Most Misunderstood Tool we Realtors Have to Help “For Sale By Owner” Sellers

I recently had a prospective client tell me “I heard that I can still sell my house myself even if I do let a Realtor put in on the market” The answer may surprise some. One of the most effective yet often misunderstood methods of assisting For Sale by Owner (FSBO) sellers involves recognizing the fluid nature of real estate listing contracts. Contrary to common belief, there exists ample room for creativity and tailored solutions for folks that want to sell their home themselves within legal and ethical boundaries established by state regulations and professional associations.

Understanding why individuals opt for FSBO helps a lot. Many want to avoid paying hefty sales commissions, have had unpleasant experiences in the past, or believe the market is such a strong market that they can sell it themselves. While statistics demonstrate that realtor-assisted sales get higher sales prices that more than cover the cost of a realtor, the opinions and view of for sale by owners have to be honored.  Realtors possess the invaluable capability to showcase listings on the MLS to a vast network of potential buyers and have the experience and expertise to get the highest price. My question to my colleges is: What is the best way to approach the situation with a solution that is fair and comfortable for the seller?

I don’t always suggest that FSBO sellers abandon their efforts. There’s a valuable tool offered by state association that deserves more attention: the nonexclusive listing contract. Although underutilized, it presents a flexible solution that can benefit both parties in a fair way. 

The non-exclusive listing agreement doesn’t adhere to a binary “listed” or “unlisted” scenario. Instead, it allows real estate professionals to offer FSBO sellers various assistance options. For instance, through a one-time showing agreement, sellers agree to compensate realtors only if they bring a successful buyer. Alternatively, in rare cases, buyers may directly compensate the realtor for their services, relieving the seller of financial obligations. 

In a nonexclusive agreement, realtors can actively market the property while allowing sellers to continue their independent sales efforts. Additionally, clauses ensuring the realtor’s involvement in the transaction if the seller secures a buyer independently can be included. for example the seller could agree to have the Realtor facilitate the transaction,  ensuring compliance with legal requirements and smooth transaction. The agreement can also be written so that the seller simply covers the basic costs to the Broker if the seller ends up finding a buyer. 

While I certainly agree with fellow brokers that hiring a licensed real estate broker often serves the sellers’ best interests, I believe there’s ample room to accommodate determined FSBO sellers in a way that they see as fair and comfortable. By leveraging non-exclusive representation agreements and implementing flexible commission structures, sellers can receive tailored services aligned with their needs and preferences.

Regrettably, few brokers actively promote or discuss this option due to the prevalent use of exclusive representation contracts. No doubt, Realtors want to be paid for their efforts.  However, as the real estate landscape evolves, it’s imperative for realtors to embrace innovative approaches and prioritize client interests. I encourage open dialogue on this option. As I always say, as  technology continues to advance and market shifts, we need to evolve as well. We should always be asking if how we are doing business is ultimately serving our clients’ best interests. Feel free to reach out if you’d like to explore this option further.

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