SAN FRANCISCO (MarketWatch) — Everyone trying to sell a home in glutted markets knows what they desperately need is the attention of buyers. Here is a way to generate interest that’s at once revolutionary and plays entirely within the realty industry’s allowable practices.
In short, take advantage of the opening up of the industry’s once tightly guarded Multiple Listing Service by paying a few hundred dollars to list your property yourself on the MLS.
Then — and here’s the kicker — offer the full 5% or 6% commission typically split between seller and buyer agents solely to the agent who brings you a buyer — and suggest she or he cut potential buyers in on the bounty to pique their interest.
The strategy is certain to attract the attention of buyers’ agents because you’ll be doubling their typical commission. It also could entice buyers if their agents elect to share part of that premium with their clients.
If buyers shopping the Internet contact you directly and are willing to pursue a purchase without an agent, you can offer them a 5% or 6% price reduction, or half that amount if they chose to work through an agent. That’s not an unlikely scenario since roughly 80% of buyers first see the home they purchase these days online rather than through a listing sent them by their agent.
“Anything that’s an incentive for a sale, thinking out of the box like this, I think it’s fine,” says William E. Brown, president of the California Association of Realtors. “But pricing is still key. If it’s not priced right, you can offer a 10% commission and no one’s going to buy it.”
Other costs to bear
Sellers will have to shoulder added costs — including an appraisal to set a listing price and perhaps a few hours consulting fees to a Realtor and/or real-estate attorney for contract reviews and guidance on required seller disclosures and disclaimers.
Fast-emerging “limited-service” real estate agents are prepared to help out with a la carte services such as helping set a list price and weighing and countering offers on an as-needed basis, just as “minimal service” Realtors will post your listing for relatively small fee.
The home-sales market nationwide has been accommodating greater seller and buyer involvement. According to the National Association of Realtors, 12% of U.S. home sales last year were conducted outside the MLS system as private party or For Sale by Owner (FSBO) transactions. Eight percent were sold through minimal-service listings and another 8% were limited-service listings, meaning only about seven in 10 homes were sold through the traditional full-service realty model.
But sellers beware: This strategy should not be pursued by first-time home sellers or anyone lacking the confidence, intelligence and presence of mind to serve as their own sales representative.
Second-time sellers have at least been through the home sales/buying process three times by this point.
Several industry leaders didn’t roundly embrace the concept for various reasons.
“Selling a home is far more complicated than throwing it on six Internet sites and hoping someone will trip over it and buy it,” says Judy Reeves, chief operating officer of NRT, the nation’s largest residential brokerage whose brands include Coldwell Banker, ERA and Sotheby’s International.
Attracting a buyer “is about price and it is about amenities. Those are decisions a consumer makes and not a buyer’s agent,” says Bryan Drakulich, chief operating officer of Irvine, Calif.-based discount brokerage Help-U-Sell.
“I love the idea (but) I’m a little wary of gaming the system,” says Glen Kellman, chief executive of Redfin, an upstart online brokerage.
Steps to take
Still, desperate times call for extraordinary measures. If you’d like to work through the MLS system but direct the entire commission you’re offering to the agent who brings you a buyer, here are some steps to take:
- Do your homework. Read up extensively on FSBO strategies so you understand the responsibilities that will fall to you, from fixing up and staging your home effectively to securing a title company and closing the sale. Call around to several area realty offices, ask for their top producing sales agent, and inquire how much he or she would charge as an hourly consulting fee on an as-needed basis.
- Determine a listing price by paying for an appraisal and conferring with a consulting broker if you feel it necessary. You could also talk with brokers from three different agencies about listing your property and the price they’d recommend — being sure to note in the course of the discussion that you’re considering listing it yourself. If you especially like one of the three, you may elect to list with them instead of on your own.
- Post your listing onto your area MLS through either a local brokerage that offers minimal-service listings or through online minimal-service brokerages such as brokerdirectmls.com, housepad.com, buyself.com, flatfeemlslisting.com, homeworksrealestate.com, and congressrealty.com. Note that many of the listing services only cover certain states, so you may have to look around for one that handles yours. And bear in mind minimal-service listings aren’t yet available in all areas of a given state, so you may be unable to pursue this sales strategy.
- In the “public remarks” part of your MLS listing, note there are special incentives for buyers that they can contact you about for more information. To mitigate the potential conflict of interest of a buyers’ agent steering a client to a listing because of a big commission, inform agents in the private remarks area that they must disclose to their client before settlement that they’re receiving an unusually large commission and the reason for it. At the same time, you can propose the agent give up to half of your offered commission to the buyer in the form of a rebate, closing-cost help or a price reduction, depending on what’s legal in your state.
- Arrange to have a “lock-box” containing a house key placed on your property for buyers’ agents to show it at will. Minimal-service agents will rent you a box for a modest fee. You won’t need to draw up a sales contract because the buyers’ agent handles that. But you absolutely should have a Realtor or real estate lawyer look over the contract with you before returning it with your counter-offer if any.
From there, follow the steps outlined in FSBO-guidance materials and don’t hesitate to contact a consulting broker at any point in the process.
View more information: https://www.marketwatch.com/story/a-surefire-way-for-home-sellers-to-get-buyers-attention