For Sale by Owner = Less $$

less-net-commission

One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe they will save the commission an agent charges for selling their home.  However,  a new study by Collateral Analytics, however, reveals FSBOs don’t actually save money, and in some cases it may cost them more by not listing with an agent.

The data in the study found:

“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)

Why do FSBOs net less money than if they used an agent?

The study suggests:

  • “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 hunters” 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 who 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 there could be multiple offers resulting in a bidding war for the property.

3 conclusions from the study:

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

Real Estate Bottom Line

If you are thinking of selling your home, consider using a real estate agent.  You could met more money!

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