FSBOs Don’t Actually Save Real Estate Commission

People who choose to list their home alone often believe they can save the commission an agent charges for getting their house on the market. But a new study by Collateral Analytics says otherwise.

FSBOs don’t actually save money and in some cases, it costs them more by NOT listing with an agent according to the study.

Home sales in 2016 in a variety of markets and the first half of 2017 were analyzed in the study.

The data revealed 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.”

FSBOs would net less money than if they used an agent. The study suggests the following reasons:

“Experienced agents are experts at ‘staging’ homes for sale”

This could bring more money into the home. Agents know more about the market and their price points.

“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.”

There are bargain shoppers out there who are taking advantage of FSBOs more often.

“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 chances of a bidding war are greater for the property. This would also mean that the homeowner doesn’t have to list lower just to sell his or her property.

There are three conclusions that we can derive from the study.

The average price was nearly 6% lower for FSBO sales in 2017.

FSBOs sell for significantly lower than those same properties sold by agents.

5.5% is the approximate differential in selling prices for FSBOs when compared to MLS sales of similar properties.

Bottom line, if you are thinking of selling your home alone you’ll likely end up losing out on potential  income.

At Burgess Group Realty LLC we pride ourselves on expert staging, broad marketing campaigns and sound negotiation tactics. Let us access the equity in your home and present a custom sales strategy free of charge. Call us today. 303.506.5669.

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