With real estate commissions in NYC at around 6 percent of the sale price, the cost of an average two-bedroom Manhattan apartment well over $1 million, and the market favoring sellers, the lure of selling an apartment without a broker is obvious.
But particularly in NYC, for-sale-by-owner undertakings (also known as FSBOs) are not 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--will give you an idea of some of the challenges you will face. (Read it in chronological order.) And 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.
If you do decide to fly solo, here are some things to understand:
- 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 3%--the typical “co-broke” split that a buyer’s broker would receive if you had hired your own broker at a 6% commission—will get you the most exposure to buyers working with brokers.
- If you pay no commission, you will be marketing only to buyers working without a broker. That wipes out a huge percentage of prospective buyers.
- Even if you do offer a commission, your apartment will not necessarily appear on the radar of many buyers’ brokers. That’s because FSBOs usually do not show up in brokers’ internal listing systems, which brokers typically rely on when scheduling a day of showings.
- Many 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.
- If you do manage to find a buyer, and that buyer does not have a broker, you will be responsible for preparing the buyer for the board package and board interview, if there is one. 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.
That said, 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.