Many people are of the opinion if they sell their house for sale by owner (FSBO) then they won’t need to pay a real estate agent the commission. And they think that this will get them more money net into their pocket. Many studies that I’ve read however say that this doesn’t actually save this was anything, and quite often this was maybe costing themselves more by not using a Realtor to sell the house.
How is this you ask?
Well it’s simple. Data shows that a home sold FSBO tends to sell for a lower price than a comparable home sells for with a Realtor involved. And in many cases, the differential between a FSBO sale price and a price on a home sold through a Realtor is less than the prevailing commission rate.
Buyers know that people selling on their own are doing it to save the real estate commissions. And any offer that they make, would automatically get the prevailing commission rate discounted from the offer. When you add in the fact that the FSBO market for potential buyers is less than 10% of the total prospective buyers out there, this severely limits a homeowner’s pool of potential purchasers. When you add into that the costs involved with selling a home, and advertising is the primary one, where are the savings for someone selling it by themselves?
Save the Commission and Sell your House Yourself. Or not. So you’ve decided that you want to save some money and sell the house on your own. You figure that the largest expensive selling the house is paying the realtor commission. And you are correct in assuming that. It is the single largest expense when you go to sell your house.
But is it actually going to save you any money? Not necessarily so.
There are many studies that have looked at this question. Almost all agree that the median house price of a home sold by owner is at least 14% less than the median price of a home sold by a Realtor. And in every case, the median price of the FSBO is up to 14% less than the sale price of a home sold through a Realtor.
So if you’re looking to save at 5% commission and you net 14% less? Where is your savings? How does that put more money into your pocket?.
It doesn’t.