Why your desire to “save money” could cost you thousands of dollars

Why your desire to “save money” could cost you thousands of dollars


There are two times in the real estate cycle that I hear sellers talk about selling their home on their own, as a FSBO (For Sale By Owner).


One is when the market is very slow, prices are depressed, and there’s a fear that there isn’t enough equity in a home to be able to compensate an agent.


The other is when the market is very hot, prices are escalating, and market times are very short.


It’s this second instance I want to talk about today.


In a strong sellers’ market, some homeowners assume they don’t need an agent – that any home will sell (and often at an inflated price). It all looks so easy from the outside … and the anecdotes about how simple it is to sell your home ripple from homeowner to homeowner.


The truth is … it’s not that simple.


In every market there are homes that never sell, and that includes both FSBOs and listed properties. In fact, in the market area I serve, xx% of homes do not ever get under contract.


How can that be? The market is hot, right?


Well, the answer is simple. Selling homes requires a knowledge of contracts, deep awareness of local market conditions, the ability to know how best to present a home, and great marketing.


Most FSBOs simply don’t have the skills to pull this off. And that’s not just my opinion.


A study by Collateral Analytics 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.”


National averages show that FSBOs sold, an average, for $208,700 as compared to similar $235,000 for agent-listed homes. Looking at those numbers, the sellers didn’t “save” themselves a 6% commission fee. Well, they did … but they cost themselves far more than that in profit. There’s almost a 13% difference in these prices. At a commission rate of 6%, that’s 7% in profit a FSBO lost.


Let’s do the math with our local prices … with an average sales price of $xxx in the markets I serve, a homeowner who is a FSBO potentially walking away from a 7% profit is losing $xxxx.




So if you’re not saving money but not hiring a top-notch agent, why in the world would you try to sell as a FSBO?


Maybe you’ve had a bad experience with an agent in the past. If so, I’m sorry to hear that! There are a lot of wonderful agents in this industry, but there are also some sub-standard performers. If you worked with someone in the latter category, I encourage you to reach out to me. My team delivers an experience like no other!


Or maybe you haven’t sold in many years (or decades even!). Back in the day, FSBOs were more common. But in the last several decades, FSBOs have dwindled down to a very small percentage of the total sales that occur. Technology has played a big role in the diminishing opportunities for FSBOs. I know that when you sell your home, you want to do just that – sell it! The National Association of Realtors reports that FSBOs only account for 8% of all home sales. Eight percent!


There are many, many benefits to working with an agent when you’re ready to sell, and I’m going to cover those in a future post. For now, l’d like to share a comment from Dave Ramsey, America’s trusted voice on money:


“Research has shown that, between mistakes, lack of negotiating skills, pricing errors, and general exposure on the market, you’ll cost yourself more than the real estate commission … you’ll come out slightly better and with a lot less hassle if you use a top-shelf agent.”


Need more information about what a top-shelf team of agents can do for you? Let’s talk!

Marti Reeder, Realtor, Managing Broker