The Halfway Point for FSBO’s
In many respects, flat fee mls services represent the halfway point for people considering trying to sell their house themselves. Some reports have estimated that as much as 50% of homeowners try to FSBO before hiring an agent, and also that as much as 80% of those people who try to FSBO do end up hiring an agent.
Thus, somewhere between the many people who try to FSBO and the many people who give up on doing an FSBO is a huge market for flat fee mls service. Flat fee mls represents almost a halfway point in the comission, in that the amount charged by the listing broker is only a few hundred dollars, but you still have to offer 2-3% to the buyer’s broker.
In my mind the 2-3% offered to the buyer’s broker is not that big a deal for the incredible amount of additional exposure you get. It’s like offering a bounty on a buyer for your house in the same way that the US goverment has been offering million dollar bounties on terrorists. Money is an extremely effective motivator, and there are many hundreds of agents who will go to work when you post that ad.
Moreover, everyone know’s that housing prices are negotiable, so if you think the agent is getting to much money, then just raise your price to make up the difference. The NAR 2002 Profile of Buyers and Sellers report even indicated that median sales price for FSBO’s was 27% lower then for homes sold by agents. So surely the use of a flat fee mls service can make up the difference in the price of a house after the commission???
April 25th, 2006 at 9:03 pm
Great blog good sir. What I’m waiting to see addressed is the other end of things, buying a home. Does this flat fee mls listing idea help that at all?
April 26th, 2006 at 9:22 pm
The median sales price for FSBO being 27% less than houses sold by full service brokers tells us nothing about the effectiveness or lack thereof of those undertaking to sell their houses on their own. Rather, I think it merely indicates that those likely to go the FSBO route own less expensive houses.
April 29th, 2006 at 11:56 am
Lenny - that’s a great idea to discuss the money-saving options for buyers, and I will try to cover that in a future posting.
Fred - your point about fsbo home values is also something I’m very curious about and have wondered as well. I will try to research it in the future, and will add more info if I can find it.