Multiple Listing Service (MLS): When is a For Sale By Owner (FSBO) no longer a FSBO?

Especially this time of year home Sellers and home Buyers are inundated with information on where and how to list and search for a home. Frequently you see ads, like I did just this week, promoting selling your home as a FSBO. This particular ad stated for a fee I’m able to enlist the services of a broker to list my house as a FSBO and gain access to the Multiple Listing Service (MLS).

My first question, am I still a FSBO when I agree be listed on MLS and I’m forced to pay a commission to the Selling agent?

According to the contributors at Wikipedia a For Sale By Owner, or FSBO (pron.: /ˈfɪzb/), is the process of selling real estate without the representation of a real estate broker or real estate agent. Homeowners may employ the services of marketing or online listing companies or market their own property but do not pay a commission and represent themselves with the help of a lawyer or Solicitor throughout the sale.”

As defined by Real Estate Fundamentals, a study book to help prepare individuals to successfully pass the real estate exam, “Multiple Listing Service ( MLS) is a marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring a buyer for their property” …….the carrot for the Selling agent or Buyer agent is the commission offered by the Listing agent to be paid at closing. If no commission is offered the house will not sell using the MLS.

Therefore it stands to reason, according to the above definitions, if I’m using a broker to list my FSBO home on MLS and as a direct consequence I’m forced to pay a commission, I’m not a FSBO.

Hence the above broker that advertises to represent me as a FSBO is really a “Wolf in Sheep’s Clothing”. I scratch my head and question is the broker guilty of deceptive practices. The broker has either performed a bait and switch or is attempting to exploit the unknowing FSBO seller.

If your intention is to be a FSBO be careful this time of year and in this market. There are many unscrupulous wolves (brokers) waiting to feed upon your home equity.

I assure you, in 2014, it is possible to sell your home as a FSBO without posting it to MLS.

 

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.

 

YOUR OPEN HOUSE: but you are not invited.

An OPEN HOUSE is a method of showcasing a home for sale to the general public. It is a scheduled period of time in which a house or other dwelling is designated to be open for viewing for potential buyers. Customarily a public Open House (OH) is hosted on a designated day and time, for example on Sunday from 11am-2pm.

It is statistically confirmed an OPEN HOUSE is more for the benefit of the real estate Agent than the Home Seller. This conclusion is reported on Realtor.com, the official website of the National Association of Realtors, and supported by a survey conducted by the Real Estate Center at Texas A&M University.

 

  • 97% of the agents responding to the survey had held public open houses.
  • 75% of agents believe Buyers are more likely to buy another home other than the one being showcased.
  • 62% of the people attending a public Open House are not even in the market to Buy a home.
  • 55% of Agents agreed Open Houses help to generate New Listing contracts.

 

Apparently all the effort and inconvenience to conduct a public OPEN HOUSE is for the self-serving needs and financial wants of the real estate agent at the considerable expense and liability of the Home Seller.

 

What exactly is the expense and liability to the home owner? To start, the real estate agent will inconveniently request you (the home owner) to vacate the property while he conducts the open house. Next, the real estate agent has no idea who is coming to the Open House to survey your home. Maybe you trust the real estate agent but what about the strangers pilfering through your personal possessions and information? Do you really want a stranger to know you do not have a security system, or that your 5 year daughter sleeps in the bedroom on the left, on the first floor? What happens if you mistakenly leave the family calendar on the kitchen wall noting you will be out of town at the end of the month or you leave other personal information exposed? What about the prescription narcotics you store in the medicine cabinet? What about your personal possessions like your jewelry, silverware, or expensive electronics? If your open house does not attract a willing and able buyer, what’s the point? Is the Open House really worth it?

 

In the Texas A&M study real estate agents confess it is unlikely they will sell your home using a public Open House. Therefore in consideration of the above statistics it is not logical, fair or even necessary for the real estate agent to ask you to leave your home so he can host a public Open House (party) at your expense? The reality is the traditional real estate agent is USING you, your family and your home to enrich themselves by acquiring more home Buyers and Sellers for their pipeline.

 

The better approach is to allow willing and able buyers to view your home when it is convenient for them and show your home by appointment only.

 

As a side note…..more recently home owners are producing virtual videos and posting it to sites like MyOpenHouseANYTIME.com and YouTube. This approach is more time efficient and secure, allowing the Seller to control who tours their home by requiring serious Buyers to make an appointment for an on-site viewing.

 

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.

 

NO Multiple Listing Service (MLS) Required: Everybody Wins

As a Seller interviewing a potential REAL ESTATE LISTING AGENT you should ask the following questions-

How important is the MLS to your success?

Can you sell my home WITHOUT posting it to MLS?

Can we try?

 

Let’s say Mr./Ms. Real Estate Listing Agent we try to sell my home directly to the Home Buyer and forgo using a third party Seller/Buyer agent and the closed broker network system of the MLS.

In addition, I only want to pay you a fixed fee of $7,000 to sell my $400,000 home.  Yes, I realize using the traditional commission broker model I would pay $20,000, but how much of that commission pie (money) do you really get to keep after desk charges and other associated fees?

Don’t you think my offer is more than fair to you? And to me? I think my suggestion is a WIN-WIN for us both. You get to put more money in your pocket and I get to SAVE money ($13,000) compared to using the traditional broker commission model.

The best part is you still get to shine and use all your sales and marketing skills (outside of MLS) to sell my home and show me (the Home Seller) how good you really are.

So Mr./Ms. Real Estate Listing Agent can you do it, can you sell my home without posting it to MLS?

Then we both can be WINNERS!

 

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.

 

The HOME BUYER: THE LITTLE TALKED ABOUT IMPACT OF THE COMMISSION

Elizabeth Weintraub, from About.com , creates a convincing argument that the Buyer, in fact, pays the commission- “Why, because it’s typically part of the sales price. If the Seller did not sign an agreement to pay a commission, the sales price might have been lowered. …..and therein lies the appeal of buying homes through unrepresented Sellers (FSBO) because given the same logic, those prices should reflect a net sales price without a commission.”

Further, the commission stated in the listing agreement is solidified between the Broker and Seller, without the consent of the Buyer. Therefore the Buyer pays a commission to the Seller’s Broker that is determined by the Seller who has the incentive to increase the price of the home- consequently costing the Buyer more money.  That does not seem fair.

Now add insult to injury. If Ms. Weintraub is correct and the Buyer pays the commission on an inflated sales price the Buyer gets hit with a double whammy. Invariable the Broker’s commission will be rolled into the financing and then amortized with interest and that could be 10’s of thousands of dollars the Buyer will pay over the life of the loan. Ouch.

Bottom line the Seller does not make any more money and the Buyer gets gouged using a Broker. There must be a better way!

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.

The Secrets of NAR (National Association of Realtors): It’s all about the Money

“The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful”…. (National Association Realtors-website). Awkwardly, NAR’s mission statement directly conflicts with the needs of the real estate market and the individual Seller and Buyer. For example, recently a well-educated friend tried to convince me it was illegal to sell a home without using a real estate Broker. Of course I know, like you know, my friend is wrong and his thinking is simply not true. However, his thinking reflects the success of the marketing campaigns spewed by the National Association of Realtors. Statistically, an individual will sell a home every 8 to 9 years. So it is understandable how NAR can manipulate the unaware home Seller and even home Buyer.

The only idea more untenable is the unnecessary, excessive, self-advocating commission a Realtor charges the Seller and Buyer. Did you know the mainstay of the Realtor is to market a Seller’s home to other Realtors and not directly to the prospective Buyer? That is the value of the Multiple Listing Service or MLS-a closed broker network. A listing broker posts a Seller’s home to MLS in hopes that a cooperating Broker will accept the commission and pitch the home to a willing and able Buyer.

Adding insult to injury the Realtor charges the Seller a 5% commission (on average).  5% does not sound like much, but what if I told you it was going to cost you $30,000 to sell your home? Now does that sound like a lot of money? Imagine that could be $30,000 in your pocket or purse and not in the Realtor’s pocket for simply posting your home to MLS. To be fair, a Realtor can do more than post your home to MLS. However, a home Seller can do everything a Realtor can do, except post a home to MLS. Again, as I said, MLS is a closed broker network- no For Sale By Owner (FSBO) sellers allowed.

The real problem is not the membership of NAR. The real issue is that NAR promotes and supports the inexcusable traditional commissioned broker model and the MLS system.  The reality is that for over 100 years Realtors have relished a monopoly and it is difficult for the Realtor to let go of the golden goose.

That’s right the Broker’s business of real estate is a MONOPOLY.

A monopoly, as defined by Investopedia, is a “situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, a monopoly is characterized by an absence of competition, which often results in high prices and inferior products.”

However, technology and the dissemination of information are gaining a stronghold and beginning to frustrate NAR’s mission statement. Every day more Buyers and Sellers are feeling empowered and confident. Already 90% of home buyers initiate their search for a home on the internet without the assistance of a Broker.

There is a paradigm shift happening in the real estate industry. Companies like Zillow and others are making a difference. It is time for NAR to cease being a dissenter and get on board. NAR needs to advocate a new real estate business model that is truly consumer friendly and better serves its members.

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.

 

MLS: A Private Network for Brokers Only

Everyday home Sellers are told by an overzealous Traditional listing Broker that what they need is for their home to be posted to the Multiple Listing Service (MLS) which, in their opinion, is the best way to market and sell a home.  But what exactly is the illusive MLS?

The MLS is a restricted website for Brokers and Agents only. Chiefly it discloses the commission and compensation paid to Brokers to transact real estate on behalf of the Seller.

According to the National Association of Realtors (NAR) its members have spent millions of dollars to develop more than 800 fractured Multiple Listing Services. Using the MLS, a traditional listing real estate broker will post a Seller’s home in hopes that another traditional real estate broker will collaborate. Invariably the most important listing detail is how much of a commission is being offered. The greater the commission the greater the chance another Broker will cooperate and the home will sell.

Therefore MLS is nothing more than a private listing catalogue created by Brokers and for Brokers to transact third party real property to the exclusion of the Home Buyer and Home Seller. Further, the MLS is never accessible to the For Sale By Owner (FSBO) Seller that is unwilling to pay a real estate broker commission.

In the 21st century the power of the real estate broker to control listing information has been radically diluted by technology; mainly the internet. Consequently, it is just a matter of time until the home Buyer and home Seller recognize the traditional commission model is an antiquated model and only works for the spoils of the real estate Broker.

The evolution of real estate is now.

Donald Van Dyne is THE FSBO ADVOCATE. He is also a licensed real estate agent in the Commonwealth of Massachusetts and the principal at JABIN Software, the developer of the iGOfsbo system. Donald is a seasoned entrepreneur and has over twenty years of experience owning and operating businesses.  For the last twelve years his focus has been in real estate sales, real estate development and property management. Donald can be reached at 978.250.FSBO (3726) or dvdjr@igofsbo.com. To check out the Evolution of Real Estate Sales & Marketing please visit us at iGOfsbo.com.