fsbo

I have to say I like the article. It is well written and a fun read even if not into FSBO. On a serious side, I still say find a broker you can communicate with and go that route. Another point is, do you want to leave work to run home and show unit? Remember, the buyer determines when it is shown. Sadly.

While I am totally for FSBO I can say as a buyer aggressively looking it can be a pain. We have found a few units that were FSBO but the owners were completely flakey and most times removed the units from the market - complete waste of our time. At the same time it’s frustrating for me when asking a broker questions about the unit and they have absolutely no answer for any basic questions.

"When I got the lease, which our landlady drafted, I paused at the “broker” clause: “Tenant states that Bear the Dog is the sole broker who has shown the Unit to Tenant.” I emailed her that I was laughing.

“You’re laughing now,” she wrote, “but he’s expecting a commission. He mumbled something about beef.”

lol

As first time buyers, we used an agent/broker for 3 months but most often found that we knew as much (if not more) about listings etc. This was mainly due to the fact that we did a lot of our own research online too. Maybe we picked a less motivated agent?
We switched to an "agentless" search and found our first condo ourselves. We used that as a reason for a lower price from seller to offset commission to buyer's broker and might have succeded but cannot say for sure.
If you want to buy without broker assistance, be prepared to do a lot of research on your own (time consuming). I think brokers maybe more useful for a coop purchase than condo for being "board ready"- especially an agent who has experience with the respective coop.

This reminds me of something I learned in wilderness survival class: It doesn't matter if you think you can, or you think you can't...you're right.

In other words if you think you can DIY you can. If you have doubts you probably won't succeed at it. I have run into flaky or even dishonest FSBOs. By contrast, all real estate agents are honest, as we all know.

I'm seeing a lot of FSBO in Bburg these days. Guess in this market it is pretty easy and they seem to go pretty quickly. Interestingly one is a $4million sale and it is not clear if it is open to brokers. Find this interesting as most FSBOs tend to be under a million. https://streeteasy.com/building/the-edge-north-tower/ph1f

"I have a friend who just purchased a FSBO in Remsen St Brooklyn that was listed on SE as a FSBO, had her offer accepted in about a week, submitted deposit,co-op interviews etc scheduled at a reasonable price and apart from the lawyer fees.....the seller is laughing (and my friend got a great apartment). Surprised more people don't FSBO."

Once in a very great while there will be an exception to the rule.

I've seen some amazing custom-built furniture in apartments made by the homeowners themselves. They saved a ton of money. Surprised more people don't make their own furniture?

I've also seen some amazing kitchen and bath renovations done by homeowners. Surprised more people don't do their own plumbing?

It's true that once in a blue moon a FSBO will be transacted smoothly for all parties involved. But don't kid yourself; that's only because there was the right combination of people who knew what they were doing, weren't flakes, and all the planets happened to align at precisely the right moment.

Most of the time, however, FSBOs are a pain in the ass.

The question is the price - is this pain in the ass worth 6% of the "biggest investment of one's lifetime", or 2-3 years of home appreciation.

Boxer, that depends somewhat on what your time is worth, and what it's worth to you to keep the process in your own hands. Clearly to the writer of the NY Times article feels like it was worth it to her to sell the Park Slope place herself, even though that process took ten months start-to-finish the second time that she placed it on the market. I will say that I have been on the other side of the table from FSBOs (both representing clients and as a principal) and it's like anything else -- sometimes they're easy, and sometimes they are indeed a pain in the patoot.

Very true Ali. Maybe the best way to look at it is to see how long you think it may take you sell the place (actual work, not just having in on the market - open houses, pictures, etc), and do the hourly rate. E.g. $1M place = $60K in commissions. If you think it's one of the nicer units on the market, and will sell quickly (e.g. work involved such as preliminary research, one/two open houses + checking the buyers credentials, etc = will take maybe 10 hours total and do hourly rate. In this case $6K/hour = is my time worth it? I definitely make a lot less at my job.) Conversely, if the place is in a shady neighborhood, difficult co-op, has a lot of question marks, etc = will take a long time to sell = worth hiring a broker.

It's not just about dollars and cents.

I COULD build my own furniture. I COULD do my own plumbing. I COULD do my own taxes. I COULD steam clean my own rugs. I COULD paint and wallpaper my own walls. I COULD install my own air conditioners every spring.

But I don't because:

-- there are professionals who'd do it a hell of a lot better than I ever could
-- in a fraction of the time it would take me to piss around with it
-- at my age, frankly, I just can't be bothered with wasting my time on something I don't want to be doing

Time is precious. You can't just apply a straight-line comparison to how much money you'd save versus how much you earn/charge professionally.

Do I make $6,000/hour at work? Sadly I do not. But is taking up my time to save that money really worth it? Depends. Does it mean I'd miss my niece's French horn recital? My family reunion? A rare afternoon alone with my mother, who's surviving breast cancer?

Our loved ones can be taken away from us in the blink of an eye. And if that happens, you'll be realizing too late that a sack of $60,000 is really and truly worthless.

Many people want an agent because they need someone objective, who's like a friend, who will relieve their anxiety during this big scary transaction. For that kind of money you can hire a fantastic psychotherapist seven days a week.

Also it is not true that a real estate agent helps, as the NYTimes article illustrates. By waiting a few more months and going FSBO, that seller made a ton more money than the agent would have got them. And agents experience the same bumps in the road as FSBOs do, it's inherent in the process and nobody gets a smooth ride. In our case, I held my nose and went back to the listing agent, who in my opinion is a terrible agent, and made another offer for the home I am sitting in right now. We buyers provided the check for that commission, in case anyone still thinks the seller pays the agent so the agent is free for the buyer. Listing agent was rude to us the whole time until the walk through and closing, when she was all sweet and smiles, and I hated doing business with her.

Many people use an agent because that is what they have done in the past and/or that is what other people they know have done.

@Matt - interesting statements. Then by your logic anyone who can get with bare essentials by on whatever money they are making while working as few hours as possible, should do that and devote the rest of their free time to friends, family, and leisurely activities. Most of the people I know do work, most of them work for money (which does not mean they do not enjoy what they do), and most try to make more money vs. less. At some point, more dollars is not worth it if it requires significant sacrifices, but if I could make enough to survive in NYC and work 5 hours/day, or make enough to have a comfortable lifestyle, be able to take my family on a nice vacation, buy a decent condo for them, and work 10 hours/day, I would definitely go with the second option (I did.) The flexibility and comfort that money provides is not meaningless, and I (as most people) do like having these perks.
Would you pay $2K for a private helicopter to take you to your summer house in 30min vs. spending three hours in traffic? As much as I hare the traffic and wasting my time, I would not. But if it cost me $100, no problem.
Besides, it is not clear why you need to miss any of the important things you mentioned if you are your own agent - it's not like brokers here rush over to accommodate every buyer's agenda on a minutes notice, so just schedule showings, or open houses on your time. A broker has other things going on it his or her life as well, and your apartment is likely to be one of several that they are showing. Plus you have a lot more vested interest in getting sale done at a good price than they do.
As to the professional experience - sure. If you think they have the expertise that you don't, or that acquiring that expertise will take your hundreds of hours (as in the case of a carpenter), or that their expertise is worth $6K/hour (vs. I don’t know, $50 for a plumber, or $100 for a tax lawyer, or $200 for a real estate attorney), then a RE agent is your guy. As for me, there is price for everything, and 6% off a heavily leveraged asset (a much higher percentage of equity which is what the seller would get) is too steep of a commission.

Actually $2,000 to save 3 hours on the LIE is a bargain.

What stupid analogies. Making your own furniture or doing your own plumbing requires specialized skills and more importantly equipment and the savings are marginal. THe internet has been a huge game changer as - assuming you are knowedgeable about the market - all you need are good pictures and then some time to show the place, and then close the deal. Really not rocket science in a market like this. THis changes the more that you require the services of a salesperson. If your unit is a coop or is slightly different and needs to be sold, then maybe not so easy. And the money involved is substantial. Sorry Matt, but your analogies are silly. And what does it mean to install an air conditioner every year? Do you have to haul the coal down to the furnace in the winter as well?

Clearly a lot of the FSBO decision comes down to the perceived cost vs. opportunity cost of labor, which doesn't seem unreasonable.

But I'm still marvelling at the perception that I make $6K an hour. Who do you think I should call first to tell them the good news: Mom or my accountant?

ali r.
{downtown broker}

I once asked my co-op's sponsor why he uses a broker to sell his apartments when the tenants vacate. On the face of it it'd make sense to do it himself: doesn't otherwise work, no board to deal with, knows the business, etc. The gist of his answer was that he doesn't know what he doesn't know, even after decades as a principal. He pays his lawyer, he pays his accountant, he pays his broker. Done.

Looking at all the sponsor units for sale right now, they have the same idea. All use brokers. I remember one exception from three years ago, on W 86th, where the sponsor eventually gave up and gave it to one of the big firms, where it sold in a month.

For me, the big advantage would be in not having to choose from among all the candidates to sell the place.

Ali - I never said what you are making. I am paying $6K an hour (and can potentially save $6K/hour), but there are several reasons you are not making $6K/hour over the course of a full year. Just to name a few –
1. You have to split the commission
2. There are properties that take a substantial amount of time to sell for whatever reason (just look at some streeteasy listings with 200-300 days on the market.) For these, the hourly savings are less and may make sense for a seller to hire a broker instead of dealing with it themselves
3. The main reason – the broker supply is mismatched to the listings supply = there are too many brokers for a limited number of sales. The barriers to entry are too low, and there is a lot of competition to land a listing. As a result, brokers spend a lot of time chasing clients instead of selling properties, and they do not get paid for that.
Just to reiterate my prior thoughts – I have never said all brokers live lavish lifestyles at the expense of homeowners. The aggregate commission pie is too small for that, with 1.4M NAR members out there (on top of many more non-NAR-affiliated RE agents.) But whether I, as a homeowner, am willing to subsidize this army, is a different question.

Matt – clearly we are on different pages of the perception of value. If I were to pay $2K every summer weekend to save me two hours of driving, I would have to miss a lot of recitals in lieu of more time in the office (although it does sound like a bargain)

I'm just teasing you, boxer (hard to convey over the 'net). You are certainly right that most brokers don't make great fortunes because barriers to entry are indeed too low, but interestingly enough, the industry seems resistant to raising them.

Sorry Ali, am tone deaf sometimes ) You make a great point about raising the barriers (and the standards for brokers) - will help both them and the buyers/sellers. Interestingly, this may not be in the best interest of the brokerages, since the more feet they have on the ground, regardless how qualified, the better off they are.

I meant will help the agents, but may not be the best thing for brokerage houses

>You make a great point about raising the barriers (and the standards for brokers) - will help both them and the buyers/sellers

No, it will just raise costs and entrench current players.
There's no special vital knowledge that is required to be a real estate broker. There's nothing in the public interest - like with doctors or frankly even hairdressers with their public health implications or cars / car dealers which have broad safety implications - that should be regulated for the real estate brokerage industry. The only thing regulations will do is help existing players at the expense of possible new entrants, like Zillow or Streeteasy or Keith B's consumer friendly model.

As someone who bought a co-op directly from the seller, I can attest to the fact that botht he seller AND THE BUYER save money. Unfortunately, brokers convince many buyers that the seller pays the commission which is really not true since the commission is built into the purchase price. I wish more sellers would see that.

so very true UESBUYER35. Brokers do try to convince buyers that their services are 'free" and that the "seller pays their commissions". Any buyer who believes this is just an idiot. The commission is in the price of the apt u r buying...duh. The service of taking you around showing you places is not free it's costing you 60k on a million listing.

The "buyer not paying commission" trickery is bad enough but nothing trumps the agent talking down a seller's listing price. Agents want that quick sale and will do anything to get the cheapest apt on the market. Some agents are just absolutely outstanding in getting that low list price....hmm sounds like a seller is not only fighting the buyers out there for a top price but his agent as well.

One other thing agents. Instead of price reductions to get the listing sold why not doubling your marketing efforts to get it sold? How about more and better quality advertising, how about more phone calling, how about more meet and greets? So quick to "reduce the price" to get it sold. How about less price reductions and more effort?

steveF, absolutely it's a total conflict of interest. An agent would prefer a quick sale (at a lower price) vs a longer or uncertain sale for a few thousand more dollars (which is meaningful for seller but not for agent).

As you know, I'm a fan of the agent managed FSBO method via firms like Hauseit etc ... it was inevitable to happen. I believe the 6% model is going to 3% over the next 5 years.

Agree on that sentiment, I'm surprised it hasn't happened sooner in NYC. Rest of the country I believe something like 1/3 of all sales are FSBO. It's nuts. Agent assisted FSBO is definitely the way to go - why on earth would I agree to pay 10% to sell?? 10% for a co-op yes, after 2% transfer taxes and 2% flip tax and 6% broker commission. Yea right!!