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Discount Brokerage Fees or For Sale by Owner - What’s the Downside?
May 27 , 2005 by Steve MullisIn today’s world of cost conscious consumers, many home sellers and buyers are trying to keep as much money as possible in their pockets from their residential real estate transactions. Oftentimes, home sellers or buyers will see the dollar savings in selling their home themselves or listing it with a discount brokerage firm but don’t necessarily go to the extra step to see what the potential downside could be.
Let’s look at the math:
FSBO COSTS - Sign, advertising, forms, etc. - $250.00
Real Estate Buyer/Broker Fee - 2% - 3%
Immediate Costs - 3% of Sales price + $250.00 (approx.)
DISCOUNTED SELLERS BROKER FEE - From $395 - $3000
Buyers Broker Fee - 2% -3%
Theoretical savings - 1% -3%
Unanticipated Potential
Attorney Fees for defending yourself if the buyer thinks that he/she has been taken advantage of during the transaction process and decides to sue you for something you forgot to disclose or for a mistake you accidentally made - just the attorney’s retainer fee can range from $5,000 - $10,000. Of course, if you lose the case, you’ll also have to pay any damages.
This is truly a risk/ reward scenario. If you think the reward of saving $2500 - $$3000 on the sale of a $200,000 home is work the risk of potential attorney fees and/or damages, not to mention the personal time you will spend managing the transaction you will probably like to play roulette as well.
This is not just about you saving a few bucks when selling your home, it’ also about exposing yourself and your family the potential of serious financial hardship resulting from some inadvertent mistake made when filling out the forms. Most real estate law suits emanate from home buyers. If you think YOU want to make money just look around, everyone else want to as well. Just defending yourself can cost thousands of dollars, not to mention paying any damages. And of course there is the issue of the value of your time. If you make an hourly wage of $20.00 then figure that your time alone (as much as 60 hours not including open house sittings, research time to establish the most accurate market value of your home, asking for help in understanding the current real estate laws in Arizona, etc.
I’m a real estate agent. My position is probably what you would expect it to be. So challenge my logic. Is the risk really worth the reward?
Steve Mullis
Coldwell Banker Success Realty
http://www.stevemullis.com
Email: stevemullis@cox.net
Mobile: 602-920-9315
Steve Mullis is a regularly featured contributor whose articles are published under Real Estate News.
