We’ll be the first to say real estate brokers are paid too much. That’s why Yoreevo charges about one-third of other brokers to sell your apartment. But what’s even better than one-third? Nothing!
A for sale by owner (or FSBO) listing can make sense for some sellers. Before you start getting ready for your first open house, you should know how much you can save and, equally as important, how much it will cost to sell your home with FSBO.
How Much Can You Save With A FSBO In NYC?
The most common reason to sell via a FSBO is to save on commissions. In NYC, sellers usually pay their broker a 6% commission. While it would be great to eliminate that entirely, you’ll probably still end up paying a commission.
If a buyer has a broker (which is usually the case), that 6% is split with their broker. To get brokers to bring their buyers, you’ll want to offer that commission. This is also called a “co-broke.”
FSBO descriptions often say, “Buyers’ brokers welcome.” That is code for, “We will pay you a commission.”
If offering the 3% commission, your total FSBO savings will likely be 3% - the commission that would have otherwise been paid to your broker, the listing broker. There are not any other material savings of selling with a FSBO. For more information on seller closing costs, check out our dedicated post.
What Are The Financial Costs Of Selling With A FSBO?
While you will save on commissions, you will have to absorb some costs that would have otherwise been paid by your broker.
For example, you will want to make sure you take professional photos. Depending on the size of your apartment, these will cost a few hundred dollars. To market a FSBO online, most websites charge a fee. For example, Streeteasy charges $599 for four weeks of distribution. You may want to pay for other websites as well.
Of course you will also have to carve out a significant amount of time to manage the process. You will be responsible for communicating and coordinating with buyers as well as showing the apartment. This can mean both weekly open houses and private showings. Make sure your Sundays are free for at least a few weeks!
Are There Other Costs Of Selling With A FSBO?
There are some unquantifiable costs associated with selling via a FSBO.
We once heard an interesting anecdote from a buyer who considered a FSBO listing in the suburbs. The buyer sent it to his broker and while the description made it clear a commission was being offered, his broker declined to show it.
If the broker was going to be paid, what could be the problem? He was concerned he would be doing two jobs for the price of one. Without a professional representing the seller, he expected to manage both sides of the transaction.
We’ve heard this from other brokers as well. They simply don’t deal with FSBO listings because they don’t want to deal directly with the owner. They are used to working with another broker and prefer it that way. It’s impossible to know how many buyers’ brokers steer their clients away from FSBO listings but some certainly do.
Your apartment also may not show as well if you don’t have a broker come in and provide tips before the listing. You might not have problem with your bright pink walls or prominently displayed Furby collection but others might.
A fresh set of eyes may also catch small defects you don’t notice but scrutinizing buyers will. That being said, a few friends can also fill this role. They can come by and point out your odd decorations or that small crack in the wall.
What Types Of Sellers Should Use A FSBO?
We’ve downplayed the commission savings of a FSBO and highlighted some hidden costs but that doesn't mean they're a bad decision. When does it make sense to you sell your apartment using a FSBO?
- You can value your apartment - One of the most important services a real estate broker will provide is an apartment valuation. If you price too low, you risk leaving money on the table. If you price too high, it will languish on the market (and incur additional costs). You need to be comfortable looking up comps and using them to come to a realistic valuation. If you plan on listing your apartment based on what your gut says or simply what you think it is worth, you may want to think again.
- You have time - Showing an apartment can take a lot of time. If you really like Sunday brunch or leaving the city on the weekends, you should probably hire an broker. It’s also helpful if you have a flexible schedule so you can show during the week as well.
- You can remove emotion - This may be the most important requirement. Most sellers think their apartment is worth more than it is. It’s such a common problem that psychologists have a term for it - the endowment effect. As a FSBO seller, you need to remove all emotion from the process. This means having realistic pricing expectations and not being offended by buyers' comments.
- You really love your apartment - Not many real estate brokers will tell you this but assuming you meet the requirements above and really love your apartment, nobody can sell it better than you. You alone can convey a sense of home. Maybe there are a couple blue jays that stop by the tree outside every so often. Or the neighbor across the hall is always happy to share freshly baked cookies. Only you know these little details which can help buyers imagine your home as their home.
Comparing Yoreevo and FSBO
As you can see, the FSBO decision is not an easy one but Yoreevo tilts the scales in favor of using a broker with our 1% listing fee.
For that 1% (versus 3% at other brokers), we handle the entire process. Professional photographs, valuation, online listing distribution, open houses, buyer/broker coordination - you don’t have to worry about any of it.
For the same reason as above, we do recommend our sellers offer a commission to the buyer’s broker so the total cost to sell with Yoreevo is 2-4% compared to 5-6% with other brokers. If you would like to discuss the details of your apartment and receive a complimentary valuation, please contact us and we’ll get something on the calendar!