Do Buyers Save w/ FSBO's?

A: On a recent showing with one of my clients, where we had to wait 20 minutes in the lobby for the seller's broker to arrive, we started talking about FSBO listings and whether or not they offer a better value than listings with the brokerage community. As I explained to my client that this is not always the case, she mentioned that FSBO's can offer a lower price because they are saving the commission to be paid to the brokers. Is this true?

Not Really. Here are some short answers.

FSBO's are everyday people with full time jobs who want to pocket as much as possible from their home sale; which there is nothing wrong with. However, they are now in charge of fully marketing their property (which can add up to thousands of dollars before a buyer is found), valuing their property (which almost always ends up being higher than market value), and pre-qualifying and preparing the buyer's board package. Sounds easy right. Go try it sometime!



I notice that many FSBO's do NOT know how to value their property as they use their emotions during this process to come up with an asking price that they BELIEVE represents the true market value of the apartment. Not always the case. Most FSBO's start out with an asking price similar if not higher than traditional brokerage listings but may have more negotiability when responding to an offer. By no means do I see FSBO's asking price drastically lower than a property listed with a broker. So, its up to the buyer to convince the FSBO to accept a much lower price because trust me, they will try to pocket the money themselves!

The majority of deals in NYC are co-broke's meaning that a buyer was brought to the deal by a representative broker. Most people do not have the time or the experience to find, evaluate, negotiate, and prepare to buy a property in NYC. So, instead they use a buyer broker to assist them throughout the entire transaction process.

In regards to a FSBO who is NOT offering an incentive to the brokerage community, think of how many potential buyers out there are NOT being told of your property because you are selling on your own! In a nutshell:

FSBO's NOT OFFERING AN INCENTIVE TO THE BROKERAGE COMMUNITY ARE GREATLY LIMITING THE BUYER POOL TO WHICH THEIR PROPERTY IS MARKETED. MARKETING TO A SMALLER BUYER POOL WILL LOWER THE CHANCES OF GETTING TOP DOLLAR FOR ANY PROPERTY

Conclusion: Its a double edge sword for FSBO's. By choosing to sell on their own to try to save the 6% commission, they will be marketing their property to a much smaller buyer pool which in turn will most likely result in 'missing' that perfect buyer who is currently working with a broker. On a similar note, those buyers who are looking ONLY at FSBO listings in the hopes of getting a better deal will NEVER, EVER submit a full ask bid anyway as their very goal is to save as much money as possible on their home purchase. Not the ideal buyer in regards to a seller seeking top dollar for their apartment!

Which now brings me to pricing! Are FSBO listings priced lower than traditional listings with a broker? Not always, and here are some real examples to prove it! These are comparable units (same apt type) in the same building where an owner is selling as a FSBO and a broker selling as an exclusive listing:

400 East 74th Street

OWNER ---> APT 404 ASKING $799K (Reduced from $849K)

BROKER ---> APT 604 ASKING $800K


720 Greenwich Street

OWNER ---> APT 2E ASKING $695K (Reduced from $775K)

BROKER ---> APT 3C ASKING $675K (Reduced from $769K)

157 East 72nd Street

OWNER ---> APT 15J ASKING $650K (Reduced from $690K)

BROKER ---> APT 9G ASKING $630K (Reduced from $640K)

Now what I do NOT know is the condition, views, light, etc. of these units so take what I list here as is! Fact is, FSBO's are just as greedy as owners who use a broker when they finally decide to go and sell their home; that is, in the sense that they do not say to themselves "well, I'm not using a broker or paying a 6% commission so I will lower my price and pass that savings on to the buyer". Yes sometimes you will find a value buying directly from an owner, but I wouldn't make it a priority during your property search or you might miss out on a good deal that happens to be listed with a broker!