Buying FSBO… WHY? Over on Seattle Afloat (Molly Cartwright and Courtney Cooper’s blog about Seattle houseboats), there was a post about the alarming number of private sales happening with Seattle floating homes.
“Many FSBO buyers have the false misconception that if they go around the listing agent then they will be able to get the home for a discount to the tune of that full listing broker and selling broker commission. That simply isn’t true. While the seller may be willing to give you somewhat of a discount, in most cases they will more likely want to pocket the savings of not listing it themselves. Any discount you could have gotten would easily be beaten by a skilled real estate agent in a negotiation.”
The fact is there were more private sales in the last year on Seattle floating homes than pleases me, but the interesting thing about them is that they provide high comps in some cases for our listings. This proves that overall, there were not a lot of “deals” happening in FSBO land. The sellers could have gotten their prices on the open market and the buyers aren’t getting any kind of perceived discount by cutting out the Realtor. The sellers are for the most part pocketing the extra money.
Sellers in Seattle are responsible for paying the commission in full on a sale when they list their homes with a Realtor in most cases. This means that as a buyer, you aren’t having to come up with a buyer’s premium on top of the purchase price for the home. The seller is paying for the commissions out of their net proceeds. There is no point to trying to negotiate it yourself if you are getting the service “free” to you. The listing agent has a contract with the seller to get paid a certain percentage whether you buy with a broker or not. Any commission they would have shared with a buyer broker just stays in the listing agent’s pocket contractually. They are not obligated to give you that commission just because you don’t use a broker. You don’t have a real estate license and are not entitled to receive commission. The listing agent may be generous and offer to pay for some of your closing costs, but the liability of taking on two sides of a transaction probably won’t motivate them to do that.
Molly and I are always amazed at some of the commission sharing schemes that unrepresented buyers come up with. Aside from trying to save money, what is the rationale in doing so? The only reason to buy FSBO is if you can get a better deal through the seller in a private sale. If they aren’t going to give you that then you might as well purchase a listed home and use a broker’s assistance.