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real estate question: things to watch out for when doing "For sale by owner"

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real estate question: things to watch out for when doing "For sale by owner"

Old 05-29-05, 03:36 PM
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real estate question: things to watch out for when doing "For sale by owner"

We're going to put our house on the market. After a couple of years here we realize it's just not the right place for us. Yes, we're idiots but it is what it is. The housing market is still very strong here and we want to try to take advantage of that now. KVRDave, others, what are some things to look for when doing for sale by owner? We already have the region's best R.E. lawyer on our side, so that's covered. What else?
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Old 05-29-05, 05:32 PM
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Well, I would hire an agent. You can sometimes knock them down to 4-5%.

But if you insist - You should at the very least agree to pay buyer's agents commissions. And you should also pay to list the house in the MLS. Otherwise, not many people are going to see your home.
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Old 05-29-05, 05:40 PM
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The big thing is price. Many people selling by owner price it the same as if they had an agent. What helps sell your home quicker is discounting it a good portion of what you would be paying for the commission. In our area it's 7 percent commission so when we sold our house I figured the price the house should sell for and dropped the price a bit. This helped sell it quicker.

We sold our house in less than one week. It also helped that it was just painted four colors and in perfect condition. We had one open house (mostly lookers that said our house was so cute they just had to be nosy). No leads. Then a few days later someone noticed our sign on the corner pointing to our house.


The house we bought was also a FSBO and it sold the first day. We were the fifth offer that day. The guy had priced it low to sell quick. We later found out a similar house a few doors down had sold a few months before for $90K more. Except that house needed a lot of work (new driveway, roof, paint, etc.).

ALSO: DO NOT follow the buyers around the house telling them non-stop details. If they are interested they will ask. I looked at a house where the guy took me through the house in five minutes and led me outside. They had lived there for 40 years so it needed redone but in his eyes it was perfect.

He later went with a listing company that still lets the seller show the home. After 8 months on the market they finally got an agent, lowered the price and it sold in a few weeks.

I read a book on For Sale By Owner and it was a help. Spend $10-15 on one and do it right!
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Old 05-29-05, 08:24 PM
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Great advice, folks. Thanks. The reason we want to do FSBO is obvious: We have a fairly large mortgage and don't want the money we will actually walk away with cut down by a realtor. I can't say for sure but I feel that given the market around here realtors aren't that much of a help. I could list on Craigs List and get the phone ringing off the hook. Whether or not it's with serious people remains to be seen.

Anyone else have any advice? Is there anything legally speaking I should look out for? Should I require people be pre-approved?
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Old 05-29-05, 08:48 PM
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I don't know where you are, but houses in my area don't stay on the market long - hours or even minutes in some cases. Prices are through the roof (no pun intended), and people are getting way more for their houses than they would expect to. I wouldn't suggest FSBO unless you have a RE license yourself. I'd get a good agent to pull good comps and make sure your asking price is high enough. My house appraised for 244k a few months ago, but I could easily sell it for 320K right now... it would be on the market for less than a day at that price. That's how crazy it is here.

You can get an agent to agree to a smaller than 'traditional' commission and I think in the long run, you'll end up with more money overall than if you did all the stuff yourself.
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Old 05-29-05, 08:55 PM
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Why not go with one of those places like HelpUSell or Assist2Sell where you pay a smaller fee (usually $3,000) and they list it and lend you signage. You'll have the best of both worlds.
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Old 05-29-05, 11:12 PM
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Originally Posted by Deftones
Why not go with one of those places like HelpUSell or Assist2Sell where you pay a smaller fee (usually $3,000) and they list it and lend you signage. You'll have the best of both worlds.
Those are kind of a scam. At least HelpUSell is. And I don't quite mean scam, but here is how it works. We will do nothing but advertise for half of a typical commission. If you want us to show the house and have other agents sell it as well, then you pay a full commission. Basically they hook you with "Low, low fees" but then try to get you right back where you were before, and generally they don't have the better agents.

I know if some areas, you can find services that will put your home on the MLS for a fee. If you can do that, definately do that. The MLS is the single most thing responsible for selling homes, and that is not because prospective buyers see it, but becuase other agents see it.

If I really wanted to sell my house by owner and that service were available to me, I would use it, and offer a buyer's agent fee slightly above the normal fee. So if the typical split is that an agent get's 3% for the buyer's side, give 3.5%. You are still saving 2.5% on a commission, and that is only if another agents brings a buyer, which will save you a lot of trouble, because they will be the ones holding the hands through financing, smoozing the appraiser, making sure the bumbs in title are taken care of before they arise, etc.

Anyway, that's what I would do. If you don't have the MLS service, advertise (don't skimp), and put in the ad that "cooperating agents welcome" or some type thing.

Otherwise, lower the price. All things being equal, a regular buyer would rather use a free service that does all the paperwork, shows lots of different houses, uses the agents gas, expertise, etc. rather than buy your home unless they feel they are getting some kind of a monetary incentive to do so. Again, that's assuming all things are equal, and in RE, price is what makes things equal.
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Old 05-30-05, 09:34 AM
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Originally Posted by kvrdave
Those are kind of a scam. At least HelpUSell is. And I don't quite mean scam, but here is how it works. We will do nothing but advertise for half of a typical commission. If you want us to show the house and have other agents sell it as well, then you pay a full commission. Basically they hook you with "Low, low fees" but then try to get you right back where you were before, and generally they don't have the better agents.

I know if some areas, you can find services that will put your home on the MLS for a fee. If you can do that, definately do that. The MLS is the single most thing responsible for selling homes, and that is not because prospective buyers see it, but becuase other agents see it.

If I really wanted to sell my house by owner and that service were available to me, I would use it, and offer a buyer's agent fee slightly above the normal fee. So if the typical split is that an agent get's 3% for the buyer's side, give 3.5%. You are still saving 2.5% on a commission, and that is only if another agents brings a buyer, which will save you a lot of trouble, because they will be the ones holding the hands through financing, smoozing the appraiser, making sure the bumbs in title are taken care of before they arise, etc.

Anyway, that's what I would do. If you don't have the MLS service, advertise (don't skimp), and put in the ad that "cooperating agents welcome" or some type thing.

Otherwise, lower the price. All things being equal, a regular buyer would rather use a free service that does all the paperwork, shows lots of different houses, uses the agents gas, expertise, etc. rather than buy your home unless they feel they are getting some kind of a monetary incentive to do so. Again, that's assuming all things are equal, and in RE, price is what makes things equal.


He's correct. You want the assistance of your local real estate agents. They have a larger base of prospects than you do. It's their job to show and sell property and they can be available most any time. Unless you are jobless and/or just stay home all the time, you can't possibly be available to show your home like an agent can.

Pay a buyer's agent commission of 3%-3.5% and you'll get the attention of agents, thus selling your home for more money and less trouble. Make a fact & feature sheet on your property (with an offer to pay a buyer's agent commission) & fax it to your local real estate offices.

Many agents (I'm one of them) will ask for a one-time listing agreement naming the prospect(s) that they will be showing the property. This is to protect the agent from unscrupulous activity. Don't be surprised if this happens, as it's not some sort of sham. Just make sure that the term of the listing is not lengthy. I usually make mine for one day and name the prospect I present the property to as well as the agreed upon commission.

You really need to get some comps before placing your house on the market. I've seen too many people price their homes using an 2nd-3rd hand info. "well I heard that the jones house sold for X $". It may be prudent to obtain an appraisal.

Good luck to you!

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Old 05-30-05, 11:46 AM
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Originally Posted by kvrdave
Those are kind of a scam. At least HelpUSell is. And I don't quite mean scam, but here is how it works. We will do nothing but advertise for half of a typical commission. If you want us to show the house and have other agents sell it as well, then you pay a full commission. Basically they hook you with "Low, low fees" but then try to get you right back where you were before, and generally they don't have the better agents.

I know if some areas, you can find services that will put your home on the MLS for a fee. If you can do that, definately do that. The MLS is the single most thing responsible for selling homes, and that is not because prospective buyers see it, but becuase other agents see it.

If I really wanted to sell my house by owner and that service were available to me, I would use it, and offer a buyer's agent fee slightly above the normal fee. So if the typical split is that an agent get's 3% for the buyer's side, give 3.5%. You are still saving 2.5% on a commission, and that is only if another agents brings a buyer, which will save you a lot of trouble, because they will be the ones holding the hands through financing, smoozing the appraiser, making sure the bumbs in title are taken care of before they arise, etc.

Anyway, that's what I would do. If you don't have the MLS service, advertise (don't skimp), and put in the ad that "cooperating agents welcome" or some type thing.

Otherwise, lower the price. All things being equal, a regular buyer would rather use a free service that does all the paperwork, shows lots of different houses, uses the agents gas, expertise, etc. rather than buy your home unless they feel they are getting some kind of a monetary incentive to do so. Again, that's assuming all things are equal, and in RE, price is what makes things equal.
But, and I've heard this from multiple people, that potential buyers are much more willing to contact someone about the house w/ a "legit" for sale sign in the front yard rather than one of those FSBO ones you can buy at any local hardware store. Obviously that's just from what I hear around my neck of the woods, so that could vary.
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Old 05-30-05, 11:55 AM
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Originally Posted by Deftones
But, and I've heard this from multiple people, that potential buyers are much more willing to contact someone about the house w/ a "legit" for sale sign in the front yard rather than one of those FSBO ones you can buy at any local hardware store. Obviously that's just from what I hear around my neck of the woods, so that could vary.
Hmmm, I've never heard that. I suppose it could be true from the standpoint that a lot of people like to call a realtor just to find out the basics (price, address, size, etc.) and feel more uncomfortable talking to the owner because they are just curious. And there are some that simply feel uncomfortable dealing directly with the owner. They don't want to make the owner feel bad if there is something they don't like etc. However, there are also lots of people that won't do anything that involves a realtor.
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Old 05-30-05, 12:54 PM
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Thanks again for the posts. Let's assume that I don't go with a broker and that I have the whole access thing worked out. Is there anything I should do? What should I require/request regarding preapproval and stuff like that?

And as far as pricing is concerned, I've been doing a lot of research into what's been selling and for how much, so I have a sense of that. We're marking the price down a bit from what others are asking, even though we're offering a lot more in some respects (much larger lot, for instance). We may end up using an agent if things don't go well but for now we're trying it this way because we'll have more control over what happens. Real estate in the NYC area is unlike other places. It has the potential to move much more quickly and be much crazier. In the 2 years we've been living here the prices have gone up about 40%, so who knows what will happen.

ETA: We probably won't even put a "for sale" sign up on the house at first. Gonna try Craigs List and ads in the Voice and Times first.

Last edited by Gil Jawetz; 05-30-05 at 12:57 PM.
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Old 05-30-05, 01:14 PM
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I wouldn't worry about the preapproval thing. Any contract that is contingent upon financing should give them something like 3 days to talk to a lender. If other people are looking, tell them you have an offer but you will know if it is going to fly in a few days. Keep in mind that this is small town mentality, and I try to be very pleasant and not put road blocks in front of a buyer if you don't need to.

And most would be preapproved anyway. But if you really worry about it, if someone wants to buy it, tell them to go talk to a bank, and you will hold it for them, or at least call them if another offer comes in while they are getting approved.
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Old 05-30-05, 01:20 PM
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Cool. I'm not overly worried about it. I just don't know what standard protocol is.
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Old 05-30-05, 02:04 PM
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Originally Posted by kvrdave
Hmmm, I've never heard that. I suppose it could be true from the standpoint that a lot of people like to call a realtor just to find out the basics (price, address, size, etc.) and feel more uncomfortable talking to the owner because they are just curious. And there are some that simply feel uncomfortable dealing directly with the owner. They don't want to make the owner feel bad if there is something they don't like etc. However, there are also lots of people that won't do anything that involves a realtor.
Yeah, well that's probably just the perception of people in the market right now where I live.
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Old 06-01-05, 07:38 AM
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Do not try to avoid paying a buyer's agent. That's just stupid.

If your home is going to sell for a large amount, you are probably going to be saving anywhere from $4,500 to $10,000 or more. It is completely OK for you to invest $1,000 or $2,000 in marketing this house.

First off, contact a real estate appraiser, or two. Ask them to comp or price the home for you, without a report. Offer to pay them $150 each for this service. Appraisers usually make $300-400 per report, but the report takes a lot of time to do. You just want the value information. (Spent: $300).

Get some high-quality signs done at a place like Fast Signs. Don't write on a sign from Office Max. No one can read those. You can probably get 5 or 6 of them done for about $100. (Spent: $400). Put one in front of your house, one in front of your neighborhood, one in front of your street, and three on major intersections nearby.

Hire an interior decorator to "stage" your home. This means you want to move most of your stuff out and put it in storage for a month while you show this place. Less stuff = more room. The decorator should give you tips and they may have some props which they will bring and let you borrow while the home is staged. This will run between $500 and $1,000, depending on the size of the home. (Cost: $1400).

Now, get someone with a knack for photography (neighbor, family member, friend) and have them take pictures of the house. DO NOT use a cheap HP digital camera. DO NOT siply walk in and take a picture. DO color-correct all the pictures in Photoshop. Then make a nice 3 page color brochure with the highlights. Put about 25 copies outside near the sign, leave some inside for the open houses, then mail 2-3 copies to the nearest agencies (ones in your zip code). This should be $100 or less. (Cost: $1500).
If you speak with an agent, tell them that there may be buyers that show up without representation. Tell them, "Buyers will feel better if they have an agent working with them --- would you like me to leave some of your business cards at my open house in case any buyer wants to make an offer?"

Contact a local, well-known and respected mortgage company. Tell them you are selling the house for $X. Ask them if they are interested in having a representative come out to the house during the open house to discuss financial options. At the very least, have the company prepare flyers for your buyers. ("Put 5% down and own this house for as little as $1250/m on a 30-yr fixed mortgage" for example). Include these flyers in your brochure that you leave outside and inside your home. Don't send it to agents, they have their own financial contacts.

Make a black and white summary sheet, and fax those to all agencies within a 20-mile radius. Make sure you mention that you will pay for any buyer's agent that wants to buy this house. Make a color summary sheet (with the good pictures) and put them on the bulletin boards at churches, apartment complexes (where rent is slightly lower than what the mtg company estimated your payment to be), supermarkets, etc. (Cost: $1525).

Go to Office Depot or Staples and buy some of the standard real estate contracts. Make copies of them if you need to. Leave these at your open house or attach them to your sales sheet. They're usually $25 or less. (Cost: $1550).

List the home on MLS. This usually runs about $300. (Cost: $1850).

List the home in your local paper. Get a nice ad if you want. That should bring up the total to about $2,000.

I can almost guarantee you will recoup your $2,000 money and time investment. If you hold out and wait a week or so until all the offers come in, you will do great. Just remember to hold out. It might only be $1,000 or $3,000 more, but that's still $1,000 or $3,000 more.

If you do all of the above steps you will have done much more than the average listing agent does. You will have saved a couple of thousand in commissions, but you will probably sell your house for more.
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Old 06-01-05, 07:39 AM
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Originally Posted by Gil Jawetz
ETA: We probably won't even put a "for sale" sign up on the house at first. Gonna try Craigs List and ads in the Voice and Times first.
Why not? Why are you limiting the number of buyers who see your house? I think that's a terrible idea, not to be harsh.
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Old 06-01-05, 08:19 AM
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Originally Posted by The Bus
Why not? Why are you limiting the number of buyers who see your house? I think that's a terrible idea, not to be harsh.
I would have to agree. By limiting the audience you're going to keep demand down, which will keep the final price down. You want a bunch of people interested so they bid against each other for the property. And even if they don't offer more money, it will be less contingencies or other concessions.

Even if you wanted to limit your audience, doing so using Craigslist and Village Voice would be entirely too limiting. You can do it to supplement, sure, but you're being penny wise and pound foolish if that's your advertising strategy.
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Old 06-01-05, 09:11 AM
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Maybe you guys are right about the sign thing. Part of me just wants to not get into it with my nosy neighbors, but that's a stupid reason. I'll look into it.

Originally Posted by The Bus
Do not try to avoid paying a buyer's agent. That's just stupid.
What exactly is a buyer's agent? Is that different from a real estate borker/agent who takes 6% or whatever ther fee is?

Originally Posted by The Bus
First off, contact a real estate appraiser, or two. Ask them to comp or price the home for you, without a report.
This is something we're looking at doing, although we've done a good deal of research into what houses are asking/selling for in the area.

Originally Posted by The Bus
Hire an interior decorator to "stage" your home.
No way. We cleaned it, organized it, and fixed some things up. But I think this is one of the ways NYC real estate is different from other places. I remember reading a post once where someone suggested putting out fresh baked chocolate chip cookies when prospective buyers come to look. Around here? Fuggeddaboutit.

Originally Posted by The Bus
Now, get someone with a knack for photography (neighbor, family member, friend) and have them take pictures of the house.
I've got that wrapped up. The pics I'm taking look like they're from Elle Decor or something.

Originally Posted by The Bus
List the home on MLS. (Cost: $1850).
Where exactly do I get into the MLS system? I'm googling but coming up with a bunch of BS. I think I'm doing it wrong.

Originally Posted by The Bus
List the home in your local paper. Get a nice ad if you want. That should bring up the total to about $2,000.
Unfortunately, listing in papers around here is probably a LOT more expensive than you're estimating. But we will check this out.

The thing is, the way the market moves here I could just list on Craig's List and have an offer later that same day. It's all a gamble. I have to get my stuff together and see what direction to go in. I called an agent who sold a house around the corner for me (a much smaller house) in a week just to see what they'd say. Their estimates just from my description were way higher than I was going to list, so I feel like my gut instinct for FSBO is good. We'll see...

ETA: Also, I suspect buyer's agent is not a thing around here. I have to look into it but it's not something you really come across. Again, R.E. is different here.

Last edited by Gil Jawetz; 06-01-05 at 09:28 AM.
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Old 06-01-05, 09:40 AM
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Ok - if you don't know what a buyer's agent is, you definitely need to get a book on FSBO. In a RE transaction, there are typically two agents - one who represents you, the seller, and one who represents the buyer. As the seller, you usually pay a 6% commission. The agents usually split it - you are, in essence, paying the buyer's commission.

You have to pay a service to list your home in the MLS. You must be a licensed real estate agent to list it in there. There are services that will do this for a fee (some of which are mentioned above). I'm sure there are others in your area that will also do this. Check the phone book.

For a quick free e-appraisal, try here:

http://www.ditech.com/equity/appraisal/form.do

Sometimes this works - sometimes it doesn't. E.g., it worked for single family home but not my condo.
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Old 06-01-05, 09:57 AM
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Originally Posted by orangerory

For a quick free e-appraisal, try here:

http://www.ditech.com/equity/appraisal/form.do
Grrr... It says "More Than One Property Meets Subject Id" because we're #161 and there's a #161A for no reason at all. Stupid morons who built my neighborhood.

I'll check out a book on FSBO after work.
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Old 06-01-05, 10:09 AM
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Definately do the sign and make it a good one. Every once in awhile I get sellers that don't want a sign in their yard. My first question is, "Don't you want people to know it's for sale?" And they generally say something about nosy neighbors as well. They will be nosy neighbors a lot longer if you don't have a sign. Plus, those nosy neighbors may have someone in mind they want to have buy your place.
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Old 06-01-05, 10:32 AM
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List it in the NYtimes and you will be fine as long as you provide adequate info and pictures. NYC real estate is very different than your typical transactions. I would suggest paying a modest buyer's agent fee if applicable.
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Old 06-01-05, 10:35 AM
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I listed my parent's coop on craigslist and they are getting calls and people are coming over to look at it. A few agents called and so far they are ignoring the agents.
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Old 06-01-05, 11:04 AM
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Originally Posted by al_bundy
I listed my parent's coop on craigslist and they are getting calls and people are coming over to look at it. A few agents called and so far they are ignoring the agents.
Again, not a smart move. Let's say smart internet shopper offers $400,000, but someone with an agent offers $430,000 (plus you pay the agent's commission).

I don't understand people sometimes. Like the people that brag about selling a house in a day. Ever think of asking for a slightly higher price?

Just seems odd.
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Old 06-01-05, 11:07 AM
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But let's say someone on the internet offers $400 and someone with an agent offers $400, minus the agent's fee, you lose out with the agent. It's all a gamble, no? As long as you don't settle for less than you're willing to settle for, you make out well.
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