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FSBOs Earn Less!

A very small percentage of homeowners try to sell their home on their own without the professional assistance of a Realtor.   The term most often used is For Sale By Owners or FSBOs, these homeowners usually choose to do this  because they think they will make more money if they don’t have to pay real estate commissions.  

A July 2017 study by Collateral Analytics suggests the contrary is true.  According to Collateral Analytics, FSBOs don’t actually save anything, and in some cases end up costing themselves more by not listing with an agent.

FSBO homes tend to sell for lower prices

At the real point, based on data collected from a variety of markets in 2016 and the first half of 2017, Collateral Analytics concluded 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.” (emphasis added)

Take a moment to think on that.

So, how much lower are FSBO sales?  

It's a significant amount lower.  The study showed that FSBOs sold their homes for 5.5 – 6% less than similar properties sold by Realtors using the Multiple Listing Service (MLS). Most FSBO's end up paying a 3% commission to the agent that brings a buyer anyway and think they are getting savings.  

Think of it this way, for a $500,000 home, that’s a $27,500 difference in sales price.    A 3% commission on that same home would’ve been $15,000.  There’s nothing fuzzy about that math…  I’d rather walk away with an extra $12,500 at the end of the sale, wouldn’t you?

Agent listed sale scenario

$500,000 sale price
$30,000    6% traditional commission
$470,000 basic net to seller before closing costs, taxes, and other normal real estate sale costs

FBSO scenario based off of Collateral Analytics study findings that homes sell for 5.5% less on average

$472,500 sales price (500k minus 5.5% according to study)
$14,175  3% commission paid to buyers agent
$458,325 basic net to seller before closing costs, taxes, and other normal real estate sale costs

Bottom Line

Trying to sell your home on your own may end up costing you money instead of saving you money. 

If your goal is to maximize your sales price, start looking for an experienced Realtor that will give you candid advice, explain market trends, and apply a strategic marketing plan to get massive exposure for your home through the MLS and beyond. 

Ask friends and family for referrals, but do your own research, too. You’ll be spending a lot of time with your Realtor, so choose wisely and always read reviews.

Her negotiating skills were tested and prevailed!

Tara at Front Door Realty was fantastic. She was knowledgeable and quick to understand our needs. Her negotiating skills were tested and prevailed! We will call on her again should we ever decide to sell and buy again.


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