What were Richard and his wife thinking? A recent news story I came across tells the story of how this couple recently put the house they have been building for the past two years in Alpine, New Jersey up for sale. Only minutes from New York City and a bargain at $68,000,000, it’s got 30,000 square feet and more bedrooms and baths than the local Holiday Inn.
So what did Richard and his wife do? What nearly 80% of all homeowners do: They listed it with a broker. By doing so, they’ve agreed to pay a broker commission of up to 6%. That 6% of $68,000,00 equals … drum roll please… $4,080,000 taken out of their pockets! Yikes! That’s a LOT of money they could save if they sell the home FSBO, as more and more homeowners are doing.
Since 2005, the number of home sales completed by homeowners without a real estate agent has steadily grown from 12% to over 20% in 2008. And guess what? The steps to selling a $68,000,000 home are no different than those necessary to sell a $68,000 home. In the case of any home sale, the most important thing you can do is expose your home to the greatest number of buyers in the market for a home like yours.
There are obviously very few buyers out there who can afford a home like the one Richard built. Imagine: the monthly mortgage payments on a 30 year mortgage will be over $292,000. (Unless the buyer pays in cash. Wow! What a thought!) Who knows–maybe Bill Gates is getting tired of his home in Seattle and wants to move to the East coast now that he has retired from Microsoft!
But seriously, folks, though it’s unlikely that Bill Gates would be Richard’s ultimate buyer, a buyer that qualifies for a $68,000,000 home may just well be an acquaintance of Bill’s. So…Bill should be targeted in Richard’s marketing plan so he can tell his acquaintances. But why spend over $4,000,000 to have an agent market to the very small group of potential buyers for this home, when Richard and his wife can do it much less expensively without an agent?
Richard may not understand that with the millions he can save on an agent’s commission, he can hire his own PR agency to get the word out, not just to the wealthiest individuals around the globe looking for a nest this close to NYC, but to virtually all the media on the planet–for a lot less than $4,000,000.
And once you identify the market for your house, the same ‘outside the box’ thinking could work to market your home, too–also for considerably less than 6% of your sale price.
The point is that all of the steps to sell a house of this size and cost are exactly the same as selling the more typical $200,000 home in America. Every step can best be handled by the home owner because the homeowner knows their home and their target market–someone like them–best! You need to get it ready to sell, then advertise and market it to buyers in your target market, show the house, get an offer and then close the deal.
And though the cost of a FSBO listing plan is infinitesimal when considering the price of Richard’s home, for many FSBO sellers, every penny of home selling expense is worth watching. So there’s absolutely no reason NOT to try selling FSBO, especially when the listing plan carries a money back guarantee should you decide to list with an agent after trying FSBO. That’s right–there’s No Risk!!! And in Richard’s case, up to $4,000,000 to gain!
If their listing contract runs out before the house is sold, we hope Richard and his wife consider selling FSBO. Like you, they could still have it listed on the MLS to bring buyers working with agents. By placing your home on the MLS, you’re still in control when you decide what you’ll pay a buyer agent–normally up to a 3% commission, but you will also expose your home to many more potential buyers and still save half the traditional 6% commission. Richard would still pocket a 3% saving…or just over $2,000,000. Works for me!
Richard, I wish you all the luck in the world with your current brokered listing. But remember, if you don’t have a sale when that listing runs out, you can literally save millions going FSBO!
