Flat Fee Brokers, FSBO For Sale By Owner, or OfferPad and OpenDoor
Hey, David Edgerton here. I’m a full time real estate agent here in the Greater Houston area; hope everyone is having a great day. This video is about comparing flat fee HAR MLS listings vs for sale by owner.
And let me just start by saying that people when they think about selling their house, they’re going to run the numbers and what’s going to be important for a lot of people is their net and how much they’re going to net at the end of the day.
And I think that people that choose to do for sale by owner are looking to save on their commissions and fees and closing costs and, I guess they feel that they’re going to net the most money because they’re going to save a ton of money on fees.
And maybe that’s true, you know, I would say from what I’ve read around 8 to 9% of all homes that are sold in any given year on average across the whole country is for sale by owner.
But my point to that is that, most people that sell for sale by owner already know who their buyer is, it’s going to be a family member, a neighbor, someone in their church or, you know, it’s someone that they know and they just do a private sale.
But if someone is looking to find, and they don’t know who the buyer is, they’re looking to find a buyer for their house and they go for sale by owner, they’re probably thinking they want to save on fees and they’re going to put a sign in the yard, maybe place an ad on Craigslist, or even Zillow.
Zillow will gladly take your for sale by owner listing and put it on their website and maybe another one of their websites like Trulia and you can advertise your house on the internet and can actually get quite a few buyers looking at it.
But here’s the thing, is that when people see for sale by owner, those buyers that specifically look for sale by owner want a deal.
They know that you’re selling for sale by owner and they know that you’re not paying a lot in commissions, if any, $ Zero, and they’re going to offer you lowball offers or low offers.
And, so you just have to anticipate that; if you are selling for sale by owner, anticipate investors calling you or just lowball buyers who are looking for a deal.
And also you’re going to get a lot of calls from real estate agents trying to solicit you to… for you to hire them as your listing agent.
And it’s a lot of work, there’s a lot of things that could go wrong, you could not negotiate the best deal or you do the paperwork wrong and there’s disputes and problems, so just be really careful if you do for sale by owner.
There’s a lot of things that could go wrong. Versus actually hiring a real estate broker, whether it be a discount or a flat fee broker to sell it that way and your chances of failure go down significantly.
So, let’s say that a seller says that I want to sell my house on the MLS.
So, first and foremost by selling on the MLS that seller basically says that, yes I will pay a buyer’s agent realtor if that realtor brings me the best possible buyer and we agree to terms and close the deal, I’ll pay that buyer’s agent 3%.
So listing your house on the MLS you’re going to be paying 3% to a buyer’s agent and the fees that you pay to your listing agent vary but flat fee agents can be anywhere from zero dollars to maybe a couple of hundred dollars, or a thousand dollars, or a percent, maybe like 1%.
But a flat fee basically means that you’re… that the listing broker is going to pay less than the going rate of 3%. So you pay, let’s say it’s a 1% listing fee to a company like Redfin.
So, you pay a 1% listing fee, plus you pay a 3% to a buyer’s agent, so you’ll be paying 4% total. But the thing is by selling it on the MLS that means you’re going to have your house listed on HAR, Zillow, Trulia, all these other websites and your chances of selling it at a higher price go up significantly over at for sale by owner.
So, your chances of selling more at a higher price go up…Yes, you are going to have some fees involved but your net will most likely be higher than what you sell it for yourself as a for sale by owner.
So, when you’re considering selling, you need to really think about your net and how you’re going to get the best net price and what it is that you’re going to get out of your listing broker.
What you’re going to get from them to help you sell it at the highest possible price where you as a seller have the less stress.
What if you sell your house to something like a direct investor or a direct buyer like Offer Pad or Open Door? So, these new companies that have multi-millions of dollars in their banks that they’re buying houses all over the country, they are making cash offers to buyers.
I have personal experience with them and basically they’re going to offer a price that is less than the market price of what a seller could get on the MLS.
So, their offer price is going to be lower and on top of that, they’re going to charge the seller anywhere between a 6% and 8% transaction fee. So, they’re going to offer thousands of dollars less plus they’re going to tack on an additional fee, so your net that you walk away with is going to be what I feel is way less; way, way, way less than what you could get using a flat fee or a traditional full service real estate agent on the MLS.
If you have any questions at all versed on any of this topics at all, just please let me know and I hope it’s been helpful.
If you’re considering hiring an agent, you really need to sit down and talk with them to understand what it is that they’re going to do. And if you have any questions about my service, please let me know.
I offer something that’s very unique, is where I will sell someone’s house for free if they use me to buy their next house. Restrictions apply but it basically I’ll willing to do two transactions for the price of one. And this is not a limited service agreement. This is a full service, no upfront cost; I do everything just like a brand name broker would.
Now, I cannot work with everyone, so this is only for a select group of people that are very well qualified. But again, please let me know if you have any questions. Thanks again. Have a great day!