Back in April, we wrote a blog about the issues surrounding For Sale By Owner (FSBO) home sales. We explained the potential disadvantages those sellers face and why it’s always a good idea to hire a qualified agent to represent you. We also said that, on average, a FSBO will sell for less than a property listed through an agent on MLS. A recent study by Collateral Analytics now confirms this difference in sales price and attaches an average amount lost based on a scientific and detailed analysis of available data.
A FSBO will sell for 5.5-6.0% less than a comparable home sold through a Realtor on MLS. “This results from this study suggest that successful FSBO sellers achieve prices significantly below those from similar properties sold more traditionally by REALTORs via the MLS.” Additionally, they noted that only about 1/3 of all FSBOs actually successfully sell. And when they do sell, they are typically on the market longer than a comparable home listed through a Realtor.
It is an understandable instinct to want to save money when selling a home. But selling by owner does not do that, according to the data. But if you aren’t paying any commission, why doesn’t FSBO end up saving you money? Well, the study and our research indicate a few contributing causes.
- Both buyers and sellers in a FSBO are trying to save the same money. When a buyer knows the home is for sale by owner, they mentally discount whatever price they offer by the commissions they know the owner is saving. The owner is counted on saving that exact same amount by not using a Realtor. Both of them can’t save it and, according to the data, the buyer usually ends up saving the 6%.
- FSBOs do not get exposed to as many potential buyers as a home listed with a Realtor. When The Star Team takes a listing, our clients’ homes are featured on Realtor.com, Zillow, and the MLS. The MLS is what gives homes the widest exposure to potential buyers. Additionally, we will promote our listings in the local paper, the Wall Street Journal, our website, our social media, and other outlets. A FSBO does not have that wide a reach or exposure.
- A FSBO might not be correctly priced. Realtors have a number of tools available and the expertise in the market to correctly price your home to sell but also maximize the sales price. A correctly priced home will sell quicker than a home that is overpriced. And an underpriced home will sell quickly, but the seller will have missed out on the best price for the sale.
The data tells the story we always knew from our experience: choosing to sell FSBO does not save money for the seller. It also transfers the burden of work from the Realtor onto the seller. More work for less profit. Contact The Star Team today and let us help you avoid the Problems of FSBOs! 772.321.7644 or info@TheStarTeamRealEstate.com