Americans want a deal.
I know I do.
And these days if you are purchasing goods or services at full price, you feel like you’ve been duped. Could you have done better?
So it makes sense that you’d want to cut out the middle man and save some money whenever possible. It makes good financial sense, right? It seems logical. Why pay someone for work that you could do yourself and, in turn, save money? Especially with one of the biggest transactions you’ll ever make – selling your home.
Should you consider selling your house as a “for sale by owner” (FSBO)? Let’s look at the statistics…
1. The average loss from a FSBO is 16%, which for a $200,000 home equals to be a loss of $32,000. If the home owner increases the desired selling price by 6% to pay for real estate agent commissions, they would only pay $12,000 for a listing agent to represent them and the buyer’s agent to bring them a buyer. This would leave the work and burden of marketing and selling the home to their agent, and the home owner comes out ahead 10%, or $20,000!
2. And speaking of price, many FSBOs use home evaluation websites to help them determine the asking price for their property. Yet, these evaluations can be off as much as 40%. This is where a local agent’s experience and knowledge of the area is key! They know how to find the true comparable home sales in your surrounding area, and how to work with lenders if an appraisal comes back lower than expected.
3. “Time on market” or (TOM) plays a huge role in marketing and selling a home. The longer a home sits, the more it is stigmatized, and potential buyers will wonder what is wrong with it. On the average, FSBO homes take 19 additional days to sell. And, in the end, more than 80% of FSBOs end up listing with an agent when they see that the home is not getting the showing appointments and offers the home owner desires.
4. It’s also an unfortunate fact that we are a litigious society. New real estate agents spend 90+ hours learning contract law, agency law, real estate law and ethics law, which they all are tested on at the state and federal levels, with additional continuing education requirements every two years. Those considering FSBO must weigh the legality risks of opening themselves up to possible litigation, and selling their home without an advocate that can advise them on the many laws that govern such transactions. A good real estate agent is knowledgeable about the law and they have insurance to protect themselves if litigation is necessary.
With trying to determine an accurate listing price, spending the time trying to sell the property, and the risks involved in such a large legal transaction, there is no question why real estate agents are worth their commission. A good agent can be an advocate for your home, an advisor to you and an ally in selling your property for the right price and in an appropriate time range, all while making sure it is a successful, binding transaction.
*Statistical data provided by Z57
Lora Pfohl, REALTOR®
Advocate. Advisor. Ally