In a hot housing market, sellers can make a profit on their property even after paying six percent commission to a real estate agent. But hot markets always cool down, and those who need to sell their properties in a declining market may hesitate to give up that six percent of the sale price to someone else.
What’s a seller to do? He can put a For Sale by Owner sign in his front yard, advertise in the local paper, list the property on the internet, show the property several times a week for several weeks, screen potential buyers, negotiate with a serious buyer, prepare all the necessary paperwork, arrange the closing, and hope the deal doesn’t fall apart because he just put a down payment on his new house.
Or he can hire a real estate agent to it for him.
Six percent, though, is still a good chunk of change to give up. But sellers need not despair. There is a new trend in the real estate industry that can save sellers money, and still provide assistance in the process.
The real estate industry refers to an un-agented property as a FSBO. FSBO means For Sale By Owner, and the slang is pronounced ‘fisbo’. Companies that provide select services to sellers are becoming known as FSBO companies, or FSBO services. Many of these are directed at the marketing piece of the selling process. For a flat fee, they will provide marketing venues, such as space on their website or in magazine distribution venues. But some go beyond that.
At gotofsbo.com, based in Virginia, a seller can advertise in the For Sale By Owner magazine, and so take advantage of such services as Advertiser Assistance Option. This package assists in the paperwork right through to closing, and for a flat fee of $475.00.
At premierfisbo.com, sellers can have a web page to advertise their listing, a for sale yard sign with an info tube, a template for a color brochure or flyer to print from any computer for the info tube, a How To Kit for do it yourself sellers, selling contracts and disclosure forms. This package is available for a flat rate of $299.
For those sellers who feel uncomfortable with the legal side of selling, there are numerous books available on the market, as well as an increasing number of real estate attorneys who will prepare and execute the paperwork for a flat fee.
Essentially, the service provided by a real estate agent has been broken down into a selection of services. Where the six percent commission is all-encompassing, the FSBO companies allow sellers to select which services they need, and to pay a flat fee for those services, up front, and so keep a larger portion of the proceeds from the sale of their homes.
Does this trend in selective services for home sellers spell the end of the real estate agent? No, it only means selling through an agent is not the only option. It means sellers who must get the optimum profit from his or her property do not need to overprice their homes to cover that commission, which usually results in extended time on the market.
Increasingly, real estate brokerage firms are offering flat fee services resembling the services offered by FSBO companies. The brokerage, and thus its agents, assemble a package from the array of services that best suit an individual seller’s needs. The do-it-yourself trend in home selling is galvanizing brokerages and real estate agencies to examine the long accepted practice of commissions paid by the seller.
Though using a FSBO company does not guarantee a sale, neither does using an agent. But being able to select specific services gives the seller control over the process, and this control is absent when using a commissioned agent. An agent may allow the listing to languish if the seller is reluctant to lower his or her price. Flat fees for selected services will obligate the agent to perform those duties he or she has been paid to do.
The trend toward selective service and flat fees is still a small part of the real estate industry, and their usage rate correlates to the state of the housing market. But as more homeowners become savvier in the ways of marketing and selling property, the FSBO companies will become increasingly popular.
Sellers want to maximize profits, and the real estate industry needs sellers. Clearly, the trend toward flat fee services will ultimately become typical in the buying and selling of homes, and the six percent commission will be a luxury item, and not the industry standard.