For Sale By Owner NYC For Dummies

Listing For Sale by Owner in NYC is a popular alternative to paying a traditional broker commission of 5% to 6% when selling in New York City. For many sellers, paying a broker commission of up to 6% in addition to the other standard seller closing costs is simply unaffordable. Other sellers who can otherwise afford to pay a commission don’t see the ‘value add’ of a traditional listing agent and simply refuse to pay such a high broker fee as a matter of principle.

Despite the monetary savings it may offer, selling FSBO in NYC has a high failure rate. One main reason is because over 75% of buyers in NYC are represented by buyer brokers who routinely ignore FSBO listings.

The majority of buyer agents only show listings which are posted in the RLS Broker Database, as these have contractual buyer agent commission amounts on offer. This effectively means that a traditional FSBO Seller in NYC only has exposure to 25% or less of the total pool of buyers Fortunately, this lack of exposure to represented buyers can easily be solved through an Agent Assisted FSBO listing.

Other reasons for the high FSBO failure rate in NYC include the tendency for FSBO sellers to overprice their listings, use amateur photos or simply behave too emotionally or erratically when dealing with buyers and buyer agents.

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Is Selling For Sale by Owner a Good Idea in NYC?

Selling For Sale by Owner in NYC is a good idea when you think about the size of a typical broker commission check here in NYC. With New York City’s average sale price well north of $1 million, a typical 6% broker fee equates to $60,000. This amount of money can easily buy you (or your broker) a brand new, Tesla Model 3 Performance.

According to the Hauseit Seller Closing Cost Calculator, total closing costs on a $1m condo go from $23,425 (~2.3%) to $83,425 (~$8.3%) when you include broker commissions. Most sellers will agree that closing costs in NYC excluding broker fees are already high enough due to NYC & NYS Transfer Taxes.

With all of this in mind, selling FSBO in NYC can be a great way to maximize your home sale proceeds assuming you have the time and desire to be personally involved in your sale.

A Full Service Listing for 1%

Sell your home with a traditional full service listing for just one percent commission.

What Is the Value Add of a Traditional Listing Agent?

Analyzing the ‘value add’ of a traditional listing agent will help you make a more informed decision as to whether or not selling FSBO is a good idea.

Pricing and Market Expertise

An experienced listing agent will prepare a Comparative Market Analysis of your home and help you make an thoughtful and accurate determination of your property’s value and suggested pricing strategy. The ‘value add’ here can be meaningful, especially when you consider that FSBO sellers are notorious for going to market with delusional asking prices. In fact, unrealistic pricing and lack of knowledge of the downsides of overpricing is one of the main reasons why most NYC FSBO sellers fail.

Fortunately, you don’t actually have to hire a traditional listing agent to benefit from a broker’s expertise on pricing strategy. That’s because all listing agents in NYC are happy to prepare a complimentary valuation of your home as part of the broker interview process. Even if you intend on selling FSBO, speaking with a few brokers can very helpful as you formulate your asking price.

A traditional listing agent also adds value throughout the sale process by monitoring for new comps and analyzing the feedback from buyer agents and buyers and recommending strategy changes, as necessary.

Professional Photography

A full-service listing agent will arrange for Professional DSLR HDR Photography of your home, prepare a custom floor plan and include virtual staging, as necessary. First impressions are critical in New York City’s momentum-based real estate market, and there is no substitute for top-tier listing media and marketing materials.

Sadly, it’s far too common to see FSBO listings in NYC with amateur photos. Seeing dark, blurry and simply mediocre photos on FSBO listings is as predictable as the fact that the majority of these sellers ultimate give-up and hire a full-commission listing agent to clean up the wreckage.

Fortunately, you don’t have to hire a traditional listing agent if the only things you’re missing are professional photos, a floor plan and virtual staging. These services can easily be ordered a la carte.

Listing Syndication

By and large the biggest ‘value add’ of a listing agent is their ability to list your home on the local broker database (RLS in NYC) so that your home receives exposure to the brokers who represent over 75% of the buyers in NYC.

FSBO sellers who understand the importance of buyer agents often write “brokers welcome” in their listing descriptions, but this is not an effective strategy because buyer agents usually only search for listings directly in the RLS Broker Database. Furthermore, the most experienced and successful buyer brokers in NYC ignore FSBO listings as a matter of principle since there’s too much uncertainty when it comes to actually being paid a commission. Not to mention, dealing directly with a novice seller can be much more difficult than working directly with a seasoned listing agent.

Fortunately, you don’t have to hire a traditional listing agent if the only thing you need is an RLS listing. You can simply order a Flat Fee RLS Listing (Agent Assisted FSBO) as an a la carte service.

Time

Running open houses and making yourself available for showings throughout the week can be very time consuming for a busy New Yorker, especially if you have a full-time job. It can also be a challenge to show the home if you’re no longer living close to the property being sold.

Therefore, a traditional listing agent adds value simply replacing your time with theirs when it comes to running open houses and coordinating showings, inspections and other visits to the property.

Negotiation Skills

A seasoned listing agent will have successfully negotiated a dozen or more condo, co-op or brownstone transactions in her or his career. Having a listing agent as your advocate who is simply a better negotiator than your typical buyer (or buyer’s agent) can give you a clear advantage when it comes to securing the most attractive sale price and deal terms for your transaction.

While many FSBO sellers are good negotiators in the workplace as advocates for their employer, they often become overly emotional an ineffective when it comes time to negotiate on their own behalf for a real estate transaction. Having a neutral and unemotional third-party advocate on your behalf can often result in a better outcome versus negotiating principally.

Board Package Assistance

Both co-op and condo board packages can be time consuming to prepare, assemble and deliver to the building’s managing agent. A typical co-op board package can take weeks to prepare, as it typically requires multiple hours of review, numerous revisions and repeated back-and-forth exchanges with the purchaser.

If you’re a busy New Yorker, having a traditional listing agent handle the considerable administrative work associated with preparing a board package can significantly improve your quality of life. At the same time, preparing a board package is not rocket science assuming you have plenty of free time and the desire to surgically follow the purchase application instructions.

Pro Tip: If your buyer is represented, the buyer’s broker will typically take the lead on preparing an initial draft of the application for review. The listing agent customarily reviews and approves the board package before it is submitted to the managing agent, however the buyer’s agent is usually responsible for printing and delivering the application to building management.

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What Are the Steps to Selling For Sale by Owner in NYC?

The first steps in selling For Sale by Owner consist of researching comps and setting a listing price, cleaning and staging your home, taking professional photos and doing your homework on how the sale process works in NYC.

Setting a Listing Pricing

Pricing is the single most important element when it comes to selling For Sale by Owner in NYC. Buyers in NYC are highly sophisticated and they simply won’t overpay, especially considering that over 75% of buyers are represented by buyer brokers who will review comps prior to submitting an offer.

Even if you intend on selling FSBO, we suggest you reach out to a few listing agents and consider their input when it comes to the pricing strategy and general valuation of your home.

Cleaning and Staging

Cleaning and de-cluttering your home are crucial steps as you prepare to list For Sale by Owner. These steps are especially important if you consider that your competition is predominantly traditional, full-service listings with listing agents who have coached their sellers on how to organize and stage these properties.

If you fail to adequately invest in the cleaning and staging of your home prior to listing, your listing will likely be unappealing to buyers who are also looking at more presentable properties.

Professional Photography

There’s a reason why all traditional, full-service listings have impeccable photos. The truth is that a picture is worth a thousand words, especially when the goal is trying to attract buyers to an open house. The benefits of professional photography in NYC real estate are sizable, especially when you consider the relatively low cost of ordering professional photography.

It’s far too common to find well-intentioned NYC FSBO sellers who think their photos are ‘good enough.’ These sellers refuse to order pro photos in order to save a few hundred dollars.

What Are the Steps to Selling For Sale by Owner in NYC? Is Selling FSBO a Good Idea in NYC? What Is the Value Add of a Full Service Listing Agent?

The vast majority of these FSBO sellers send up failing, only to hire a full-commission listing agent who promptly takes professional photos, lowers the asking price, sells the property and collects a 6% commission.

Having a floor plan on your listing is also a requirement if you are expecting buyer brokers to take your listing seriously. Many of the most successful buyer brokers in the city will simply ignore a listing if there’s no floor plan for quick reference, and over 50% of buyers will not visit a property unless there’s a floor plan online for review.

Do Your Homework

While most FSBO sellers have good intentions, many of them fail to do any research on how to sale process actually works before pulling the trigger on a FSBO listing. Although they’re expecting to save 6%, these sellers have no idea how to deal with buyer brokers, how to review an offer, how to negotiate or what to do after an accepted offer.

It’s crucial that you invest the time to learn how the sale process works in NYC before going live with your listing. Residential real estate in NYC is largely momentum-driven, so it’s harmful to your sale if you haven’t prepared for the next steps.

As much as saving 6% in commission is a good idea, it’s unreasonable to expect such considerable savings if you fail to do basic research on how to manage the sale process on your own.

Pro Tip: Hauseit’s Blog has over 400 detailed articles on how the sale process works in NYC.

Building Preparation

For condo or co-op FSBO sellers in NYC, it’s important to educate yourself about your building’s policies for resales and request the relevant documentation which you will need to provide prospective purchasers prior to commencing the sale process.

Many coop buildings have specific rules and regulations regarding unit sales. They may include any of the following:

  • Providing the board with advanced notice of your intent to sell

  • ‘Quiet Hours’ whereby showings or open houses are prohibited

  • Requirement to escort prospective buyers to and from the lobby

  • Blanket restrictions on open houses

It’s also important to request all building documentation which you may be asked for by prospective buyers and buyer brokers. You’ll also need to provide these documents to your buyer’s attorney at the time of an accepted offer as part of buyer due diligence. Requesting these documents now will prevent delays once you have an accepted offer.

Here are the documents worth requesting:

Assembling these documents in advance will reduce delays during the sale process and minimize the chances of your buyer walking away after an accepted offer and before the contract is signed.

Flat Fee RLS Listing (Agent Assisted FSBO)

Properly syndicating your listing onto the RLS broker database and major real estate website such as StreetEasy, the New York Times and Realtor.com is the most important element for success as a FSBO seller in NYC. Although non-brokers are unable to post listings in RLS, you can access the database through an Agent Assisted FSBO Listing.

Over 75% of buyers are represented by agents who exclusively use RLS to search for and send listings to buyers. Most FSBO sellers are unable to effectively market their homes to represented buyers due to the lack of RLS access. However, this can easily be solved with a Flat Fee RLS Listing Service (also known as Agent Assisted FSBO).

Open Houses & Showings

Running open houses and conducting private showings are a time consuming yet critically important aspect of your sale. It’s important to make yourself available as often as possible and to minimize the amount of times you need to reschedule or cancel showings.

Buyer brokers and buyers in NYC are very busy, and it’s not uncommon for them to simply forget about a listing if they think it’s too difficult to schedule a viewing.

Don’t be a difficult person when scheduling viewings with prospective buyers.

If it’s impossible just to schedule a basic viewing request, how hard will it be for a buyer or a buyer’s agent to work with that seller during the next stages of the deal?

Receive Offers, Negotiate and Sign a Contract

It’s important to learn what documentation to ask for when receiving offers. A complete and fully documented offer should include the offer terms (price, contingencies, etc.), a Submit Offer Form, proof of funds, a pre-approval letter. Optionally, a buyer may also submit attorney contact information. If you’re selling a co-op, it’s also important to ask for a REBNY Financial Statement.

You should also do some research on how to negotiate as a seller, as there are many nuances specific to real estate which you may not be familiar with. Once you’ve accepted an offer, the next step is to circulate a deal sheet. Buyer due diligence and contract review takes up to two weeks, at which point the buyer will sign the contract and make an earnest money contract deposit (customarily 10% in NYC).

Submit the Board Application and Close your Sale

If you’re selling a condo or co-op, the next step after a fully executed contract is for the buyer to prepare and submit the purchase application. If your buyer is represented by an agent, you can expect the buyer’s agent to take the lead on preparing this for his or her buyer.

While a condo board is usually required to respond to an application within 30 days, there is no such requirement for a co-op. Therefore, the co-op closing timeline is considerably longer than than for condos.

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Posted: 9/5/2015 | Updated: September 19th, 2019
Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).

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