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Reasonable expected sale price $245,000.

  • Traditional Agent: Fee = 6% = $14,700. High energy agent who is very familiar with the neighborhood and market

  • Limited service agent (Duffy Realty type): Fee = $500 + 0.5% + Buyers agent (if buyer has agent) = $1,725 or $9,075. Duffy is a well known agent in the state and has a huge book of business here, but not necessarily in this neighborhood.

  • For Sale By Owner (FSBO): Fee = $0

The market is really hot, and prices are rising. Only a few houses are for sale in the neighborhood, and all are under contract.

Should we use an agent for the sale?

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The answers you'll receive are going to be largely subjective. I can't tell you which option would be best for you, but there are plenty of things to consider.

Do you know how to sell a home? If your market is hot enough, FSBO may make sense as you won't need the marketing power and expertise of an agent. In very hot markets, you'll end up with potential bidding wars if you price your house correctly. But that's where things start getting tricky. Do you know what your house is realistically worth in your market, or are you making assumptions based on Zillow (or similar)? Do you know what paper work is needed to complete a FSBO sale? Are you any good at negotiating? There are certainly plenty of resources out there for FSBO sellers to learn how to do it, but it can be overwhelming.

FSBO isn't really fee free. If the buyer has an agent, they'll want a percentage (3%) for setting up their part of the sale. Without experience in negotiation, you may be leaving a decent amount of money on the table. Also, in negotiations, an experienced agent may nickel & dime you with contingencies all the way up until closing. Then there's anything you might need to pay for marketing materials and time off from work (if needed) to have the house shown. However, if you're in a market where people are literally walking up to your door to ask if you'd consider selling and for how much (which just happened to a friend of mine), then it might actually be a pretty painless process.

Traditional agents charge a fee, but that fee goes towards marketing and their experience in sales and negotiations. They do the work of getting your property in front of the right people and setting up house showings. The work is done on your behalf, and you won't need to alter your personal work schedule anywhere near as much as you would with FSBO. They only get paid if the house sells.

Limited service agents are a bit of an unknown to me, but it's more than likely the buyer will have an agent, so assume the higher fee. It also appears that the LSA gets paid at least $500 no matter what happens, so they're certainly not putting in any extra effort to help get your house sold. It appears that you're simply paying to get on their list of homes and get some marketing from them, but that's about it. I'd imagine you could get the same exposure as a well educated FSBO seller.

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    An agent foolish enough to bring a client to a FSBO is not entitled to a commission. With FSBO, the important thing is to still have a lawyer handle the terms, title search, etc. That expense is separate from the 0%/3%/6% in any agent discussion. – JTP - Apologise to Monica Jun 12 '16 at 17:15
  • Entitled or not depends on the type of agent. I hired a buyer's agent; I would certainly can't considered her work and advice with the fee even if I had bought a FSBO. But that is something I'd deal with as a buyer, not the seller's problem. Absolutely agree re needing a lawyer of your own in the process, though whether they need to attend the closing is debatable. – keshlam Jun 12 '16 at 19:34
  • Downvoter - care to comment? – BobbyScon Jun 13 '16 at 16:10
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There are advantages to using an agent. A Realtor doesn't just list the house on the MLS. They can also help to keep you out of hot water in legal issues. There are a lot of things buyers can sue for. An agent knows how to prevent them.

Using a listing service is certainly an option. You are basically paying an agent to advertise your home without having them manage the deal. It's cheaper and gets your home noticed. But it still puts you in the same position as a for sale by owner as far as the legal risks go.

As a for sale by owner you can find the buyers completely on your own without paying any agent. Keep in mind a buyer doesn't pay an agent so most people use an agent to find a home. Agents have no reason to show their buyer a home if the seller is not going to pay them.

Typically for sale by owners offer the buyers agent a commission of 2-3%. If the agent finds a buyer they get the commission. In order to make sure they get paid they will ask for what is called a pocket listing.

A pocket listing allows an agent to sell your house to their buyer without advertising the house on the market. You do not have to work with them if their buyer chooses not to buy the home.

As of January 1st 2020 the NAR (national association of Realtors) will ban pocket listings. So the option to pay only a buyer agent like this may no longer be an option.

These are just some of the things to consider.

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