What is for sale by owner and how does it work?
People who choose to list their property by themselves, without using the services of a real estate broker, can avoid paying the broker commission, typically 6% of the sale price in NYC, but are also responsible for handling all the aspects of the selling process. Those responsibilities include marketing the apartment, scheduling appointments, qualifying the buyer, and negotiating.
To start, a seller will need to prep their home. This includes making repairs, staging, and cleaning the unit. Next, you will need to determine an asking price by comparing similar properties on the market. Then, you will need to list and market the property: this means creating a listing description, taking high-quality photos, posting the listing on different real estate sites, which could be free or come with a fee, and handle any other marketing like mail advertising and social media. When you get offers, you will need to vet them. While agents typically make sure potential buyers are qualified, you will have to handle the vetting process and accept the offer. Is there an offer that appeals to you? Now you will need to negotiate. There’s almost always back and forth when selling a property. So, you will have to determine the final price, repair concessions, contingencies, and any other purchase agreement negotiations with an FSBO listing. When you accept an offer, you will need to ensure buyers meet board requirements, and if you own a co-op, facilitate board interviews. Lastly, you will have to fill out paperwork. Although New York State requires that sellers hire a real estate attorney to aid in paperwork and the legal details of the transaction, you will still have to spend time filling out a bulk of it.
So essentially, everything a seller’s agent would normally handle will fall on the owner in a for sale by owner listing.
Who handles the contracts and the closing?
Typically, a seller’s agent will make sure you fill out all the necessary paperwork. However, if you’re a FSBO seller, you’ll have to handle many of the documents and forms yourself. Thankfully, New York requires a real estate attorney to aid in this process, even if the property is for sale by owner, but as the seller you will likely have to gather a lot of the information such as the signed deed, bill of sale, etc. you are basically acting as your on broker and gathering all the info they would.
What do you need to know about buyers agents if you’re representing yourself in a sale?
Buyer’s agents negotiate on behalf of buyers. They will be familiar with past sales, the value of comparable properties, etc., giving them potentially a leg up in the negotiation process. If you’re less experienced, this could make getting the best sale price for your home more challenging.
Sellers should expect to confirm the commission that they’re willing to pay an agent by email, and perhaps through what’s known as an ‘Open Listing Agreement.’ This only commits a seller to pay a commission to this agent if a deal happens with specifically named buyers.
Potential benefits and pitfalls
On the upside, benefits to selling by owner include:
- Having Discretion and Control, since you exclusively determine how your apartment is marketed, shown, and the negotiation process, and you may also be able to sell quietly without the pain of preparing the unit for public showing.
- You may be able to achieve a higher price than the market would bear.
- And you may save on paying a commission by avoiding the use of a real estate broker.
On the downside, you may potentially miss out on a wider audience—both national and international exposure—that can translate to a higher price, since brokers have relationships and access to a wider network that help get exposure to a property. Without the benefit from a broker’s relationship, community, and resources, you can miss the ability to connect with your target audience or utilize alternate marketing plans.
While there is no right or wrong, I would always recommend using a broker when selling in NYC. Dealing with condos and co-ops is a steep learning curve, and there are many legal issues and nuances that could cost you the deal. Additionally, brokers come with a lot of marketing power – trying to match the resources of a large brokerage could cost you plenty of time and money. Bottom line, you already have a lot of stress involved in the selling process – why add more to your plate? Professional services like a doctor, a plumber, a lawyer, and a real estate broker exist to help you achieve your goal as quickly, smoothly, and successfully as possible. I consider that money well-spent.