If you’re looking to sell your home, you have two options. The first, and by far the most popular option, is to enlist the help of a real estate agent, or Realtor. While this is the most efficient and practical way to sell your home, it will also cost you about 6% of your proceeds just in commissions.
The second option is to try and sell your home yourself, as a FSBO, or For Sale By Owner, and therefore ostensibly save some big money by not paying a listing agent.
According to the latest reports, 89% of sellers now use a real estate agent to sell their home, while For Sale By Owner (FSBOs) accounted for only 8% of all home sales.
So which way is best for homeowners? Of course, Realtors will tell you to use their services when selling, because they have a vested interest in getting you to sign on the dotted line and put a For Sale sign with their face on it in the front yard.
But is that really the best for homeowners?
Being a loan officer in the mortgage business, I don’t make money from home sales. I have no agenda or vested interest either way if a seller chooses the FSBO option or uses a Realtor.
So I thought I’d be the perfect person to present you the facts, statistics, and hard data on FSBOs versus selling with a Realtor, so you can decide once and for all which is the best way to sell your home and net the highest profit.
After extensive research by numerous studies, articles, and other credible sources, here is what I found:
Last year, the average FSBO sold for $210,000.
Meanwhile, the average home listed with a real estate agent sold for $249,000.
That’s a difference of $39,000 – or 15.6% in sale price – when listing with a Realtor.
If the average FSBO sells for $210,000, the seller will net (discounting all other factors, taxes, fees, etc. for purposes of this illustration):
$210,000
– $6,300 (3% paid to buyer’s agent)
= $203,700
Now let’s look at the average home sold with a Realtor:
Numerous studies and housing market research show that the average Realtor-listed home sells for $249,000. That means the seller would net (discounting all other factors, taxes, fees, again):
$249,000
– $ 7,470 (3% paid to buyer’s agent)
– $ 7,470 (3% paid to listing agent)
= $234,060
Even after paying a full commission to both agents, homeowners who sell with Realtors net 14.9% more profit.
That’s almost a 15% increase in profits just by using a Realtor!
If home sellers were truly motivated by putting the most money in their pockets as possible (and why wouldn’t they be?) and are thinking logically, data proves that they can make an additional 1/7th just by enlisting the help of a real estate agent.
But there are other compelling reasons NOT to list your home as a FSBO:
Time is also not on the side of FSBOs. Considering that:
Average time to sell for FSBO: 88 days
Average time to sell for listings with a Realtor: 69 days
So working with a Realtor saves at least 19 days, which is 22% longer on average, in an industry when time is definitely of the essence during limited hot-selling seasons of spring and summer, and the subsequent cooling of sales and prices during the winter.
Interestingly enough, 20% of FSBOs end up relisting on the MLS after the do not sell the first time, which creates a lot more work and time delays for the sellers.
When it comes to marketing their FSBO, how do sellers fare? Not very well, judging by the fact that the highest and best marketing platform FSBOs use is just a yard sign! Furthermore, 32% tell only friends, neighbors, and relatives and expect their house to sell.
So what were the biggest challenges FSBOs reported?
Understanding and performing paperwork: 12%
Getting the right price: 6%
Preparing/fixing up home for sale: 6%
Selling within the planned length of time: 18%
Having enough time to devote to all aspects of the sale: 6%
In fact, a recent survey found that owners of FSBOs reported having 70% more stress during a transaction than those who sold with a Realtor.
The contracts, disclosures, documents, timelines, procedures, etc. necessary to sell a home sometimes reach hundreds of pages, and you can’t just skip them because you’re unfamiliar or selling a home yourself.
Additionally, there is the potential for HUGE liability issues with every single real estate transaction. People do end up getting sued and in court all the time when they don’t properly disclose material facts about their house, their neighborhood, etc. A seller essentially magnifies their liability when they represent themselves in the sale of their own home (talk about a conflict of interest!).
There are even things you can’t say as a Realtor that extend to a homeowner when they decide to try and sell their own home, like Fair Housing Laws that curb discrimination, steering, redlining, and other practices. If you don’t know exactly what you can and can’t say – or even write in ads for your home – you could be violating federal laws.
What does it all add up to?
If you want to net 14.9% more profit,
Have less stress 70% while working far less,
Sell 22% faster,
And avoid a huge liability and potential to be sued.
There may be some times when selling on your own (or with the help of an attorney, etc.) is a logical path, like when there are sales between family members, divorcing spouses, sometimes when you buy directly from the builder, and also company relocation sales.
But the numbers don’t lie when they show that using a Realtor to sell your home is by far the best choice, ensuring you have a positive selling experience, sell for top dollar, and, most importantly, land the highest profit.