The Problem with FSBOs 

 

The Internet has given buyers and sellers more real estate tools than ever before. Sites like Zillow and Realtor.com allow non-real estate professionals access to some of the information that was previously only available to licensed Realtors. This has given rise to more people choosing to work without an agent. For Sale By Owner signs can be seen here and there throughout our marketplace.

The reason most people choose to work without an agent is simple: they believe they will save money. A seller might be tempted to list a home themselves in order to avoid paying a commission. This is an understandable approach. But does it really end up saving money? As Realtors, we might be biased, but the facts support using an agent to sell your home. According to the NAR, the average price of a home sold by an agent last year was $235,000. The average FSBO fetched an average of $208,000. That’s a difference of $27,000. The commission that would be saved on this kind of transaction? Less than half that.

There are other reasons to carefully consider whether or not a FSBO is a good option. Following are a few:

Marketing
The Internet is by far the most common way a buyer learns about a home. If you are planning to list your own home, do you have an Internet marketing strategy? Buyers learn about a house from a yard sign in less than 10% of all transactions. At The Star Team, we have a comprehensive online marketing strategy that showcases our listings on all the major websites as well as the MLS (which a FSBO does not have access to).  We also provide mailings, ads, and other marketing materials and no cost to the seller.

Your Buyer Will Have an Agent
88% of all buyers use an agent. In order to “save the commission,” a seller would have to limit themselves to marketing their home to 12% of potential buyers. Fewer potential buyers means a lower average selling price. If a seller agrees to work with a buyer’s agent, then their potential savings—the justification for the FSBO in the first place—has been cut in half. And now the seller will be negotiating against an experienced agent who only represents the buyer’s interests. That puts the seller at a disadvantage in the transaction which, on average, will also result in a lower average sale price.

Your Time
What is your time worth to you? Whatever value you assign to it, it is almost certainly not zero. Selling a home takes time. You have to show potential buyers the home, prepare all the documents, and spend time doing whatever marketing the home needs. If you have an agent, they do these things for you. If not, then you are spending your own valuable time doing the work they would have done. Subtract the value of your time from the savings you hope to achieve by listing your home yourself.

The Real Reason Most FSBOs Fail to Save Money
Let’s say that you are ok with doing your own marketing. And you are resigned to either reducing the pool of buyers or paying a buyer agent’s commission. You are ok spending your own time on this project. Now should you list your own home for sale? There is one more important factor to consider. The motivation for the seller to do a FSBO is to save the 6% commission. When a buyer chooses not to use an agent and look at a FSBO, they are looking to save the same amount. They are discounting any price they are willing to pay by the same amount you are trying to save. This is one reason why most FSBOs do not end up saving the seller money: both buyer and seller are trying to save the exact same amount.

Let’s Talk
The Star Team has extensive local and national marketing programs available to sellers at no cost. We handle every aspect of your transaction smoothly and professionally. We ensure that your home is exposed to the maximum number of potential buyers to get you the highest price the market will bear. We do the work and we believe we are worth every penny of the commissions we earn. Contact us today and let us show you how we work and the level of service you can expect. It’s less work and more money. That’s just smart business!