Does FSBO Save You Money?

Does FSBO save you money? Most people who own a home have considered selling it themselves and bypassing the agent. There are always a few FSBO homes for sale in Smyrna and Murfreesboro. Saving money (the sales commission) is by far the most common reason for attempting to FSBO. Is it really as simple as that, FSBO and pocket those commissions? Most people want to sell their home quickly and want to net as much money on the home sale as possible, so it’s a fair question. Here’s some valuable FSBO advice.

In a previous post, I described a few situations in which selling FSBO might make sense. Money wasn’t one of them. The evidence indicates that owners who take on the job of selling their home FSBO don’t save nearly as much money in practice as they do in theory. Why is that? Consider three reasons to think twice about going the For Sale By Owner route:

You won’t save 6% (or 5%, or 8%, or whatever the full commission is)

The sales commission is split between the seller’s agent and the buyer’s agent. Expect that the buyers will be working with an agent. That agent is working on commission. If the FSBO seller refuses to pay any commission out of the sale, the buyer will either have to pay it out of pocket or move on to a different seller. Which would you do?

The lesson: Even FSBO sellers can expect to pay a fair commission to the buyer’s agent. If you refuse to do so, expect the buyer to move on to a seller who will. Essentially that cuts any theoretical savings in half.

Time is money

According to this study, FSBO houses sat on the market 18 days longer than houses sold by an agent. That’s almost 3 weeks of additional holding costs: taxes, utilities, mortgage payments, maintenance, and more. The additional wait time can even cause sellers to miss out on the home they were hoping to move to.

The lesson: subtract additional holding costs from those theoretical FSBO savings and add the risks of taking longer to sell

Finding the right buyer is a full-time job

The Ohio Association of Realtors compiled a list of 184 tasks that agents do for you. Some of these are mandatory – someone must accept and negotiate offers in order to complete the sale. Other tasks might be neglected. For example, no one says you have to advertise your property online. However, successful agents do these tasks and more, because that ensures the greatest chance to sell your property according to your timeline and at the best price. All of those tasks and marketing efforts take time and money. It’s a full time job to find a buyer who will pay top dollar for your home on your terms.

The lesson: subtract out the value of your time and the real dollars spent in advertising your home for sale. Professional staging and photography, hosting open houses, advertising on hundreds of websites, print marketing, and more all add to the time and expense of selling for top dollar. Ask an agent how much time and money she spends getting one listing sold, and assume it will take you longer and cost you more, because that agent is practiced and probably has administrative help for time-consuming tasks.

The bottom line

When you accurately value your own time, holding costs, and the likelihood that you’ll be paying out some commissions anyway, the argument for FSBO becomes weaker and weaker. This explains why owners of higher priced homes are less likely to FSBO – the money saved is simply not worth the time and effort spent.

Bonus Fact

This takes us to the question I posed in a previous post: Do FSBO houses sell for less than houses sold by agents?

The National Association of Realtors research has historically indicated a 10-15% lower median sales price than agent-assisted sales. There’s a lot of misinformed hype about that statistic – it can easily be an “apples to oranges” comparison. The reason? FSBOs are more common with inexpensive homes such as mobile homes, manufactured homes, and condos.

The lesson: More expensive assets generally require more skill, marketing, preparation, and time to sell quickly at market value. The more valuable the asset, the more important it is to enlist professional help in selling it according to your financial goals and within your timeline.

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Aaron Lovett is a full-service Realtor in Smyrna, TN, working out of the regional office of Century 21 United Realty in Murfreesboro, TN. His service area includes Smyrna, Murfreesboro, the remainder Rutherford county and surrounding areas. Aaron has lived in the area for over a decade. He takes pride in helping home buyers and sellers reach their real estate goals.