FSBOs – Not Saving Real Estate Commission After All

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It’s something we hear quite often… For Sale By Owners (FSBOs) don’t want to use a real estate agent because they believe they will save the commission an agent charges for getting their house on the market and selling it. But it turns out, that isn’t typically the case!

New studies have found that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they reviewed home sales in varies markets throughout 2016 and the first half of 2017. The results showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

So, why would FSBOs net less money than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money. We’d love to discuss a home sale plan that works for YOU, to help you avoid losing money and having to deal with the pitfalls of selling a home on your own. Let’s talk!