be filed as a judgment of the court. Either side can appeal to a judge from the registrar. If the registrar reduces the bill by 1/6 or more, the lawyer pays the client's costs of the review. If the bill is reduced by less than 1/6, the client pays. The BC provision is here:



Legal Profession Act



All provinces have something similar. In some places they don't call it a review, they call it applying to "tax" the bill.


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## Beaver101 (Nov 14, 2011)

^ Okay, thanks for the clarification(s)!


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## AlwaysMissingTheBoat (8 mo ago)

Mortgage u/w said:


> I keep advocating that agents should be paid a flat fee rather than a commission. Regardless the sale price, it takes the same effort - in most cases, zero effort!


Agreed! Agreed! Agreed! Perhaps it could be a sliding scale. In cases where the home is sold within a week, the customer pays the minimum base rate. If it takes a month, the customer pays 50% more than the base rate. If it takes two months, it's double. Something like that. 

In my mind, there's few things as frustrating as paying an agent anywhere near 5% commission when a home practically sells itself in a hot market. That's an insane amount of money if you were to break it down per hour -- like several thousand dollars per hour to do an initial consult or two with the sellers, a few showings and some paperwork. 

Can you imagine going to a mechanic or hiring an electrician and they tell you that they charge $1,000 an hour? You'd laugh them out of the room! Even a lawyer -- and I definitely value the role of a good real estate lawyer in the transactions every time -- only gets paid a fraction of that.

I could write a book based on home sale experiences because my wife and I have sold five homes -- three with realtors, two privately. One time the private sale was a cinch in a very hot market. We received offers over the asking price and settled on one in two days. The other time the market was rather tepid and it was a painful situation. After three weeks of no offers, we wound up finding a realtor who did charge us a flat rate because we used his services when we purchased and we referred another couple to him. He showed up with a buyer the next day!

Another time we used a discount brokerage and that was an interesting experience. There wasn't much interest in our home after almost a month and we had a lengthy conversation with the fellow who owned the brokerage. He explained that because we weren't offering a commission to the seller's agent that was causing agents to discourage their clients from seriously considering our home. We heeded his advice and changed the terms of the contract to offer 2.25% commission to the buyer's agent and, what do you know, we had a buyer within a few days. By the time we paid that commission and the flat fee to the brokerage, we wound up practically no farther ahead than if we'd hired an agent in the first place. Live and learn.


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## Mortgage u/w (Feb 6, 2014)

AlwaysMissingTheBoat said:


> Agreed! Agreed! Agreed! Perhaps it could be a sliding scale. In cases where the home is sold within a week, the customer pays the minimum base rate. If it takes a month, the customer pays 50% more than the base rate. If it takes two months, it's double. Something like that.
> 
> In my mind, there's few things as frustrating as paying an agent anywhere near 5% commission when a home practically sells itself in a hot market. That's an insane amount of money if you were to break it down per hour -- like several thousand dollars per hour to do an initial consult or two with the sellers, a few showings and some paperwork.
> 
> ...


It goes to show how the realtors control the buyers. Then they want us to consider them as "professionals". Although some are indeed good, honest and ethical realtors, they get buried by the majority who are hungry, sly and very manipulative. They don't know how to sell homes - they just know how to generate hefty commissions.

As the saying goes, you need stupid to make smart.


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