Study FSBOs Dont Save Real Estate Commission

Dated: 08/29/2017

Views: 10

Image title

One of the main reasons why 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 getting their house on the market and selling it. A new study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed 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.” (emphasis added)

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

The study makes several suggestions:

- “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 lookers’ 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 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 greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.

2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.

3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

Blog author image

Nicholas Yannitelli

Nicholas is the company Inquiry Coordination Director. In this position he will contact anyone with an interest in learning more about properties and make sure you are directed to the appropriate Exe....

Latest Blog Posts

Low Interest Rates Will Have A Huge Impact On Your Home Purchase

Low Interest Rates Will Have A Huge Impact On Your Home PurchaseAccording to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate

Read More

Sedona AZ Whether You Rent Or BuyYou Are Paying Someones Mortgage

Whether You Rent or Buy…You Are Paying Someone's Mortgage Sedona AZ: There are some people who have not purchased homes yet because they are uncomfortable taking on

Read More

Buying Remains Cheaper Than Renting In 39 States

Buying Remains Cheaper Than Renting in 39 States!In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed

Read More

Oct 16 2017 38829 1

Real estate trends:http://www.premiersedonaproperties.com/blog/real-estate-trends?ts=blgPhilip TatumRealty Executives Northern Arizona928-274

Read More