Thursday, August 6, 2009
Nashville FSBO vs. Listing Agent
I live in an area in Nashville TN where there are A LOT of homes for sale. In fact, there is a neighborhood called "Lenox Village" that has close to 60 homes on the market!! Out of the 60 homes that are listed many of them are "For Sale By Owner". I PITY the FSBO that thinks they have an edge over an aggressive listing agent!! (In the best Mr. T voice I can muster up)
Let's talk about exposure. I know that some FSBO's get smart and figure out a way for their home to be listed in the MLS... CONGRATS! For the rest of you, aside from the occasional drive-by who else is going to see your home? What about the family in Florida who needs to move to Nashville because of a job change? Are they going to see your home? NO! They are going to call an agent who in turn is going to look at his/her favorite database....THE MLS.
The #1 reason why someone would chose not to use a listing agent is to save money. That of course is a great thing to do especially in this economy. Let's look at some interesting facts;
1) Homes listed with a Realtor sell in half the time of those who are trying to sell on your own. There are many reasons for this but I will cover the basics. Staging (a good Realtor will tell you what needs to be done to the home in order for it to be ready to sell. Green walls, clusters of candles, and 6 cats aren't appealing to every person walking through the home....take some advice.) Marketing ( If you think the MLS is the ONLY place to have a home listed then you are sadly mistaken. How many people are using things like Facebook, Myspace, Craigslist, Twitter, ACTIVE RAIN, and simply Googling areas? The answer....MILIONS.) Pricing (I am sorry but a home that was bought 2-3 years ago is probably not worth $20,000 more in 2009. Ask an agent what your home is worth...not what you THINK it's worth. This may prompt a decision to RENT as opposed to sell....for now.)
2) FSBO's sell on average 15% less than those that are listed with agents. Let us start with negotiations. A GREAT listing agent knows what you need and knows how to get it. Some of us are masters of negotiations. Here is where the fun begins....
Please keep up. Let's say that you have a mortgage of $1,500 a month and you "need" to get out but don't want to pay a listing agent to sell your home. I am going to stay conservative here for arguments sake but realize it could be much worse. Also, (for those that have a home in the MLS) let's say that you are only saving 3% as opposed to 6% because the person that brought you your buyer is a Realtor (which will require his/her 3%). On a $250,000 home your goal is to save yourself $7,500 by not paying a listing agent. That is the number we are working with... with me so far?
Again, on average, a home listed with an agent is likely to sell in half the time of a FSBO. In Nashville, let's say that on average the listing agent will have a $250,000 home on the market for 3 months and then it sells. According to stats (in this situation) a For Sale By Owner will have their home on the market for 6 months before it sells. On a $1,500 note you are now saving $3,000 by not using an agent ($1,500 a month for 3 months is $4,500. $7,500 - $4,500 = $3,000).
So now the number we are working with is $3,000. Let's refer back to paragraph 5... "FSBO's sell on average 15% less than those that are listed with agents". Again, for arguments sake I will keep that percentage low. Let's say that an agent can get only 1.5% more for a house than what a FSBO can. On a $250,000 home that is over $3,500. In this scenario the For Sale By Owner is now saving $500. I wanted to keep my numbers low for my next point.
Now, if it is going to cost someone the SAME amount of money to list it themselves as opposed to using an agent why wouldn't they?? Aside from the most important thing (price), there are MANY things to take into account. Inspections, appraisals, title, negotiations, open houses, marketing, HOLDING DEALS TOGETHER, all these things are the jobs of an agent. Why wouldn't a family of 4 with school, work, church, soccer, etc etc etc NOT want to hire a listing agent? According to the numbers....I have no clue.
KELLER WILLIAMS REALTY
9175 Carothers Pky Suite 110
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