You Get What You Pay For

by Darrin DeRoches August 18 - 24, 2011

So I was reading the Wall Street Journal the other day! Ok, I was on Facebook and a link popped up to a story at the Wall Street Journal about the founder of ForSaleByOwner.com. This site and type of sale is usually referred to as a FSBO.  It is where a seller of a property pays a salesman for a sign, online exposure and other basic real estate information in the pursuit of selling their home –by themselves – without the aid of real estate professionals.  I have written about these systems before and they advertise themselves as the alternative to $15,000 commissions for only $199 for their system.     To be fair – some people use the system and sell their homes.  Others view these systems as just multi–level marketing systems that are simply selling you a sign and forms and leave the rest up to you. I personally know people who have used these systems and sold their home. But they then used a real estate person to buy their new home. They tried to avoid the commissions but in the end they actually sold their home lower than the market value. They listened to the FSBO Company who had them price it on the low end of the market, and it sold. So did they really avoid commissions or lose out on profit?     So the founder of the website ForSaleByOwner.com – Colby Sambrotto had an apartment of his own to sell in Chelsea, New York. So of course he used a real estate agent, instead of his own system.     “A founder of a website dedicated to direct sales of homes by their owners has sold his two–bedroom apartment in Chelsea for $2.15 million with the help of a real–estate broker and a standard 6% commission...”     The interesting part of the story was not that he used a professional real estate broker but what the broker had to say “At first he wouldn’t let me increase the price,” [the broker] said. “I told him I know what I am doing – the market is picking up.”       I wonder if the owner was buying a bigger place for millions more since he is making money on people selling real estate with his website or was he selling because he is losing money on his website?  It just goes to show you that the owner of a website that sells real estate has no idea what he is doing when it comes to real estate.  His broker had to argue with him to increase his price and he went with a broker in the first place, so they can sell his property.  So he sold for over two million and paid in excess of $120,000 in commissions with all the money he made from people paying him $199 to sell their real estate? Irony or the old saying “you get what you pay for!”  V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.