Updated for 2016…
When you are a real estate agent, one of the first rules of business is to reach out to “For Sale By Owner” listings (FSBO) and try to convince sellers to list with you. It makes sense, since this group typically has a high rate of failure and usually decides to list with an agent after going it alone for a few weeks or months. Since we operate a new kind of real estate company that can truly benefit FSBO sellers (among others), I figured I would share what I have learned in talking to NYC FSBO sellers as well as other real estate agents that call on FSBOs.
Here’s what I’ve learned:
Unfortunately, when some agents call on the FSBO, they don’t just come out and say they want their listing. Instead, they apply the “bait and switch”. First they say that they want to “preview” the apartment for an unnamed client or clients. This gets the FSBOs excited that they have an interested buyer and also puts the FSBO seller in a frame of mind that is more receptive to talking to a real estate agent (many FSBOs explicitly say “no brokers” on their listings for this reason). After a tour of the home and some compliments (“did you decorate this yourself? It looks fantastic!”), the agents take out a glossy folder extolling the virtues of their firms, suggest that if the sellers wants to list, they should list with them, and then never bring a single buyer to the sellers’ homes.
The FSBO seller is usually surprised when few real buyers from the big brokerages show interest. Even when the seller posts “brokers welcome,” most brokers and agents ignore these listings unless the client specifically asks to see the property. Agents know that this type of transaction has the potential to be a disaster, so they stay away. They know that “brokers welcome” doesn’t mean they will get their commissions. There is no contract between the seller and the agent, and there is often no contract between the buyer and the agent. So the risk of not getting paid is too great to bother, especially if the sellers disliked brokers so much that they chose to list as an FSBO.
The other reason that agents rarely bring sellers to FSBOs is more technical. In NYC, most brokerages are members of the Real Estate Board of New York (REBNY) and use the REBNY database as the de facto MLS. It’s how agents share their listings with other agents (called a co-broke), and it’s how agents search for listings for their clients. There have been many rants about this system, how the data is not accurate and how it is not fair for consumers and smaller brokerages. I am not going to weigh in on that debate. This is merely a reality that prevents NYC FSBOs from getting their listings shown by agents. Unless a listing is in the REBNY database, it does not exist to most agents.
So the bottom line is that you should expect very little buyer traffic from the brokerage community if you are selling your home without a broker. But what if you want to have brokers show your home and still want the financial benefit of selling direct to unrepresented buyers? In that case, you need a licensed REBNY brokerage with an expertise in NYC to co-broke your listing to other agents and help you navigate the tricky landscape of NYC real estate.
Here’s where I pitch our business:
RealDirect brings you the best of both worlds. You get the cost savings of an FSBO, plus the expertise and access to buyers that a brokerage provides, wrapped in a high tech listing that makes it easier for sellers and buyers to work with each other.
Here’s why RealDirect is better than going FSBO:
Cost: As a FSBO, you would need to pay over $450/month just to get your ads in the NYTimes and Streeteasy. You get these and much more with RealDirect. With RealDirect, you have a choice of 2 ways to pay: a $395 fee, or, if you don’t want to pay until your home sells, a 1% commission at closing. It’s up to you how much to pay a buyer’s commission, but we recommend 2.5 to 3% to ensure the best shot of having agents bring buyers to your property.
Promotion: Because we are a licensed member of the Real Estate Board of NY (REBNY), RealDirect not only gets your listings into all of the real estate search engines like StreetEasy, Zillow, Trulia, etc., but also in all of the broker databases in NYC, and on the other brokers’ web sites that publish these listings to the public. FSBOs can’t do this, and since most buyers still work with agents, you want to be here to reach them.
Time savings: Our powerful web-based platform manages your advertising, web site, contacts and appointments. All you do is show your home. And we can even help you do that if you don’t have the time or the inclination to do it yourself.
Support: As a RealDirect client, you work with a licensed real estate agent to manage your marketing, staging, pricing, negotiating and even board packages. We are with you every step of the way. And we know the NYC market because we’re New Yorkers too.
So in a nutshell, compared to FSBO, RealDirect saves you time and money, while making your process easier and more informed.