Options For Selling Your Home in South Florida
What Are Your Options When Selling a Home in South Florida?
Anyone who decides to sell a home or condo in South Florida has multiple possibilities. The actual choices available first depend on whether the homeowner is right side up, or upside down on their mortgage (if they have one, or more). If they are upside down (they owe more money than the property is worth), and they don’t want to pay the difference out of pocket when they sell, then they will need to try and do a Short Sale.
Shorts sales are a large topic in themselves, which we will cover in another post, but for now we’re going to focus on your options when you have equity in your property, or at least can break even.
In this case you have two primary options: 1) Sell your home yourself, or 2) Sell your home through a Realtor.
Going FSBO (For Sale By Owner)
First let’s talk about selling your home yourself. Doing so will allow you to save paying a commission, but it also means that you have to bear all of the expenses of marketing the property yourself, which can be significant, and you will have to show the property yourself, negotiate your own contracts, and try to coordinate and facilitate the many things that have to happen in order to get your transaction closed.
How do you market your home when you sell by yourself? Now I know that this is going to sound like a shameless plug for listing with a Realtor, but it is actually true that when selling your home by yourself, you do not have the most effective and far reaching marketing tool available to home sellers, the MLS (Multiple Listing Service). You will have to try to compensate for that lack of market exposure. We have an entire article covering the Power of the MLS, so we’re not going to dwell on it here, but not having that enormous tool available to you will in fact put you at a disadvantage in reaching and attracting buyers compared to your competitors who have their properties listed.
That is not to say that you will not find buyers. If you have a single family home that allows yard signs, putting up a simple For Sale By Owner sign will catch people’s attention and if you are in a non-gated, desirable community, you could very well find a buyer just from the sign. You can advertise in online classified ad Sites like Craigslist.com. You can tell all your friends, mail out post cards to your neighbors and spread the word on social media Sites like Facebook, Twitter, Pinterest, etc.
You can also sign up on a FSBO Web Site, though that can be an expensive and often useless venture. Many of these Sites and other similar venues out there have perfected the art of preying on FSBOs by hammering hard on the number one reason people decide to sell by themselves – saving paying a commission! They’ll tell you about a beautiful Web Site they’ll build just for your property and all the great marketing they’re going to do – then lock you into paying thousands of dollars in fees. Sometimes by the time it’s all over with, the costs total even more than you would have paid in commission if you had listed with an agent in the first place.
In fact, many sellers, after getting stuck with all those fees but still not being able to sell, eventually list with an agent in order to get a real buyer at a decent price for their property.
Some supposedly For Sale By Owner Sites are really just fronts for No Service, Flat Fee MLS listings. They are Realtors, who will charge you a fee Up Front, usually anywhere from $295 to $695 to list your property in the MLS and then disappear. You are on your own from that point on. Those type of MLS listings will give you some of the total MLS benefit – the Web Syndication part, but you will not get the full benefit of Realtors showing your home to their buyers, in part because there is effectively no Listing Agent on the transaction, so the buyer’s agent has to do twice the normal amount of work for the same or less pay than usual, effectively cutting their hard earned income in half. Consequently, buyer’s agents often avoid these listings when they can.
However, even without the MLS, there are things you can do to try and get the word out that your home is for sale, and if your home is priced well and shows good, you will eventually get some offers and one may even be acceptable. But without having the benefit of the MLS, you will get far fewer buyers interested, or even knowing about your home – which means fewer offers, and which almost always also means a lower sales price than you could get with the full benefit of the MLS.
In fact, no matter how many buyers you are able to attract on your own, having it properly listed in the MLS and professionally marketed, will always generate more. And more buyers means more competition which means a faster sale with more and better offers.
Another thing that you will quickly discover when you start advertising your property for sale is that the majority of people contacting you will be Realtors trying to list your home, or newly hatched wanna be investors who just graduated from the latest get rich in real estate with no money or experience seminar; who have been trained to only go after FSBOs to try and find vulnerable sellers – or worse, experienced cons and unscrupulous types trolling the FSBO market for easy marks.
You will have to sort through all of these FSBO hunters to try and pick out the few, possibly real buyers that might be mixed in. But even when you find those, they will almost always try to squeeze you on the price since they assume you are saving money by selling it on your own, and they want to put that money in their own pockets.
You may already know all this stuff, especially if you’ve done this before. And certainly, listing your home for sale with a Realtor can be just as problematic as trying to sell your home by yourself if you pick the wrong person and/or program to list with. When deciding how you want to sell your home, you should also consider all the pros and cons of listing with an agent. Here are some of them:
Listing with a REALTOR
Just randomly going with an agent to list your home is no guarantee that you will be any better off than trying to sell your home FSBO. In fact, sometimes it can actually be worse. Who you chose and what the listing terms are can make a huge difference in the outcome you are likely to experience.
The MLS can be the most powerful marketing tool, by far, for selling your home, but only if you use it correctly and to its maximum advantage. Unfortunately, many Realtors either don’t know how, or are just too lazy to do it right. Most agents do know however, that most sellers are focused on other, largely irrelevant ideas about what is important when selling their home and picking an agent, so they focus their listing presentations on exploiting and perpetuating those common misconceptions, while simultaneously leaving out most of the stuff that really matters.
So what criteria should you use when deciding who to list your home with? First, you should decide on the type of program you want to use. Then, if there are multiple companies offering the type of listing that you want, pick a company and/or agent that understands how to really get your home sold, is willing to talk honestly about it and that you are personally comfortable with.
Agents love to brag about themselves and are constantly promoting “their brand”. They have their Dog and Pony shows all set up and canned rebuttals to overcome your objections with, but if you wade through all the hype, you can usually boil it down to a few commonly available choices. Let’s look at your typical listing program choices:
Full Service, Full Commission: This is the most common listing type. Full service is one of the valuable reasons for using an agent. Of course, what you actually get after signing a listing that locks you in for 6 to 12 months is not always what was promised or what was expected.
What constitutes a “Full” commission varies from area to area and property type to property type. There is no set or fixed amount and agents and brokers do not collaborate to set these amounts. They are determined by the market – a balance between what sellers are willing to pay and what agents are willing to work for, on any particular property at any particular time. But the market does naturally reach an equilibrium that normally defines a fairly narrow commission range that these listings will usually be taken at.
In South Florida, the most common and average commission amount for a full service, residential property listing is 6%. It has been in that range since the 1980’s. Prior to that it was a little higher, but the real estate business was more difficult and time consuming back then, and prices were significantly lower as well. Still, the current average commission amount has remained pretty much the same for the past 30 years or so.
The way that most Realtors are trained to make a successful living in real estate is to List, List, List. Build as large an inventory of listings as you can and let other agents sell them. An experienced full-time agent can manage 30-50 active listings at a time, but only 5-8 active buyers. Working with buyers takes more time and effort, but getting listings is a difficult and challenging process. However, if you can build a listing inventory, you will be successful.
Consequently, agents are taught to put all of their money and marketing efforts into finding sellers and getting listings. Competing for listings is the hard sell part of real estate. Not marketing and selling properties, agents marketing and selling themselves to get listings. The typical plan is to stake out a ‘farm’ area, market yourself relentlessly there until you pry loose some listings, then leverage those listings to make other sellers think you’re the local expert that they should list their home with, etc. The goal is to spend as much of your time, marketing and effort collecting and locking in listings and just keep moving from one to the next. Let other agents sell them and when you can afford it, hire an assistant to handle the transactions for you.
For those agents who learn this process well and stick to it, the payoff can be quite nice. Most sellers think that the person who has the most listings in their area is actually the one who’s selling the most property in there, not realizing that most of those properties are actually sold by other agents. Most sellers also think that a listing agent who is aggressive and relentless at marketing themselves to sellers for listings, will also relentlessly market their home for sale – Probably two of the most costly misconceptions sellers have about listing agents.
With full service, full commission type listings, the listing agent typically splits the commission 50/50 with the selling agent (the agent with the buyer). So if they take the listing at a total 6% commission, it would be split 3% to them and 3% to the selling agent. Some of the more greedy listing agents will take a higher percentage for themselves, a practice that is harmful to the seller and often done without the seller’s knowledge and/or without the seller caring because they don’t understand the negative consequences that practice causes. Fortunately however, that is not very common done.
In addition to the commission, the vast majority of brokers in South Florida also charge a Processing or Transaction Fee. They tag various names to these fees, sometimes trying to make them sound more legitimate by calling them “Regulatory Compliance Fees”, etc. This is usually disclosed in the fine print somewhere and often not pointed out or discussed by the agent in advance.
Full service, full price listings are the gold standard in listings. With a good agent a seller will get great and complete service, competent marketing, the best possible price for their home and the smoothest experience possible under the circumstances – as long as you selected a “Good” agent – but for a price.
Full Service, Discounted Commission: Some brokers and companies are firm on their commission. Some aren’t. The ones that aren’t will negotiate their commission if they really want your listing.
There are two primary ways that this is done:
1) A flat percentage off the usual commission. For example, if they normally charge 6%, they may agree to do it for 5% or even 4%. Normally in this case, they will still split the commission 50/50 with the selling agent, which means that now agents with buyers are being offered less to sell your home as well. Some of the more greedy listing agents will keep their side of the commission the same and offer and take the entire discount off of the selling agent’s side, which is really harmful to the seller’s interests. Occasionally you will find an agent that truly has their seller’s best interest at heart and will take the discount off of their side of the commission so that the seller still gets the maximum benefit of the MLS listing. When an agent offers to discount the commission, you should always find out if the listing agent is taking it all off of their side, or reducing the selling agents commission also (or entirely).
2) A split or variable rate commission. This is where the listing agent will charge 6% (for example) if another agent sells the property and a lesser amount (4-5% for example) if they sell it themselves. This is another bad deal for the seller because this fact has to be displayed in the MLS and since it is unfair to selling agents, you are likely to get less showings and less buyers for your home. However, even with that disadvantage, your property is still much more likely to be sold by another agent than by your listing agent, which means that not only will you get fewer buyers seeing your home, you will most likely still end up paying the full 6% commission anyway.
A La Carte, Pay for the services you want: Some brokers and companies offer an A La Carte type of listing, where various services are itemized and the commission you pay varies depending on what services you want. If you want full service and marketing, you pay full price. If you can accept less, you pay less. In most cases these brokers will also split whatever amount you are paying 50/50 with the selling broker, which again, on any less than full service listings, is both offering less of a commission to the selling agent (with the buyers) and often requiring the selling agent to do more of the work at the same time because the listing agent will not be doing their ‘normal’ job.
Brokers that offer this type of listing will tell you how great it is because you only have to pay for what you absolutely need, if you are willing to do part of it yourself, or don’t think you need particular services at all – and that these listings can be tailored to the specific needs of each seller instead of the one size fits all approach. Bottom line: You pay less, you get less.
Flat Fee, No or Very Limited Service: This type of listing began hitting the market in the mid 1990’s and when it did, many agents thought it would be the end of the world – their world, anyway. Twenty years later that world is still here and thriving, and Flat Fee brokers are still around, though only have only a tiny share of the total market.
With these type of listings, you pay a flat fee up front, at the time you sign up. That fee is usually in the $295 to $395 range, but can run anywhere from $150 to $750. You pay the fee, sign some papers and the broker sticks it in the MLS and then moves on. You have to do everything yourself, including take your own photos, handle all showings, negotiate all offers and try to get the deal to close. Then, if you do manage to get a sale closed, you still have to pay a commission to the selling agent – typically 3%.
You are essentially selling your property FSBO, but with a partial benefit from being listed in the MLS. It is a ‘partial’ benefit because 1) These types of brokers frequently do not take the time to listing the property with maximum information and photos in the MLS resulting in your home being difficult to find and missing information that buyers are looking for, and 2) Selling agents avoid these types of listings when possible because they have to do a lot more work and it is a lot more difficult to get the transaction negotiated, handled and closed, yet they still only get paid the same amount they would in a ‘normal’ transaction with an active and available listing agent (which is plenty difficult already).
Flat Fee/Limited, or No Representation listings do typically allow the owner to sell to their own buyer and pay no commission at closing, or to cancel the listing at any time, but you are still out the money you paid them up front, which is not refunded in these cases.
Some brokers offering these types of listings will also offer to do some additional things, for additional money – like providing a sign, loaning you a lock box, doing some additional marketing, or offering transaction management – sometimes as additional up-front fees, and sometimes as additional commission, or both.
As you can see, there are a variety of choices and options when deciding on how to list your property for sale with a Realtor. In addition to those above, some agents and brokers offer other ‘special’ deals like offering to sell your property for free, or even buy it from you if they don’t sell the property within a certain amount of time, etc. As you might imagine, these offers come with a lot of conditions and caveats, most commonly that you have to agree to sell your home at the price the agent dictates, but any agent can sell your home fast if you price it cheap.
Savvy Seller – Full Service, Flat Fee, No Risk: We developed the Savvy Seller listing program to address the various shortcomings of commonly available listing programs and offerings. First, we wanted to make it No Risk. Most agents will spend a lot of time and effort telling you all the great things they’re going to do, but they typically want you to sign a listing contract with them locking you in for 6 to 12 months, and you have to sign that contract Before they start doing any of those great things they promised. So what if you’re not happy with what they actually do after you sign the listing contract? You’re stuck, and they’re free to move on to the next seller listing presentation to give their pitch all over again.
We believe that you shouldn’t have to be stuck with any agent that you are not happy with. And if an agent really is going to do such a wonderful job for you, they shouldn’t be so worried that you might want to fire them. Flat Fee listings will let you cancel at any time, but that’s because they’ve already collected all the money they’re going to make from you, and they won’t give any of that back. Our Savvy Seller program lets you cancel any time (prior to accepting a sale contract from an buyer brought by an agent), for any reason, with no obligation. We don’t collect any money up front and we don’t charge you a penny for cancelling.
We also believe in giving you the most bang for your buck, so we pay 100% of the commission to the selling agent. Paying all of the commission money to the agent that brings the buyer, which is whose attention you want to get, gives you the biggest benefit for your hard earned money. No more having to pay a 6% commission in order to pay 3% to the selling agent. Now you can pay the selling agent 3% and keep the other 3% in your pocket.
We provide you with full service for our low processing fee of $495 (payable only at closing), and no commission paid to us. Most other brokers charge a processing fee in addition to their full commission.
Finally, we know how to market your property in today’s world. Many agents will have slick presentations premade and designed by their company’s marketing dept. A marketing department that spends all of their time and money on trying to impress sellers, not selling homes. Many of these agents really don’t understand how properties actually get sold these days, and how to find the most qualified buyers for your home. But they do know that most sellers also don’t know this, so they focus on making a big deal about the common misconceptions that most sellers have about the whole real estate marketing process, perpetuating the myths in the process.
We don’t make our living building an inventory of listings, like most listing agents and brokers. We make our living selling properties, so we know where the buyers are, what they want and how they go about looking for a property to buy – and we make sure they will find yours, and that those who want to see it already know a lot about it when they arrive. Better informed buyers mean higher showing to offer ratios which means faster sales.
Savvy Seller is No Risk, Low Cost, Maximum Flexibility, Effective Marketing and Full Service – All rolled into one program.
If you’re selling a home in South Florida, check this selling opportunity out before you make a decision – you’ll be glad you did.