How to Sell For Sale by Owner in NYC

The most important thing home owners need to realize when they try to sell For Sale by Owner in NYC is that they can’t avoid all brokers completely. If you try to exclude brokers and write “no brokers” or “principals only” on your FSBO web listing, you by default will turn away all buyers represented by agents. As it turns out, buyers’ agents represent over 75% of total buyer traffic, which is not surprising considering there are 30,000 real estate agents in Manhattan alone.

If you try to sell For Sale by Owner in NYC and either actively avoid or get ignored by buyers’ agents, your listing will receive exposure to just a small fraction of the total pool of buyers. This lack of exposure has ramifications for how many offers you may receive, the quality of these offers and whether or not you are able to find a buyer at all.

This lack of comprehensive exposure to buyers is why FSBO listings in NYC are generally considered to be ‘off-market.’ Ironically, being off-market (ignored by the majority of buyers) is not the intention of the majority of FSBO sellers in NYC, as most of them realizing that offering a commission to buyer brokers is important for marketing efforts.

The challenge for a FSBO seller in NYC does not stop once she or he realizes that it’s important to offer a competitive commission to buyer agents. This is because FSBO listings are usually ignored by buyer agents, even if the seller is offering a buyer broker commission. We explain all the reasons why in this article, but in short, FSBO sellers are notorious for being unrealistic, hard to deal with, prone to renegotiate the buyer agent commission and generally unreliable when it comes to paying out a commission at closing.

That being said, why would a successful buyer’s agent take the risk of working with a FSBO seller when there are plenty of other traditional, agent-managed listings in RLS with a contractual offer of commission to buyer brokers?

You would think that the internet would be able to seamlessly connect buyers and sellers of real estate without a middleman, as it has for so many other industries already. So why do buyers’ agents still exist? The reason is quite simple if you step back and think about it.

Remember when we mentioned there were 30,000 real estate agents in Manhattan alone?  Collectively, real estate agents represent the biggest sales-force on the planet, offering a customized, high-touch concierge service at no cost to buyers about to make a major life decision they usually have little experience with. Keep in mind that sellers in NYC customarily pay all commissions, including the fee paid directly to the buyer’s broker.

When a veteran buyer’s broker offers to send you great ideas that have just come to market, organize your open house tours for the weekend, submit offers, negotiate on your behalf and provide you with general, market and property specific advice for free, no strings attached, it’s really hard to turn down. And keep in mind, the pitch may very well be made to you where it’s most effective, in person at a social event by an agent who may even be your friend.

Now perhaps it’s starting to make sense why savvy real estate search websites funded by equally savvy venture capitalists never seem to be able to eliminate real estate agents. Unfortunately for home sellers, buyers’ agents in NYC are here to stay for the foreseeable future. Barring the invention of highly capable, robotic AI with the full range of human emotions, it will be extremely difficult to eliminate buyers’ agents in the near future.

Unfortunately for the sellers, in order to remain competitive with commissions offered in traditional For Sale by Agent listings, they will have to continue to offer 2-3% to buyers’ agents even if they are selling For Sale by Owner in NYC.  If a seller offers less or nothing at all, inevitably buyers’ agents will steer their clients away from the listing, assuming they even decide to gamble on letting their clients see a FSBO listing in the first place.

While ‘Flat Fee MLS’ listing companies have been around for decades, the next generation of listing syndication companies like Hauseit have dramatically increased the effectiveness of buyer agent engagement for FSBO home sellers.

Traditional Flat-Fee MLS listing companies and the discount brokers who associate with them have the same problem as a non-MLS syndication services: everyone knows that a Flat-Fee MLS Listing is effectively a FSBO. While this may not matter to the seller or to unrepresented buyers, it may matter to the traditional buyer agents who are not necessarily be enthused about bringing their buyer to a quasi-FSBO transaction when there are plenty of other traditional, agent-managed listings available for sale which aren’t openly trying to disrupt the traditional commission model.

Moreover, the fact that many Flat Fee MLS Listing photos are watermarked with the Flat Fee company’s logo make it completely obvious even to the most unsuspecting broker. As a result, the seller likely experiences no reduction in broker solicitation and harassment versus if she had just sold For Sale by Owner in NYC herself.

Yes. It is absolutely critical that you have professional photographs taken if you want to sell your home for the highest price possible. After all, why would you skip on a $300 investment when you are likely selling a million-dollar NYC home?

Keep in mind that your home will be competing against professionally marketed listings by traditional brokers, all of which will have sparkling professional architectural photography showing off each listing in its best possible light. Don’t even think about snapping a few sloppy photos with your cell phone camera to save some pocket change. The risk is simply not worth it.

Photographs are a key driver of the first impression buyers formulate of your home. Why would you turn them off with sloppy unprofessional photos that your mom took with her flip phone camera?  Low quality, unappealing photographs mean less traffic to your open houses and fewer showing requests. This is especially sad when you actually have a great home that’s otherwise properly priced!

Lastly, while it’s not required to professionally stage your home with high end sample furniture, you should at least make sure your home is clutter free and clean for the photos and during any showings. That last thing you need is for people to perceive your property as less valuable because of your random personal junk lying around which has nothing to do with the actual property for sale!

If your property is vacant and you are not planning on physically staging your home, you may also want to consider virtually staging some of your listing photos. Research has shown that virtually staged photos sell real estate faster than photos of vacant properties. Especially when it comes to the first photo of your listing, a virtually staged professional photo can have a dramatic impact on the level of traffic your property receives.

Understanding closing costs in NYC is critical before you begin the sale process. You can estimate your seller closing costs in NYC using Hauseit’s Interactive Closing Cost Calculator.

What Are for Sale by Owner Fees for Marketing Your Property?

This depends on whether you are pursuing a traditional DIY approach or whether you are smart enough to consider a Flat Fee MLS listing to supplement your buyer exposure.

For Sale by Owner Fees – Traditional Approach

Just because you’re forgoing any broker assistance whatsoever does not mean your marketing will be free. You will still have to pay to advertise on popular internet search websites, hire a professional photographer and pay for a new floor plan.

As of this writing, it costs $599 to list For Sale by Owner on StreetEasy for 4 weeks. The cost jumps to $799 if you want your listing to be “featured” on StreetEasy during the 4 weeks.

Each real estate search portal will have their own requirements and costs, and you will have to individually list on all of them if you want complete exposure to all potential unrepresented buyers.

Under the traditional approach, there will not be any way for you to engage buyer’s agents and the 75% of buyers who are represented by agents. Your marketing will be limited to the ~25% of buyers who do not end up working with a buyer’s agent.

For Sale by Owner Fees – Agent Assisted Approach

Just because you are getting access to the RLS through a flat fee broker does not mean you are giving up control of your home sale process. Not only will you receive all inquiries from brokers and buyers, you will receive the same level of attention from represented buyers as you would have if you paid 6% to a traditional broker.

We advise home sellers to sign up for a Flat Fee RLS Listing which not only will give them the full cooperation of buyers’ agents but will also be cheaper than listing individually on websites like StreetEasy directly.

Be careful of MLS listing packages from websites that claim to cover the entire, continental U.S. and promise to list you in your local MLS wherever you might be. These websites are extremely expensive, costing up to $1,000 per listing package and completely irrelevant for the unique NYC market. How can they list you in your local MLS when NYC does not have a primary MLS to begin with?

Hauseit’s partner brokers are all REBNY member firms who will list your home in RLS (REBNY Listing Service), which is the equivalent to the NYC Multiple Listing Service. REBNY is the dominant broker trade association in the NYC area with over 16,000 current members.

Since you are choosing to engage all buyers whether they are represented or not, you will need to offer a commission to buyers’ agents. You are only obligated to pay this commission if you choose to sell to a represented buyer. You can choose to sell to an unrepresented buyer, in which case you wouldn’t owe anything at closing.

While there is technically no standard real estate buyer agent fee in NYC, the most common range is from 2% to 3% of the sale price. Most listing agents will tell you that 3% is the gold standard and most common commission amount being offered. However, seeing 2.5% commission in RLS being offered to buyer’s agents is increasingly common.

In some cases, buyer agents are brazen enough to contact the listing agent by writing emails saying “I can’t work for 2%” or “our firm policy prohibits working for anything less than 2.5% in that price range.”

How much commission you’re offering to buyer agents is especially important if you are competing with lots of other listings or if you are selling in a neighborhood or price point which is a buyer’s market. If, on the other hand, you’re selling a highly desirable unit, an argument can be made to offer a below average buyer agent commission.

No. You cannot renegotiate the buyer agent commission after it has been listed in RLS and a buyer’s agent has already inquired on your listing. After all, the premise under which the buyer broker contacted you in the first place was presumably because of the commission amount being offered.

That being said, you are free to change the commission offered in RLS at any time which will affect new future showings. Keep in mind that just because you can’t negotiate a commission already listed in RLS doesn’t prevent you from negotiating on the price. You can always counter with a higher price to a represented buyer to make up for the commission which you will be paying!

For Sale by Owner fees (closing costs) are the same as what traditional sellers pay except for the reduction in broker commission paid. That means even though you’ve dramatically reduced your seller closing costs, you will still need to pay NYC & NYS Transfer Taxes, a co-op flip tax (if applicable to your building) as well as your real estate attorney fees and other miscellaneous closing costs.

Considering that attorney fees usually consist of a one-time flat fee of a couple thousands of dollars, most of these other costs will be minuscule compared to the 6% broker commission which you’ve just saved!

For a complete breakdown of real estate closing costs in New York City, please consult our comprehensive closing cost guide for NYC.

Originally Published: 10/30/15 | Updated: June 27th, 2019