For Sale By Owner (FSBO) purchase - how much discount can I expect?

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CULater
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For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by CULater » Tue Jun 12, 2018 11:30 am

What is a reasonable percentage discount to expect on a home purchased directly from the owner, compared the realtor-brokered price? For example, should there be a discount of 6% for the realtor fee? What other fees and charges should discounted, and what would be the total discount to expect?
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David Jay
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by David Jay » Tue Jun 12, 2018 11:36 am

In my experience, most of the FSBO types are thinking along these lines: "Why should I give the realtor any of my money. The entire proceeds of the sale should be mine".

In other words, they are not inclined to "split" the commission with the buyer. So you get all the hassle of FSBO negotiation and paperwork without any monetary benefit. You may find an exception, but in my experience this is the rule.

Best of luck!
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pshonore
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by pshonore » Tue Jun 12, 2018 11:44 am

Perhaps the asking price has already discounted by 6% (doubtful). No one knows how a FSBO priced the house.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by jimmyrules712 » Tue Jun 12, 2018 11:51 am

I'd say it depends on if the buyer has a realtor representing them who is still taking their 3% commission. If yes then I would not expect any discount. If they don't have a realtor involved either then I'd expect the buyer to save the 3% that would be going to their realtor.

The 3% that would be going to the seller's realtor should be kept by the seller.

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lthenderson
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by lthenderson » Tue Jun 12, 2018 11:54 am

As the potential buyer, I would start at 6% less than asking price if that was the standard realtor commissions in the area. As the home owner, I would price it at or slightly above market value and tell the potential buyer that offered 6% less that I expended time and money to promote my house that I am trying to sell and it priced at market value. In the end, I would expect the price to be somewhere between those two numbers.

audioaxes
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by audioaxes » Tue Jun 12, 2018 12:36 pm

If the owner is still providing 3% buyers commission then dont expect any kind of discount.

CULater
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by CULater » Tue Jun 12, 2018 1:49 pm

Not sure I understand how realtor's commission works. If there is a seller's agent and a buyer's agent they would split the commission (eg. 6%)? But if there is only a seller's agent, would there just be the commission to the seller's agent of half (e.g. 3%) or does the whole commission go to the seller's agent (6%)? At any rate, I'm assuming the price is jacked up to cover the commission costs and that without any realtors involved you should theoretically pay a discounted price equivalent to the commission rate. I know it's theoretical, but it seems to me that when I'm negotiating for an FSBO home I should know the comps and then discount that by the commission rate as a ballpark.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by Jack FFR1846 » Tue Jun 12, 2018 1:57 pm

You have to do your own comps with a FSBO house. And do them.

When we bought out house that was essentially FSBO (was going with a real estate agent soon, but not signed), we offered 42% below asking on our house. We settled on 41% below asking. This is why I laugh when I hear agents say "anything more than 10% below asking is an insult". Well then, here's my offer and I spit in your face, pig dog.
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sport
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by sport » Tue Jun 12, 2018 2:10 pm

Discount off of what? There is no MSRP for a house. The seller asks what he wants and the buyer offers what they will pay. If there is an overlap, there is a sale. You can always justify offering less than asking price, but you don't have to justify any offer you make. Your offer is just that, an offer. The seller will either accept it, counteroffer, or reject it.

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MP123
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by MP123 » Tue Jun 12, 2018 2:14 pm

CULater wrote:
Tue Jun 12, 2018 1:49 pm
Not sure I understand how realtor's commission works. If there is a seller's agent and a buyer's agent they would split the commission (eg. 6%)? But if there is only a seller's agent, would there just be the commission to the seller's agent of half (e.g. 3%) or does the whole commission go to the seller's agent (6%)?
That's negotiable between the seller and their agent. Often there's discounted rate (4-5%) if the listing agent also brings a buyer.

I'm not really sure that you can expect to realize a discount from a FSBO. Who know how they priced it? Factoring the commission or not? They might be 20% over market and you bite off on it, ask for and get a 6% discount, and still overpay. Get comps for sure.

pshonore
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by pshonore » Tue Jun 12, 2018 3:06 pm

CULater wrote:
Tue Jun 12, 2018 1:49 pm
Not sure I understand how realtor's commission works. If there is a seller's agent and a buyer's agent they would split the commission (eg. 6%)? But if there is only a seller's agent, would there just be the commission to the seller's agent of half (e.g. 3%) or does the whole commission go to the seller's agent (6%)? At any rate, I'm assuming the price is jacked up to cover the commission costs and that without any realtors involved you should theoretically pay a discounted price equivalent to the commission rate. I know it's theoretical, but it seems to me that when I'm negotiating for an FSBO home I should know the comps and then discount that by the commission rate as a ballpark.
You can certainly bring your buyer's agent along but a true FSBO is under no obligation to pay any commission to any one, without a prior signed agreement.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by bsteiner » Tue Jun 12, 2018 3:13 pm

If there's a broker and the contract price is 500, the buyer pays 500 and the seller gets, say, 470.

If there's no broker, the buyer and seller might end up somewhere between 470 and 500. But I think they would end up closer to 500 since the buyer would have to pay 500 to buy a similar house, whereas the seller isn't selling any similar houses. In any event, it's up to the seller whether to hire a broker or to try to sell the house himself/herself.

The percentage of houses that sell through brokers, by word of mouth, or by the seller placing an ad where buyers are likely to look, varies from place to place.

bubbadog
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by bubbadog » Tue Jun 12, 2018 3:16 pm

I have listed a couple of properties on the MLS as FSBO. In the listing, I put the buyer's agent commission, which is around 3% in my area, that I was offering.

The Wizard
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by The Wizard » Tue Jun 12, 2018 3:56 pm

Depends on what kind of bidding war you get into for the property.
Let's say asking price is $300k and first two bids are for $340k and $350k.
You have to deal with reality, see?
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Copper John
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by Copper John » Tue Jun 12, 2018 5:43 pm

I sold my condo in a FSBO deal to a buyer who was not represented by a realtor. The buyer's offer was in line with comps and the upgrades I had put into the unit. I split the 6% commission fee savings between us and took 3% off. I would not have offered any discount to a buyer with a realtor. I offered realtors somewhere between 2-3% commission.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by denovo » Wed Jun 13, 2018 12:28 am

sport wrote:
Tue Jun 12, 2018 2:10 pm
Discount off of what? There is no MSRP for a house. The seller asks what he wants and the buyer offers what they will pay. If there is an overlap, there is a sale. You can always justify offering less than asking price, but you don't have to justify any offer you make. Your offer is just that, an offer. The seller will either accept it, counteroffer, or reject it.
BOOM, there is your answer OP.
"Don't trust everything you read on the Internet"- Abraham Lincoln

goodlifer
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by goodlifer » Wed Jun 13, 2018 8:14 am

You should look to get the house of your dreams for a reasonable price compared to the other homes in the area. If you are basing your decisions solely on getting a deal, then narrow your search to foreclosures. Some of the foreclosures in my area are so low that I am tempted to buy one myself as a rental.

I have bought and sold quite a few properties. Whenever I got a low ball offer, I would tell my realtor to ask them what comparables are they using to come up with this offer. If there really were comparables that sold close to their offer, I would play ball. I have never had to play ball. And it is my experience that people that choose to go the FSBO route know about comparables and market expectations. They are not going to give you a 10% discount just for the heck of it. Your best route would be to kindly point out things like all the walls in the house are hot pink and need to be repainted, or the windows are shot, or the house down the street sold for $20 a square foot and her is asking $25, etc.

J295
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by J295 » Wed Jun 13, 2018 8:59 am

If a desirable home is priced at "market value" the discount I would provide is zero. This may be especially true in a seller's market, which we have in our area for many homes. We have sold two desirable homes FSBO and bought one desirable home FSBO, all with no adjustments because there was no realtor involved.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by 123 » Wed Jun 13, 2018 9:14 am

CULater wrote:
Tue Jun 12, 2018 11:30 am
What is a reasonable percentage discount to expect on a home purchased directly from the owner, compared the realtor-brokered price? ...
Discount? Discount? What part of the country is this property in? In the San Francisco Bay Area the initial "price" is just the starting point. In the Bay Area the question is how much ABOVE the initial price you have to go to close the deal. Things are different out there.
The closest helping hand is at the end of your own arm.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by mrgeeze » Wed Jun 13, 2018 9:57 am

David Jay wrote:
Tue Jun 12, 2018 11:36 am
In my experience, most of the FSBO types are thinking along these lines: "Why should I give the realtor any of my money. The entire proceeds of the sale should be mine".

In other words, they are not inclined to "split" the commission with the buyer. So you get all the hassle of FSBO negotiation and paperwork without any monetary benefit. You may find an exception, but in my experience this is the rule.

Best of luck!
+1
I think a lot of FSBO's don't price their home according to market. Mose are overpriced.
Many of the owners are less than savvy about how the whole deal works. They actually need a realtor, or a lawyer.
My general conclusion is most FSBO's are greedy and not worth dealing with.

To answer your question, I believe a split of the real estate commission 50/50 between buyer and seller would be equitable.
I do realize the buyer pays the commissions.
Everyone wants a piece when the pie is being cut. Just the way it is.

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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by dbr » Wed Jun 13, 2018 10:00 am

denovo wrote:
Wed Jun 13, 2018 12:28 am
sport wrote:
Tue Jun 12, 2018 2:10 pm
Discount off of what? There is no MSRP for a house. The seller asks what he wants and the buyer offers what they will pay. If there is an overlap, there is a sale. You can always justify offering less than asking price, but you don't have to justify any offer you make. Your offer is just that, an offer. The seller will either accept it, counteroffer, or reject it.
BOOM, there is your answer OP.
Exactly. Otherwise you are just playing games.

adam1712
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by adam1712 » Wed Jun 13, 2018 10:42 am

CULater wrote:
Tue Jun 12, 2018 1:49 pm
... At any rate, I'm assuming the price is jacked up to cover the commission costs and that without any realtors involved you should theoretically pay a discounted price equivalent to the commission rate. I know it's theoretical, but it seems to me that when I'm negotiating for an FSBO home I should know the comps and then discount that by the commission rate as a ballpark.
The seller is likely thinking:
Instead of paying the commission rate for the realtor and only getting the discounted price, I get the whole price. When I do the work of selling a FSBO home, I don't have to pay the commission rate and get to keep the money.


To make a FSBO work, you are likely going to have to meet in the middle.

NotWhoYouThink
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Re: For Sale By Owner (FSBO) purchase - how much discount can I expect?

Post by NotWhoYouThink » Wed Jun 13, 2018 11:31 am

Some negotiations are cost-based. Parts and labor, mark-up over invoice, etc.

Some negotiations are price-based. Art, real estate, personal injury law.

You are contemplating entering into a price-based negotiation. Costs are not the driving factor. Now maybe once you get close to a price you and the seller agree on you can try to use the FSBO argument to knock a couple of percentage points off. But maybe they'll say that was already included in the list price. So figure out what the house is worth to you and work from there.

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