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) agree to show their apartment themselves to potential buyers. In exchange, an agent handles the more challenging, tactical aspects of selling in NYC—such as distributing the listing across all relevant public and broker-only websites, negotiating with buyers, preparing a co-op or condo board package if the buyer doesn’t have a broker, and more. For now, Prevu’s “Smart Sellers” pay a zero percent listing agent commission to Prevu, a savings of up to 3 percent of the sale price. Sellers can choose whether to offer to 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 no commission at all.
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.