Would you pay $3500 for a supercharged, highly marketed FSBO website?

[MonteDobson]

We are evaluating a new business opportunity in the For Sale By Owner (FSBO) segment and are looking for some feedback. This opportunity is not your typical FSBO website as it incorporates an aggressive marketing strategy ($250K annual budget) that I think lacks from the current "we-list and com-free" type sites. It also allows potential buyers to view the homes using 3D technology. To me the concept combines the marketing prowess of a good realtor with the potential savings by selling a home yourself.
Question is: Would you pay $3500 to sell you home on a "supercharged, highly marketed FSBO website", which could save save you over $10,000 in realtor commisions?

The plan for the fee would be to give (2) choices: 1) Pay upfront fee of $1999 or 2) Pay upfront fee of $149, plus $3499 due upon sale of the home.

Your vote and comments would be greatly appreciated!

 

[ChrisDavies]

As a professional online marketer, I`d have to look at the site first. $250k may not buy you squat if you don`t manage the spend right.

But yes, upon sale I`d pay $3500; up front probably not more than $500-$1000.

 

[SamEfford]

As Chris said, if there was a small fee up front, and the rest due upon sale of the property.

 

[MonteDobson]

Thanks Chris and Sam for your feedback!

The plan would be to give (2) choices: 1) Pay upfront fee of $1999 or 2) Pay upfront fee of $149, plus $3499 due upon sale of the home.

Also, here is a sample of the marketing plan:

• Downloadable and printable feature sheet
• Ads local newspaper and publications
• Property comparisons to assist you in setting a competitive price
• Your property is listed until sold
• Classified ads with your properties description and custom ID
• Bench ads with multiple locations on target locations
• An "On-Line All the Time Open House" for your property with:
  • 360 degree photos of every room and view
  • Floor plan of your property
  • Map of your properties location
  • "Additional Details and files" link for articles, and other files of interest to buyers"Suggested Links" providing a link to target market amenitiesCMHC and other web sites of interest to buyers
  Facebook and other social networking sitesExposure on other online sites such as Kijiji etcSearch engine optimized website and paid online advertisingDecaled vehicles etc in target areasMortgage industry referrals etcAd in the magazine Condo Living with 2000+ distribution pointsDirect mail campaigns to home owners in target marketPeople who have registered online for new property updates

And the list goes on...

 

[Thomas Beyer]

QUOTE (C2Ventures @ Nov 14 2008, 04:55 PM) Question is: Would you pay $3500 to sell you home on a "supercharged, highly marketed FSBO website", which could save save you over $10,000 in realtor commisions?
no

Use a competent realtor, set the price properly, negotiate an aggressive fee (say 3% or 2 1/2% or flat fee) and get onto MLS. Everything else does not work unless you sell to a large investor network that you have built or if you work with an investor network (for a much higher fee than 3% usually)

 

[CarlaJohnson]

The MLS listings are a big wide highway that the overwhelming majority of home buyers & sellers travel on. You can put all the ads up on the side roads that you want, but you will still miss most of the traffic.

 

[MonteDobson]

Thanks Thomas and Carla for your input.

I just found out that the listings can be put on MLS as well, making it accessible from all angles.

 

[Thomas Beyer]

QUOTE (C2Ventures @ Nov 15 2008, 09:49 AM) Thanks Thomas and Carla for your input.

I just found out that the listings can be put on MLS as well, making it accessible from all angles.
A few things on FSBO`s:
a) ensure that someone capable is able to show your home .. or coordinate showings from other realtors .. this maybe you if you are home 24/7 .. but it should not be you .. so how is this person compensated if not you ?

b) Even if FSBO, you should also be prepared to pay the realtor who brings the buyer !! That is the true value of MLS: it allows realtors to make money by pointing their clients to your home .. if a realtor working with a buyer doesn`t get paid he will find ways to not show your home to his client .. or even drive along a different street so that the buying client doesn`t see your house !

So when listing a home, keep both your interest AND the buyer`s (and their agent`s) interest in mind !!!

c) In addition, many FSBO listings are overpriced .. as they think: gee, I can save $10,000 in commission, let`s tack $10,000 or even $20,000 onto the price .. making it even less desirable to buy !

The only way to sell is: price competitively, have a decent agent, list with good description and pictures on MLS.

. (note big period)

 

[ohsofrugal]

Yes, if this was indeed a supercharged fsbo site. It has to have a unique selling proposition that is convinving to me since there are already big players in the fsbo market that are probably a lot cheaper.

I would only use the 2nd fee structure option (pay $149 upfront, rest due on sale of the house).

I would consider the 1st fee structure of paying $3500 upfront ONLY IF there was a money back guarantee associated - ie. your house isn`t sold then get your money back. If I have to write a cheque for $3500, I`m going to have great expectations before I do so and wouldn`t want to be out $3500 and have my house not sold for whatever reason.

 

[Thomas Beyer]

QUOTE (ohsofrugal @ Nov 15 2008, 10:32 AM) ... If I have to write a cheque for $3500, I`m going to have great expectations before I do so and wouldn`t want to be out $3500 and have my house not sold for whatever reason.

Indeed .. a great idea for the FSBO site operator .. but not for you .. check if they still exist one year from now !!

 

[RedlineBrett]

Thomas nailed it here.

The big question you have to answer is what incentive are you giving for buyers to come to your site vs. use a realtor or MLS?

All the FSBO sites have done the easy thing which is create an online database to list houses... but they fall apart when it comes to execution.

Facilitating multiple showings in the same day, getting background information, preparing good contracts, managing deposits and conditions etc... buyer agents do all this work. By choosing to go the FSBO route you need to realize that you are saving money by passing this job onto the buyer. Buyers know you are listing FSBO because you want to try and save money. Shows less motivation to sell and hence results in less interest from buyers.

QUOTE (thomasbeyer2000 @ Nov 15 2008, 11:10 AM) A few things on FSBO`s:
a) ensure that someone capable is able to show your home .. or coordinate showings from other realtors .. this maybe you if you are home 24/7 .. but it should not be you .. so how is this person compensated if not you ?

b) Even if FSBO, you should also be prepared to pay the realtor who brings the buyer !! That is the true value of MLS: it allows realtors to make money by pointing their clients to your home .. if a realtor working with a buyer doesn`t get paid he will find ways to not show your home to his client .. or even drive along a different street so that the buying client doesn`t see your house !

So when listing a home, keep both your interest AND the buyer`s (and their agent`s) interest in mind !!!

c) In addition, many FSBO listings are overpriced .. as they think: gee, I can save $10,000 in commission, let`s tack $10,000 or even $20,000 onto the price .. making it even less desirable to buy !

The only way to sell is: price competitively, have a decent agent, list with good description and pictures on MLS.

. (note big period)

 

[GarthChapman]

FSBO`s work in a Seller`s market, but don`t do well at all in a Buyer`s market. FSBO Sellers often have the idea that they can sell for the same price as an MLS listed property and pocket the Realtor commissions. That only works in an over-heated market.

If they are going to work going forward I think they will have to radically change their business model - maybe become a more complete service to compete directly with Realtors. But that is a tall order indeed - it would require serious numbers of expert people. If they remain as they are then I suspect most will fail - they are really not much more than a marketing tool. They don`t help with much of the other elements of selling a property, as the Realtor`s do. And to prosper they will need to do most of what Realtors do for both parties, as most buyers and sellers alike are not sophisticated enough to do much of the process on their own.

So maybe think about creating something that will work with Realtors. Build something that brings business to them and they may reduce their charges somehow in compensation for that - as long as the Seller pays no more in total.

 

[Dan_Eisenhauer]

All of the above comments are great.

Consider yourself as a buyer. What will be your number one choice... to go off on your own and buy a FSBO where you do all the looking, research, and negotiations, or... call a Realtor who will do all that for you for no fee.

One of the disadvantages of being a FSBO, and Thomas alluded to it... both Buyer and Seller want to save the same commission. The Seller is going FSBO, mostly likely to save the $$, and for no other reason. The Buyer knows the Seller is not paying the commission, so offers take that into account.

Unless MLS.ca has changed its policy in the past two years, non-Realtors cannot advertise their properties on MLS.ca. When I was selling, I often worked with FSBOs, and became known as the FSBO king in my office. Find a way to work with Realtors, and be willing and ready to pay them a decent commission.

The reason MLS was created is because 30+ years ago a group of Realtors realized they could do better working together, and pooling their listings, rather than trying to sell their own listings only. A FSBO does not have the pool of Realtors behind him with their list of potential buyers with $$ in their pockets. Even as an experienced Realtor, I could not sell my own house privately, and ended up listing it.

In summary, there are so many reasons to list with Realtors that I would never try to sell privately again. Having said that, you are appealing to a very small segment of the market who thinks they can and will do it alone. It takes only a few of those who want to try to make your site profitable.

Here is another profit centre idea for you. Can you find a way to have a referral service where you receive a fee for referring the seller to a local competent Realtor? My experience is that most FSBOs list within 8 weeks. it would be great if you could find a way to profit from those changes in mind.

 

[MonteDobson]

Thanks all for your excellent comments!What are you thoughts in these "niche" markets:
1) Brand New Construction Market - walk into a developer and offer to market/sell their 100 unit condo complex for $4000/unit...that`s potentially $400K payday right there. Benefit to developer = lower marketing costs and allows them to focus on what they do best which is to build new homes. New home buyers typically do not use a buyers realtor in my experience.
2) Condo conversions - for investors considering conversion, put a marketing package together to sell all the units in the building
3) Investors - typically more sophisticated buyers and sellers that like to use more sophisticated buying/selling strategies than the general public (ie. assumables, VTB, rent to own etc)

Also, I want you to all know that I am in no way trying to downgrade the work that realtors do, I am just looking at this from a business angle to see if there is an opportunity to service these "niche" markets mentioned above. The numbers do work if a person can secure some of these types of agreements.

 

[Thomas Beyer]

QUOTE (C2Ventures @ Nov 15 2008, 08:37 PM) Thanks all for your excellent comments!What are you thoughts in these "niche" markets:1) Brand New Construction Market - walk into a developer and offer to market/sell their 100 unit condo complex for $4000/unit...that`s potentially $400K payday right there. Benefit to developer = lower marketing costs and allows them to focus on what they do best which is to build new homes. New home buyers typically do not use a buyers realtor in my experience.
2) Condo conversions - for investors considering conversion, put a marketing package together to sell all the units in the building
3) Investors - typically more sophisticated buyers and sellers that like to use more sophisticated buying/selling strategies than the general public (ie. assumables, VTB, rent to own etc)

Also, I want you to all know that I am in no way trying to downgrade the work that realtors do, I am just looking at this from a business angle to see if there is an opportunity to service these "niche" markets mentioned above. The numbers do work if a person can secure some of these types of agreements.
sure .. all great niches .. if you can execute !! you honestly believe a developer of a 100+ complex gives you the right to sell his units ? Of course, if he trusts you and you can execute you will have a great business .. which takes years, likely decades to build and $100,000`s to build and market ongoing ..

For example, we have 20 investor condos for sale in Camrose (see our website) where I`d love you to sell them .. they all cash-flow at 75% leverage .. and break even at 80% .. this "niche" market requires extensive work and necessitates a HUGE investor database (say 2500+ ..) ... do you have that kind of qualified investor database ? if so, check our website and call me if you can sell some or all of them !!!

 

[TommyK]

I came across Novo Condo that advertises most of the new constructions in North America. It`s a big site with a lot of database. I assume that they receive a cut from the developers for referring clients to them.

http://www.novocondo.com/

Check it out.

Tommy

 

[Ken15]

I always though that all these FSBO sites should join together to compete with MLS. Have a "Private Listing Service" site where you could somehow search all the private listings (FSBO) sites at once. I find myself searching so many different FSBO sites it is time consuming. There are at least 4-5 FSBO sites in my area..... checking these daily/weekly is a pain.

Ken

 

[mcgregok]

Check out http://www.greatercalgaryrealestate.COM. Does a similiar thing with a realtors assistance.

 

[bigbabba]

QUOTE (C2Ventures @ Nov 14 2008, 05:55 PM) Question is: Would you pay $3500 to sell you home on a "supercharged, highly marketed FSBO website", which could save save you over $10,000 in realtor commisions?


yes, as long as you had some type of guarantee in place, a realtor only gets paid once they sell even if it takes months..

I actually like the idea, you would deffinately need to put alot money into marketing in order to compete with MLS. But, in the long run I think it could work.

Unfortunately most realtors don`t earn their keep, putting a house on MLS and having an open house here and there does not make anyone of these people worth the 10`s of thousands they earn in commisions..sorry

 

[ShannonMurree]

No, I wouldn`t pay for anything up front that doesn`t give me a guarantee it`s going to sell. Then if it`s not successful I`m out of pocket and that`s a waste of $3500. At least by using a Realtor it`s at their expense initially. If it doesn`t sell the first time and the contract expires, nothing out of pocket and can try another. However, the good one should price it right coming out of the gate so hopefully that route won`t have to be taken. Anyway...that`s my two cents.