How To Save Real Estate Commission

Copyright (c) 2007 Wee Dilts

Are you tired of paying outrageous real estate commissions?

It's a FSBO myth that you can't sell real estate without a broker. Let me show you Six ways you can save thousands of dollars.

Six for sale by owner options:

1. Sell by owner - pay no co-op to buyer agents.
2. Sell by owner - hire a licensed broker or an attorney to write your contract.
3. Sell by owner - offer buyer agents a co-op fee.
4. List as a FSBO on MLS for a Flat Fee - pay buyer agents a co-op fee.
5. List full service MLS - pay a discounted commission.
6. Sell on ebay - pay their fees.
7. Pay an outrageous 6-7% commission.

You can mix and match to come up with several ways to save commission. Based on twenty plus years of working with For Sale by Owners, I'll give you pros and cons and make Recommendations.

1. Sell by owner - pay no co-op to buyer agents:

You sell to a buyer who is not represented by a broker. You're not represented by a broker so there is no commission.

Pros:

You save commission.
You maintain complete control.
You don't list with a broker.

Cons:

There could be contract errors.
You may not have access to State approved forms.
You are open to legal recourse.
The contract may not be defensible in a court of law.
Inspections and deadlines may not be addressed.
It's difficult to build trust with the buyer.

Recommendation:

Use plan two.

Hire an attorney or a licensed broker to write your contract. This builds trust between you and your buyer.

2. Sell by owner - hire a licensed broker or an attorney to write the contract:

This is a smart economical choice.

Pros:

The contract will be on the correct forms.
Required inspections and deadlines will be addressed.
Terms are usually defensible.
Less chance of legal repercussions.
Less chance of contract failure.
You can split the cost with the buyer.
Builds trust between you and the buyer.

Cons:

It costs more money but it's worth it.
You have to find a broker or an attorney who will write the contract for a reasonable fee.

Recommendations:

Do It!

3. Sell by owner - offer buyer agents a co-op fee:

This is a good option; however, agents who have buyers may not know you have a house for sale. Pros:

You open the market to more qualified buyers.
A licensed agent will write the contract.
You may sell quicker.
It costs less than a law suit.
You don't have to list with a broker.
You save money.
You maintain control.

Cons:

It costs more money.
The buyer is represented by an agent. You are not.

Recommendations:

Use plan two. Hire an attorney or a licensed broker to review the contract. And, if needed, write a counter offer. Now you have someone looking out for your interest.

4. List on MLS for a flat fee - offer buyer agents a co-op:

This is the best of both worlds. You remain a for sale by owner. You remain in control. And you save half of the commission.

Pros:

Increased buyer exposure.
90% of the buyers buy with a broker.
You pay half the commission you'd pay for full service and you get full MLS exposure.
You maintain the right to sell by owner.
Buyer agent contracts will be on the correct forms.
If you pay for contract assistance, all forms will be correct.
Agents call you to set showings and to present offers.
You maintain control.
You increase the chances of selling.
You will get a higher price.

Cons:

It costs you more money
The buyer is represented by an agent - You are not

Recommendations:

Incorporate with plan two.

Hire an attorney or a licensed broker to review your buyer agent contact and, if needed, write a counter offer. Now you have someone looking out for you. It costs far less than a law suit. You save money and maintain control.

5. Do a full service MLS listing - pay a discounted commission:

This is the great choice. You get representation. Most brokers will negotiate commission. If they won't . . . Find one who will.

Pros:

You have someone to review your offers, write counter offers and monitor the closing.
You save money, though not as much as with a flat fee FSBO listing.
Your contracts will be on correct forms.
Inspections and contract dates will be monitored.
You're less likely to have legal repercussions.

Cons:

It costs you more money.
You lose some control.

6. Sell on ebay:

I know nothing about selling real estate on ebay; however, I know it is popular. I'll make some logical assumptions:

Pros: You save commission.

Cons:

There could be contract errors.
You may not have access to state approved forms.
You could be at risk for legal action.

Recommendation:

At this time, I'm not comfortable recommending ebay.

There is one more option; you could:

7. Pay an outrageous 6-7% full service commission:

Pros:

The broker takes over the sale.
You get a sign, MLS and various goodies.
The broker presents offers to you.

Cons:

You pay too much to sell your home.
You lose control.
I could go on and on but I won't.

Recommendation:

Sell by owner and save thousands of dollars.