3 Reasons why NYC FSBO Sellers Fail
Succeeding as a NYC FSBO seller and saving 6% is very achievable if you follow a simple game plan. Provided that you go to market with an informed and realistic listing price, professional photos, flat-fee MLS listing syndication, and act professionally, you will maximize your chances of finding a buyer.
However, not every NYC FSBO seller is successful. The good news is that most NYC FSBO seller pitfalls we’ve seen are entirely avoidable. In this article, we will summarize the different reasons why we believe FSBO sellers in NYC often fail to sell their home on their own and ultimately end up hiring a listing agent.
NYC FSBO Failure Reason #1: Poor Listing Syndication
The most common reason why NYC FSBO sellers fail is because they do not comprehensively advertise their listings on the correct websites and local New York City broker database.
Instead of using an inexpensive NYC Flat-Fee MLS listing company and listing their properties on every relevant site all at once, many NYC FSBO sellers think it’s sufficient just to list a property a few free sites like Zillow and ‘see what happens’.
The results of this bewildering and misguided strategy are, among other things, a lower sale price, failure to sell altogether, or the gradual loss of confidence to the point that the NYC FSBO seller hires a traditional, full-service listing agent and pays 6% in NYC agent commissions (more on this point below).
Why is a NYC FSBO seller’s poor listing syndication such a fatal mistake? It’s damaging for a number of reasons:
Fewer Unrepresented Buyers See the FSBO Listing
While it may sound obvious that listing on fewer websites results in less exposure, the damage is far greater than what meets the eye. Having fewer buyers doesn’t just mean that fewer offers are made. It also means that there’s a lower likelihood of a bidding war, meaning that the sale price may not be as high as it could be otherwise.
We literally cringe when we hear sellers tell us that they’ve already gotten ‘loads of calls’ just from being listed on one or two websites and therefore don’t feel the need to advertise more comprehensively.
Many NYC FSBO sellers shockingly have never heard of StreetEasy, the most popular real estate website in NYC, and don’t even bother to list on that site! A home sale is one of the most important financial transactions of a person’s life. When the consequences for poor strategy are so severe, for a NYC FSBO seller to have such little awareness of how the market works is quite disturbing.
It just takes one more set of eyes to find a higher offer, an all cash buyer or create a bidding war. For the low-cost of a NYC Flat-Fee MLS package, it’s shocking to hear that FSBO sellers who will be saving roughly 3–6% in agent commissions aren’t willing to spend a dime on listing in RLS, where 75% of buyers actually come from!
Virtually No Buyer’s Agents (and their Clients) will See the Listing
Over 75% of home buyers are represented by buyer’s agents in NYC who are primarily using RLS (REBNY Listing Service) to search for and send properties to their buyers.
A NYC FSBO seller who is not listed in RLS is effectively excluding 75% or more of the most serious buyers from seeing your listing.
To make matters worse, even if a buyer’s agent happens to stumble upon a NYC FSBO seller’s listing online, he or she likely won’t want to show it to the buyer.
Why? Buyer’s agents work for commission only. Therefore, they can’t take any risk of sending their buyer to a FSBO listing and possibly losing out on the commission.
If it wasn’t clear already, traditional FSBO sellers who don’t list on RLS have pretty bad reputations with buyer’s agents. Therefore, most big time buyer’s agents (the ones with real buyers) will steer their clients away from FSBO listings and towards listings offered by full-service, REBNY member listing agents!
Hauseit’s Flat-Fee MLS Listing Service solves both of these problems. Our listing service for NYC FSBO sellers gives their properties the exact same exposure that would be offered by a full-service NYC listing agent but for noting more than a flat-fee and zero percent listing agent commission.
NYC FSBO Failure Reason #2: No Professional Photos
As a FSBO company that was founded on the principle of helping sellers save money, we understand that your priority is to save as much money as possible when selling in NYC. However, one must also be practical when selling FSBO and realize that there are instances when spending a bit of money on the sale process will actually generate a positive return on investment.
Many FSBO sellers we work with are adamant about saving an extra few hundred dollars and avoiding hiring a professional photographer. Instead, these sellers take amateurish photos of their listing with a cell phone camera without professional lighting or digital retouching. There’s a reason why 100% of agent-managed listings have professional photography. It’s because professional photography is an inexpensive investment which legitimately attracts buyers. For a few hundred dollars, these agents maximize their chances of leaving a strong first impression with buyers, closing deals and getting paid a commission which dwarfs the few hundred dollars invested in professional real estate photography.
We regularly have clients who have low quality listing photos and ultimately do not find a buyer on their own. After these FSBO sellers go and hire a listing agent, the property magically reappears with brand new listing photos and ends up selling. Why? Photos really do make a huge difference. Instead of spending a few hundred dollars, these FSBO sellers ended up spending tens of thousands of dollars on a listing agent because they lost confidence and ended up hiring an agent out of desperation.
As a FSBO seller, you are already saving tens of thousands of dollars by listing without an agent. It simply does not make sense to try and save a little bit more money while running the risk of scaring away buyers, losing momentum and ultimately feeling compelled to hire a listing agent. We offer professional listing photos for a low-flat fee with a fast turnaround of 48 hours.
NYC FSBO Failure Reason #3: Unrealistic Listing Price
Setting a realistic listing price is the most important part of the exercise of selling FSBO in NYC. The market is certainly hot, however buyers are not irrational. They won’t pay more for your listing when the one around the block is priced materially lower per square foot. Your listing’s asking price cannot simply be a function of an emotional desire to make a certain amount of profit or to psychologically sell above a certain asking price.
The process of determining your FSBO listing price should be a very enjoyable and educational exercise. Between conducting a comparable market analysis, speaking with agents and researching the market, you will learn a tremendous amount about the market as well as how you should position and market your own listing.
Ultimately, a listing price needs to be in line with comparable listings and recent sales from today’s market. If the profit or sales price you envision is not in line with the current market, we suggest you either reset your expectations or hold of on selling until your targets are in line with actual market pricing.
NYC FSBO Failure Reason #4: FSBO Seller Loses Confidence
Because roughly 75% of buyers are represented by buyers’ agents in NYC, we always suggest that FSBO sellers embrace the co-broking model and incentivize agents to find you buyers. There’s never any obligation to accept an offer brought to you by an agent. But if you ignore buyers agents, then they ignore your listing and you may miss out on that buyer who they may have found to offer you top dollar for your listing.
However, we do on occasion encounter buyers’ agents who abuse the co-broke model and use their ‘buyer outreach’ as a covert way to catch you off guard and pitch you their full 6% listing agent service. These agents may discover that your listing is an agent managed FSBO by meeting you at an open house or by having contacted you before you used a flat-fee MLS listing service.
These predatory NYC agents will reach out to you on the premise of having a ‘buyer’ and request to view/show your listing. In reality, these agents do not have a buyer. They are simply attempting to corner you and use the private ‘showing’ as an opportunity to pitch you to hire them as a listing agent for 6%.
We suggest that you avoid being cornered by these agents at all costs. Meeting with them in private is an opportunity for them to inundate you with false information about why our listing hasn’t sold and lower your self confidence to the point where you may actually consider hiring them as a listing agent and paying 6% commission.
What should I do to prevent or stop fraudulent co-broking and manipulation by listing agents?
Method 1: Screen out Fake Buyers’ Agents
The most effective way of avoiding predatory buyers’ agents (covert listing agents) is to screen them out before committing to an actual showing of your listing. Take a look at the comparison of a genuine co-broke inquiry compared to a fake one:
Fake Co-Broke Agent Inquiry:
“I would love to come take a look at your apartment. At your earliest convenience please let me know what day/time works best for you to show the unit. I look forward to hearing back from you soon.”
Genuine Co-Broke Agent Inquiry:
“Hi Jack, I hope you are doing well. My client Sam Smith is very interested in this property. Can we see it on Sunday at 12:00pm? Thanks, Nigel”
Method 2: Report Unethical Buyers Agents
In addition to being ethically questionable, the solicitation of property owners who are already under an exclusive listing (even with a flat-fee listing service) by other real estate salespeople/brokers is actually against the official rules of the Real Estate Board of New York.
As per the REBNY Universal Co-Brokerage Agreement:
Section 3. Solicitation of Exclusive Listings. If an Exclusive Property is subject to an Exclusive Listing then, during the term of the Exclusive Listing, a Participant who is not a party thereto or whose firm is not a party thereto (“Participant B”):
A. May not solicit the Owner with respect to the Exclusive Property; but
B. May enter into a separate agreement, such as an Exclusive Listing to lease the Exclusive Property, with the Owner concerning the Exclusive Property where (i) that agreement (the “Second Agreement”) covers matters which are not covered by the Exclusive Listing or (ii) Participant B or his or her firm is specifically requested to do so by the Owner. Before entering into the Second Agreement, Participant B should inform the Owner that by entering into the Second Agreement the Owner could be liable for a commission under both the Exclusive Listing and the Second Agreement.
If you believe that a buyers’ agent has fraudulently reached out to you under the guise of having a ‘buyer’ but ends up just pitching you to hire them as a listing agent, we encourage that you submit your complaint in writing to REBNY.
What if you’re solicited after you’ve signed up with a Hauseit affiliate broker?
If you’ve signed up for our 1% full service listing option you will not have to deal at all with any other agents besides your listing agent. If you want to avoid any interaction with and solicitation from agents without buyers then this may be the best option for you.
Expect a traditional, full-service listing by a reputable REBNY Member Firm for only 1% commission to the listing agent. The service will be identical to a traditional 6% commission listing and it will not appear any different than a traditional 6% commission listing.
What if I’ve signed up for an Agent Assisted FSBO?
If you have chosen to sell your home via an Agent Assisted FSBO listing in NYC where you manage the showings, the amount of broker solicitation you will receive will still be dramatically reduced. This is primarily because you will already have an exclusive listing broker who is a Member Firm of REBNY (Real Estate Board of New York). REBNY has penalties up to $10,000 for violations of its code of conduct, which include the solicitation of the owner client of another Member Firm’s exclusive listing.
However, because you will be conducting your own showings you may occasionally be solicited in person by an agent. If this happens, make sure you know how to deal with broker solicitation and are aware of the most common real estate agent lies in NYC.
The overall level of solicitation by agents without buyers will be dramatically reduced because you will have the protection of a REBNY Member Firm screening for trollish agent inquiries on your behalf.
See below for an actual email exchange between a troll agent and our affiliate listing agent and the seller client.
Troll agent inquiry via StreetEasy:
i have called and emailed to get access to this apartment. who should i be speaking with?
Response from Hauseit affiliate listing broker:
Eric, nice to hear from you again. You asked a few questions about [address redacted] but we never heard from you when we asked whether you had a buyer!
Do you have a buyer for that one still? What is the name of your buyer for this one and what stage of the search are they in?
Response from the troll agent:
i dont recall inquiring about that apartment. is it STILL on the market?
unfortunately i am not allowed to disclose the name of this buyer as i am bound by a NDA i signed.
the buyer is in the latter stages of the search and we are considering this listing. we recognize it is “technically” a FSBO and will seek to negotiate accordingly since the owner is saving atleast 2–3% on the commission.
When can we come by and have a look
Even though it was a heavily misspelled and grammatically incorrect email written by what could only be someone with minimal schooling, our affiliate listing agent passed this on to the owner for permission to screen and ignore such a trollish request:
Jason — this is a classic example of a troll with no listings, clients and with a history of sending us time wasting emails before. We are almost certain he has no buyer as this would be the first time a real estate agent signed a NDA with a home buyer.
He is also insulting us by claiming this is a FSBO and saying he will violate REBNY rules by dealing directly with the owner without our permission (up to $10,000 offense).
Just wanted to check in with you to make sure we have your full support to ignore and screen trolls like this. Thank you!!
Watch out for the horribly conceived lies someone like this will try to tell you https://www.hauseit.com/common-real-estate-agent-lies-nyc/
In case someone like this solicits you in person: https://www.hauseit.com/how-to-deal-with-broker-solicitation-when-selling-fsbo/
The owner’s answer is an example to follow for all our customers. With your full support our affiliate listing brokers will have the ability to screen and protect you from agent trolls without buyers.
We will follow your lead. Please ignore and screen as you see fit.
I can’t find the email, but I saw a request to show the place on Saturday. I can’t do weekend viewings, at least not on short notice, but would be able to show the apartment during the day next week.
Disclosure: Hauseit and its affiliates do not provide tax, legal 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 or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.