the Five Different Ways To Sell Property
By Simon Harrison
Exclusive Agency Listing
Exclusive Right to Sell Listing
Simon's Local Listing Service
For Sale By Owner or FSBO
The way that works best these days is the most common, and that's to list it with a broker. A listing is a form of employment agreement between brokerage firm and their client, who is most often the seller. There are several different ways to do that.
1- An Open Listing is where the seller lists it with one or more different brokers, and if one of those brokers brings a buyer, that broker gets the whole commission.
2- An Exclusive Agency Listing is where a seller lists it with just one, who will share it with other brokers, and the agreed upon commission will also be shared with other brokers when it sells.
3- An Exclusive Right to Sell marketing agreement. Same as the above with two main differences. With an Exclusive Agency listing, you can sell it yourself without owing the broker a commission. This can happen only if the buyer hasn’t been procured in any way by anyone in the brokerage community. An Exclusive Right insures that the broker will handle everything as well as protecting that broker’s commission, no matter who buys it.
4- Simon's Local Listing Service- This is a way to reduce the cost of selling the house as well as the price of the property itself. This form of listing is now available to the public, but in the past it has often been reserved for foreclosures, court ordered sales, bulk liquidations, (REOs) and other must-sell scenarios. This is the only way to move a property for less, while using the entire brokerage community's resources. To be fair, this form of listing isn't for everyone as it involves up-front fees. More on this after we describe the last way, and that's by owner.
5- FSBO-For Sale By Owner, or 'Fizzbo'. Sellers can do it themselves by prepping the house, pricing it right, taking out ads, building a website with some pictures, conducting frequent open houses, qualify leads, conducting all the tours for prospective purchasers that come with or without brokers, negotiating a deal as well as all the paperwork, arranging appropriate inspections, and getting to the closing table.
The reality about doing it this way is that sooner or later the overwhelming majority of Fizzbos end up selling through a broker. It's true that occasionally we hear about a homeowner who sold well by doing it themselves. The ones that don’t use a broker often get less than market value because they’re sold to sharp investors (sometimes brokers themselves), or they don’t get the right exposure to all the buyers, reducing the pool of available bidders. After all, some people do win the lottery, and anyone can get lucky. People who do are often capable and experienced enough to handle any and all stages of a property offering: showing, negotiating and contracts, right to the closing of a sale. The fact is very few people really are that capable, and to be fair, that includes some of the agents and brokers in the business today.
The most common way to sell a house today is an Exclusive Right because many people want a broker handling any and all of the details from beginning to end. To understand how you can save money when selling your property, you first have to understand how real estate commissions work. In a traditional real estate transaction, there are two agents, or sides, in a deal. There’s the list side, and there’s the buy side, which is almost always an equal split arrangement between firms. The commission is pre-set by the sellers when sellers list the property (pardon me if you already know all this).
Anyway, the buy side and the sell side each earn a percentage of the overall home price. When listing a property, the seller sets this percentage, known as the commission, earned by each side. Traditionally, the seller sets a commission of 6%, with 3% going to the seller’s agent and 3% going to the buyer’s agent. For example, on a traditional $1,000,000 transaction with a 6% commission, it’s $60,000 paid at closing, $30,000 to the list side and $30,000 to the sell side. In this traditional arrangement, the commission is already included in a home’s price, at listing, so a buyer who pays $1 million yields the seller $940,000. This amount may seem small in comparison to the overall value of the home, but it is often large in comparison to the amount the home has appreciated since its last sale. The buyer is the only person bringing a checkbook to the closing, and all commissions ultimately come out of the money the buyer provides.
Let's not forget that these are commodity transactions, which are almost always driven by money. Since we don’t want to reinvent the wheel, we just want to apply Harvard Business School basics that say the only way to compete in commodity transactions, is to become more efficient, and bring down costs.
That's what Simon's Local Listing Service does- How we can bring down the cost of selling you house is by reducing the list-side commission, get paid up front, and keep the sell-side the same traditional 3%. That up-front listing service figure is half a percent of the sale price, or $5,000 per million instead of $30,000. That brings the traditional $60,000 commission down to $35,000 for a net savings of $25,000 per million of list price. This cost reduction makes it way into the asking price in a fiercely competitive market, which often makes the difference between selling, and not selling a property. Nobody can successfully market a property for so much less by offering less service, or provide less exposure, or by spooking the traditional broker, whom we still need because brokers still make the most deals. What's very importnant here is that we don't discount the sell-side commissions. As experienced traditional brokers, we know that properties that offer discounted commissions sometimes don’t make the show list until later, if at all. We’re not radicals, nor are we purists, but we have found a way to get the same listings to all the brokers out here in the same traditional way. With the listing service, properties don't look any different than traditionally listed properties.
We are well-versed, experienced brokers and agents. With any listing we service, we feature the property on 20 different Websites, we print and distribute brochures, we conduct open houses for the brokerage community as well as for the public, and we provide the same effective, experienced, guidance, advice, meaningful suggestions, advertising and services that traditional agents offer. Remember, we’re not purists or radicals, we’re just making appropriate adjustments that changes in the industry warrant, and consumers on all sides have been demanding. We sold that sample $1,000,000 house for $360,000 ten years ago. The price of technology has gone up as well as everything else, (like our premium location on the Long Wharf), but we don’t need triple the commission to sell it again.
To conclude the listing choices segment, keep in mind that more information often brings up more questions, and all the answers are important ahead of big decisions. Please feel free to call Simon Harrison Real Estate at 725-HELP or Simon’s cell phone at (917) 822-6652 if you have any questions or comments about these different listing programs.
STAGE YOUR HOME...
By Simon Harrison
Put your house on a diet
The first step is to completely unclutter every room. Remove half your possessions; in storage, a friends' house, give to charity for a write-off, have a yard sale, go to the dump. It might be uncomfortable to live in, but it's also a step forward in what could be the transition phase, or acceptance that you'll be moving. This impression is a good one for the buyers to get as well.
The 80/20 Closet
Most people wear 20% of their clothes 80% of the time. Store as much as you can in storage, and leave space between hangers. Leave a only a few select items of neatly-pressed clothing hanging. Keep one or two pairs of shoes in shoeboxes.
Kitchen and Bathroom Basics
In the bathroom, you should have some pretty towels and a bar of soap, and not much else. Remove everything from the countertops and empty the medicine cabinet. Put everything in storage except a couple rolls of toilet paper. Put candles around the bathtub and remove your razor, shaving cream and half-empty shampoo bottles. Make it look like a catalogue. Same with the kitchen, throw out the old cutting board and stop cooking fish and anything that smokes. Remove the high volume of canned goods and pasta boxes to storage or charity. This gives more than the illusion of space.
If you've run out of money, don't let buyers see you sweat. They could get the impression that you haven't done appropriate repairs when needed. A fresh coat of paint goes a long way toward making your home look fresh, clean and move-in ready. If you want to give the impression that you are really moving, tell them that you've painted the walls white but have left the trim alone because colors are very personal. It'll also save the Clean the carpets. If they're stained or at all worn out, replace them. After an exhausting move and a pricey purchase, a buyer doesn't want to envision their first job after closing as a messy paint job paint and paying for new flooring. Don't give them the idea that that's going to be the case...if you do, they'll mentally start discounting the asking price.
Look at your furniture like a critic. If you've been using an easy chair every night for the last eight years, it's probably not a good impression. Anything that's ratty or dirty needs to be out of the house. If you have nice furniture, then leave the nicest pieces in the house. If not, then purchase a very few new pieces, but don't mix themes too much...it ends up clutter.
Leave Marketing Materials
At the house in case agents have switched tacks during a showing, so there will be materials on site. Ask your Agent if they will be building a flyer to leave on the counter for buyers and other agents to take. Then give them photos that show the pool open and the landscaping in bloom, and other photos that focus on the most important details about your home. Realize, though, that if a buyer isn't interested in your home, then nothing in the flier will sell the property. These serve as reminders when buyers have been shown a lot of homes...which might very well be the case these days.
Make a list of every single improvement you've made to the property since you've lived there, the time frame in which it was made and approximately how much it cost. Also make a list of everything you personally love about the home. Give this information to your agent to put this information in your listing...and trust them to edit the information.
Make it easy
Agents often edit a show list, and if there's always a drama showing the house, it will miss the cut more and more. In other words, make your home super easy to show for real estate agents. Use a lockbox or hide a key, (move the location every now and then for security, but tell all the agents the new location). Your showing instructions should be "show anytime." If you prefer a call first, then the instructions should be, "Call first, leave a message and go." When a real estage agent calls, keep it brief and don't bother giving any extra information. It should already be in your flier.
Leave for showings
Try to be out of the house before the buyer arrives. The majority of buyers will feel tense and intrusive snooping around and opening closets and cabinets when the seller is there. If the buyer arrives before you can get out of the house, then make them feel welcome and leave promptly. Don't come back until they're gone. Let the agent do what they do best...even if you think you can do it better. You may be able to, but you do not know exactly what's happened in the agents constant communications with the buyers.
PETS In Storage
Kidding, but not really. It may not seem feasible or practical to have pets relocated while your house is on the market, but if you truly are seeking top dollar, you need to have a pet-free household. Many people are sensitive to odors and pet dander, so clean thoroughly once you find alternative living arrangements for your pet. If all else is done as suggested, it will be a short time.
When do you get paid?Don't dare price your home high in this market. Be extremely careful to price your home very competitively from the beginning, when the largest number of buyers will see your listing. Once you receive an offer, you should almost always counter-offer. If you over price a home, you run the risk of "chasing" the market, or becoming a stale listing. Staging, pricing and marketing strategies are more and more common, and those are your neighbors, but they are also your competitors.