In my humble opinion, there is nothing better than pure capitalism. Think of Uber and Lyft changing the transportation industry. What about Facebook and Twitter changing the way we receive our daily fill of information without having to wait for the newspaper to be delivered. Absolutely amazing!
For Sale by Owner is a great example of capitalism’s ability to change the real estate industry. For Sale by Owner transactions account for anywhere between 10 – 15% of residential real estate transactions but it’s difficult to account for because there is no single source tracking these transactions. Comparatively, 85-90% of residential real estate transactions utilize the Multiple Listing Service or MLS which is able to report its transactions to the National Association of REALTORS®.
So how is For Sale by Owner driving change? Let’s look at the pros and cons.
- You can save on the commission or compensation that’s paid to the real estate agents representing the buyer and seller. In Texas, it’s usually in the 6% however this is 100% negotiable. This could be several thousand dollars saved by doing it yourself.
- You can manage the marketing of the property. Examples include open houses, flyers, social media, word-of-mouth, on-line classified like Craig’s List, newspaper paper classifieds, and on-line with Zillow & Trulia. You market the property the way you want based on how your community buys real estate.
- You can control the sales pitch. You know the property better than anyone so you can point out it’s great aspects. This could be the proximity to transportation, shopping, the hill country or something more specific like how the wind keeps the yard cool in the summer or the sun helps keep the house warm during the winter.
- Missing out on mass marketing where a vast majority of residential real estate transactions happen on the MLS Real Estate. There are thousands of real estate agents and their buyers on the MLS. Huge market!
- Support with legal documents. Real estate agents are not typically attorneys, unless they are licensed to practice, but they do have access to promulgated contract forms, addenda, and notices that are made available by the Texas Real Estate Commission and Texas Association of REALTORS®.
- Screening buyers to save time and ensure safety. Nothing worse than wasting time, energy, and effort on a “buyer” that is not really a buyer. There are scam artists out there as well as investors that are looking for a steal. Most investors do not shop on the MLS but instead look to For Sale by Owner for distressed properties.
I am inspired by the capitalistic attitude in the For Sale by Owner community. I am one of their biggest advocates and that’s what led me to embrace the Flat Fee MLS in Austin model at DIY Home Listings. Imagine saving thousands of dollars in commission while managing the marketing of your property to thousands of buyers. In addition, you can control the sales pitch and not waste time screening buyers or figuring out promulgated real estate contracts.
What do you think? Is Flat Fee Real Estate the best of both worlds?