July 29, 2009

FSBO?

For Sale By Owner (FSBO).

"Why should I use a broker when I can sell the property myself and save on commission costs? "

I am often asked this question in the early stages of meeting with potential clients.

My answer is fairly simple.

I tell potential clients they may not in fact need a broker. I then to proceed to go through a series of IF's with them.

You don't need to hire a broker if......

1) You have the time to market the property yourself on a daily basis

2) You have the resources and staff to market the property yourself on a daily basis

3) You have the market knowledge to properly price your property and market your property yourself on a daily basis

4) You have access to the leading Internet resources like Costar, LoopNet, Xcelligent, etc. to market your property on a daily basis to the local brokerage community (just because you aren't using a broker doesn't mean your potential buyer isn't)

5) You have a network of tenants, investors, and owner/users to call on to market your property to on a daily basis

6) You have all the appropriate paperwork and checklists handy to ensure that if you can successfully market and sell your property it is done with all of the I's dotted and T's crossed.

7) You are ready, willing, and able to make marketing and selling your property a full-time gig.

If a potential client can put a check next to all seven of the If's above, he or she does not need me.

The absolute worst reason an owner can use to decide not to use a broker is because they want to "save money".

I have an accountant friend who thinks like this. Technically, from an accounting standpoint, he may be correct. If you use a broker, the broker will potentially get paid $0.06 of every $1.00 you receive. However, what my accountant friend doesn't consider is what all accountants refuse to consider: OPPORTUNITY COST

The idea of opportunity cost is very well illustrated in this exchange between Marge and Homer Simpson. In this episode of The Simpsons, Homer had acquired a large amount of sugar and decided to stop going to his job at the nuclear power plant and instead start a career as a sugar salesman:

"Homer: And you didn't think I'd make any money. I found a dollar while I was waiting for the bus." [Homer triumphantly shows the one dollar bill he found for Marge]

Marge: While you were out earning that dollar, you lost forty dollars by not going to work. "

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