With real estate commissions in NYC hovering around 5 to 6 percent of the sale price, and the cost of a two-bedroom Manhattan apartment averaging well over $1 million, the financial lure of selling a co-op, condo or brownstone without a broker is obvious.
Even so, for-sale-by-owner undertakings in NYC (also known as FSBOs) have historically not been for the faint of heart, the busy, or the ignorant. A close reading of The FSBO Diaries—an online account of an Upper West Side couple’s attempt to sell their co-op without an agent—gives an idea of some of the challenges. (Read it in chronological order.) A few years ago, somewhat famously in the local brokerage community, the founder of FSBO.com gave up and hired a broker after six months trying to sell his $2 million Chelsea condo on his own.
More recently, the emergence of smart alternatives to big-name conventional brokerages has vastly improved the ability (and desire) of sellers to save all or a significant chunk of the average 5-6 percent commission. For example, sellers who list their abode with Prevu (a Brick Underground partner based in NYC) pay a fair listing commission of only 1 percent. One of Prevu’s salaried agents will provide you with a detailed home valuation and listing strategy. As a tech-enabled, full-service brokerage, Prevu handles showings, manages negotiations, and everything else you would expect from a traditional real estate broker. Prevu’s “Smart Sellers” pay a 1 percent listing agent commission to Prevu upon closing, a savings of up to 5 percent of the sale price. Sellers offer a commission to buyers’ brokers to entice them to bring buyers to the apartment (highly recommended – see below), and if a buyer comes without a broker, sellers pay just the listing agent commission, a unique feature of Prevu versus traditional brokers.
If you do decide to fly solo, here are some things to know before liftoff:
- There are actually two types of FSBOs: The kind where you pay no commission to brokers, and the kind where you offer a commission to a broker who brings you a buyer. That amount can be anything that you want, but 2.5 to 3 percent--the typical “co-broke” split that a buyer’s broker would receive if you had hired your own full-service broker at a 5 to 6 percent commission—will command the most exposure to buyers working with brokers.
- If you offer no commission, you will be marketing only to buyers working without a broker. That wipes out a huge percentage of prospective buyers.
- Your apartment will not necessarily appear on the radar of many buyers’ brokers if you are a pure FSBO–meaning you aren’t working with a hybrid-model brokerage like Prevu, that can distribute your listing to the RLS, a local MLS in New York City.
- Some brokers refuse to bring clients even to fee-paying FSBOs—in effect, blackballing your listing--because they do not want to encourage the success and proliferation of FSBOs.
- You will be responsible for preparing the buyer for the board package and board interview (if there is one) if you find a buyer who does not have a broker, and you are not working with a brokerage, . Also, because you will be speaking directly with the buyer, your level of liability regarding legal disclosures may be increased.
- A buyer who recognizes that you are a FSBO will often expect to “share” in any cost savings that you might have.
Whichever route you try as a seller, so long as you have a realistic sense of what your apartment is worth, it’s certainly worthwhile to see whether one of your neighbors might be interested in buying it before you hire a broker. You may wind up saving the broker’s fee and pocketing a premium from a neighbor eager to combine apartments; in addition, co-op board approval is usually, though not always, a shoo-in when selling to a neighbor.