Ask A Realtor: FSBO or Broker – Where’s the Value?

Dear Timm and Rick,

I am getting ready to put my home on the market and have read about all the buyer demand and multiple offers. Given the high demand and desire to maximize my profits, I am thinking I can probably go the for sale by owner route (FSBO), though there do not seem to be as many as I would anticipate given the current market. Curious why sellers aren’t taking this route and maximizing profits – or what I and other potential sellers – might see as the most profitable route.

FSBO vs. Broker Seller

Dear FSBO vs. Broker Seller,

You are correct that buyer demand is very high and sellers such as yourself are in a great position to maximize profits. That being said, the saying that things are not always as they appear to be is a case in point for FSBO sellers. It’s like comparing apples to oranges by only focusing on the commission structure. Working with an experienced broker comes with many benefits, all aimed at making sure you, as a seller, leverage the buyer market to your greatest advantage.

These broker benefits, designed to optimize opportunities for sellers and matching them with the right buyer(s), include:

Increased exposure

Access to the MLS, the primary marketing and listing tool available to buyers and other realtors, requires a real estate license or partnering with a broker, which would involve a fee. While there are companies that profess “free or flat fee” access, these come with stipulations once you sell your house. By not being listed in the MLS, FSBOs miss an opportunity to expose their property to the greater market. Most resort and even down valley buyers are already working with a buyer broker and have an established search with properties being emailed directly to them. More often than not, FSBO properties are not included in this search. Being listed in the MLS allows for syndication to all the major real estate websites which gives you unmatched global reach.

Presenting your home in the best possible light

Most of the FSBOs we see have smartphone snapshots that don’t present their home in the best possible light. Experienced agents have a wide variety of marketing tools at their disposal such as professional photography, drone imagery, 3D virtual tours and video, all paid for by the listing broker. If a property has sub-standard marketing, it will often get overlooked. Fewer looks mean fewer showings, fewer offers and ultimately a lower price for the property.

Market value pricing

Many FSBOs will look to a website like Zillow to determine property value and as a result overprice or underprice their property. Real estate algorithms like the Zestimate can’t keep up with the fast pace of our seller’s market and are often inaccurate. There is nothing worse than leaving money on the table because of underpricing a property. Conversely, price is also the number one reason properties don’t sell – so you have to get it right. Seasoned brokers know the market inside out and have the experience and knowledge to price a property correctly.

Handling showings

Whether this is your primary or secondary home, handling showings on your own can require you to take time off from work or worse yet, travel back and forth if your primary residence is outside the area. Access and security are important considerations. Listing brokers will attend showings and ensure the property is show ready with lights on, blinds up, a comfortable temperature and just the right ambiance. These seemingly small, but important steps can make the difference between a successful showing and a one where the property is eliminated due to less than favorable showing appeal.

Transaction management

Preparing a property to go on the market and showing the property are just the first steps. In a seller’s market you have to know how to handle multiple offer situations and oftentimes there is still a negotiation that needs to take place. Contracts need to be prepared and the transaction needs to be managed through the due diligence period – and this is where the majority of transactions fall apart. This is also where an experienced broker really earns their salt. An expert negotiator and problem-solver will not only help you get top dollar but will also keep your transaction on an even keel all the way through closing.

Technology advantages

A seasoned broker will position your home in a way that is inviting while also promoting it through a variety of marketing channels not readily available to an FSBO. The use of professional photography and 3D home tour technology has, in some cases, sold homes before a buyer even steps foot in it. Without the professional presentation and the “lights-on-the-moment-we-let-the-market-know-we-are-here” attitude, the home will not typically garner the interest it deserves. Technology advances now allow homes to be seen by a lot of people, all over the world, and without the right exposure plan in place, a home can easily be overlooked.

Broker-to-broker relationships

Networking within the brokerage community can and does elicit more and better qualified buyers, relationships that are built on trust and respect, both with clients and the brokerage community. This understanding gives sellers greater peace of mind that the networking within the brokerage community can only help, not hinder, the experience, with the ultimate goal of getting you, the seller, what you need and want…the most return for your sale.

Anticipating stumbling blocks

As a professional group, brokers are working with sales transactions on a daily basis, which allow us to anticipate potential stumbling blocks before they occur. Trip hazards for a FBSO seller are plentiful and can be costly. Knowledge of some of the existing questions and being able to address them up front are additional broker benefits that minimize potential downfalls for sellers. These include: Who is going to be allowed into the home? Are they qualified to make this type of purchase? Is a USDA loan the same as a conventional loan and why does it matter? What is a contingency offer? What is the best approach with multiple offers? How does one decipher between the details that may make one better than the other? Once under contract, what happens then? How do you handle items that come up from the inspection? These are just a few of the potential land mines a FSBO seller can face and often times, in a tight market, will have to try to figure out on the fly. Experienced brokers work through these items regularly and provide guidance and support to sellers to minimize daily and continuous disruptions as well as potential pitfalls in closing.

From emotional to business transaction

“The home is where the heart is!” We have all heard this saying and it is so very true. Many memories, sometimes a lifetime full of them, have been made in your home. Once you make the decision to sell, you have committed to shifting from the mindset of those memories being yours to the thought process that you are willing to let a new buyer create their own memories in the home. An experienced broker can help you navigate these situations and allow you to separate the sale of the home from the memories created within it.

Net to seller fallacy: An argument against listing with a broker is that a seller will net less money because of commissions to be paid out. This is simply not true. An experienced broker can make the homeowner many percentage points more than the low single digit commission percentage for the listing side. The seller, whether a FSBO or not, will typically still be paying the buyer broker commission. Formally listing your home with a professional Realtor will, in some instances, produce sales 10-20 percent higher than when a seller tries to do the process on his/her own as an FSBO. That math is easy. This is why brokers, along with sellers, are having a banner year. Our success is directly correlated to seller – and buyer – success and making sure it’s a win-win for all parties.

Good luck with your sale,
Timm & Rick

Timm Kluender and Rick Messmer are 25+ year Vail Valley residents and award-winning broker associates with locally owned Berkshire Hathaway HomeServices Colorado Properties. Timm’s expertise is in the resort market, including Vail, Beaver Creek, Arrowhead, Edwards and Cordillera. His sales accolades include the Chairman’s Circle Diamond Award, given to the top ½ of 1% of the Berkshire Hathaway HomeServices International Network, as well as being the #1 Top Producing Agent for Berkshire Hathaway HomeServices Colorado Properties in 2020. Rick’s knowledge and experience spans from East Vail to Down Valley, with a specific focus on Eagle, Eagle Ranch and Gypsum, including ranch properties. He also serves as the managing broker for the Eagle Ranch office, where he has also earned President’s Circle and Chairman’s Circle Gold Awards for sales performance. Timm can be reached at 970-471-3472 or timmk@bhhsvail.net and Rick at 970-376-0041 or rick@bhhsvail.net