F.S.B.O. Companies and Other Cut-Rate Real Estate Agencies
The newspapers and radio waves
are filled with advertisements from F.S.B.O. companies and cut rate real
estate agencies these days. F.S.B.O. stands for “For sale by owner.”
These ads would make anyone think that to sell their house its not only
fast and easy, but cheap as well. After all, why would you want to pay
that 6% commission to the Realtor?Well, I would like to opine on this subject in the hopes that the
reader will be provided with a little insight on this topic.
F.S.B.O. COMPANIES
I have seen many advertisements
stating that a F.S.B.O. company can list your house starting at $500.I checked a couple of these companies out. They are some of the
best known in this state (at least I think so).It is true that for approximately $500.00 one of these companies
can list you home and provide you with some very basic materials such
as: yard sign, contracts and disclosures.I examined the type of contracts offered. One company’s
contract was not even for use in this state! The “Listing” language
in the advertising means on the company’s respective website. What
that means to you, the Seller, is that a person would have to go to that
particular website to view your home. This does not provide the maximum
exposure that a Seller needs in order to effectively market their house.
However, for an additional fee
(usually another $500), a prospective Seller can get the ultimate
package! This package usually includes more signs, contracts, manuals,
etc.
But to get the maximum exposure, the
prospective Seller is advised to have their property listed in the
Multiple Listing Service. The reasoning is simple: The Seller can now
market their home to every Realtor in their area and in most cases their
state, as well as having their property on national publicly viewable
sites such as Realtor.com.
That advice I find to be very
interesting, because the MLS is overseen by the National Association of
Realtors and the many state and local real estate boards. Realtor.com is
owned and operated by the National Association of Realtors. By many
statistics, it is the number one web site for real estate available to
the public and the most popular.
These oversight organizations are
made up of REALTORS! Yes that’s right! Your friendly local Realtor is
a member of the National Association of Realtors as well as their
respective state and local real estate boards.
But what is even more curious is
that these F.S.B.O. companies advise that the Seller will have to pay a
“Selling Broker’s Commission,” to the Realtor that actually brings
to the Seller a ready willing and able Buyer who actually BUYS their
property. One F.S.B.O. company recommends a commission between 2.5% to
3%!
Now there are a couple of problems
with this. The first problem is that the Seller is still representing
themselves, which in some cases is a violation of the local MLS rules
and regulations. Meaning: The MLS is an instrument that allows brokers
to market their respective listings to each other. Some MLS local boards
do not allow Sellers to market their property directly to the MLS
without a broker.
The other problems with this setup
is that as a Seller, you are paying 2.5% to 3% plus $800.00-$1000.00 to
market your home WITHOUT the benefit of a realtor. This also DOES NOT
include the costof print
advertising ( which is expensive).
So, the question has to be asked.
Why would aSeller incur
such expenses when at A&M Realtors can provide FULL SERVICEfor4.5%?
CUT-RATE REAL ESTATE COMPANIES
We have all seen these ads as well.
A real estate company can list your home for as little as 2% commission.
What you are not told is that to have your property properly exposed you
must have at the very least a listing on the MLS. In most cases the 2%
that the Seller is willing to lay out in commissions does not cover a
MLS Listing. That is in ADDITION to the initial 2% fee. The
additional cost ranges anywhere from an advised 2% to 3%.You do the math. The actual cost is then anywhere from 4% to 5%.
So the question again has to be
asked: Why go with a cut-rate real estate company when A&M, Realtors
will give a Seller FULL SERVICEfor4.5%
with a commission reduced to 3.5% when the property is sold by an
A&M agent with no co-operating broker?