My Speech on FSBO

Last month, I delivered a speech on FSBO. I was only given 7 minutes, only enough to briefly introduce the topic and talk about it advantages.

Ladies and Gentlemen, I just made twenty-thousand dollars!

Well, to be exact. I saved myself twenty-thousand dollars when I sold my house last week. How did I do that? It was simple. I sold it myself without going through an agent.

For an average detached home in Toronto, a typical sales commission of 4% actually translates into 16 to 20 thousand dollars. This is outrageous! In every real-estate transaction, a new car is given away.

Paying commissions is not only sad, it is completely unnecessary. According to the Canadian Real Estate Association, 1 in 4 houses sold in Canada is sold without using an real-estate agent. For Sale By Owner, or FSBO, is currently a fast-growing movement within the real-estate industry.

You may or may not own a home now. At some point in your life, you may need to buy one or to sell one. I hope that after today’s talk, you can also save yourself thousands of dollars down the road. I will start by discussing some FSBO myths, and then we will look at some benefits on selling and buying properties without the middlemen.

Many people are scared to sell their properties themselves all because of some what I call "FSBO myths", often told by the real-estate agents.

Myth #1 - It is hard to sell a house without exposing it on the MLS
The Mutiple Listings System (MLS) is where all the agents make their listings available. This is by far the biggest myth.

Unless you live in an utterly remote area or you are targeting out-of-town buyers, serious buyers will surely check out your area. After all, they are going to spend a large portion of their life-savings on this single purchase. All you need to do is to put up clear signs and serious buyers will contact you. I had about 8 showings altogether for my house. All these people found me out from my signs.

Myth #2 - An agent can protect me from all legal pitfalls.
In reality, real-estate agents are neither qualified nor authorized to dispense legal advice. Only lawyers can do so. Not surprisingly, Canadian law requires the use of a lawyer by both buyer and seller, but there is no requirement whatsoever to involve a real estate agent in any real estate transaction.

Your lawyer is the one who can protect your legal rights.

Myth #3 - An agent can sell my house faster
In fact, statistics show otherwise. The US independent research group Realty Viewpoint did a survey in 2003 and found out that houses sold privately sell 3 weeks sooner than those on the MLS.

In the current slowing-down market, in which a house takes 2 months on average to sell, I sold mine in 10 days. Come to think of it, if the agent is so confident, why does he require you to sign a binding agreement with him for 90 or even 120 days?

What are the benefits of doing a FSBO as a seller?

Well, first and most of all, you save money. By this I mean a lot of money! The same survey conducted by Realty Viewpoint shows that on average FSBO-ers make 29% more than those who use an agent.

Secondly, you control the time for showing your house. There is no lock-box, no need to hide in the park when some complete strangers are walking around in your house. I didn’t want to open my house except on Sunday afternoon and several listing agents didn’t like the idea. So I did it myself and I still managed to sell my house very quickly.

Thirdly, you are the best sales agent of your house because you know your house the best, not the listing agent or the buying agent. They know nothing about your house except for the information you provide them.

As for a buyer, FSBO houses are usually cheaper as compared to the MLS-listed ones, and there is often more room for price negotiation, simply due to the absence of the commission overhead.

The best thing about hunting for a FSBO house is that you can communicate with the owner directly. This is very important since you can get a much better understanding of each other throughout the negotiation process. You can directly work out all the outstanding issues and quickly come up with creative solutions. In my case, the buyer did not need some of my items, so I excluded them and was able to give him a lower price.

You can see, without the middleman, both the buyer and the seller win. This is the ultimate win-win solution to any real-estate transaction.

Ladies and Gentlemen, paying commissions is not only sad, it is completely unnecessary. If you need home-selling advice, search the Internet, talk to people, or even hire a consultant for a flat fee. Why would you want to give away your hard-earned money?

Let’s get rid of the middle-men. Sell your house privately, and pay yourself with what you deserve.