NEW STUDY: Selling By Owner Costs Sellers More
In this day and age of “DIY” (Do It Yourself), it is not really surprising to know how many people try to do things on their own. From fixing a flat tire to setting up a closet, it seems like people are willing to learn new things just to save a few bucks.
There are a few things that are worth to DIY but is selling your home by owner one of them? Many sellers ask themselves this question everyday.
Any homeowner can go out there and sell their homes themselves but in doing so there are a lot of considerations to think about, including how much time they willing to spend selling their home, how will they let people know that their house is actually for sale, and are they really netting more or less money for their property?
Listing a home with an agent would mean having to pay commission for costs in handling the transaction and marketing and most people try to avoid this fee by selling properties on their own. But is it really worth it? Can they really “save” money in the process?
According to the recent study conducted by Collateral Analytics Research, FSBOs do not only sell at discounted prices, sellers net home prices less than they would with an agent-represented MLS sale, as well.
In this graph from Sklarz and Miller 2017 article we see the difference between a regular MLS sale versus FSBOs in San Diego and notice that MLS sale prices are higher relative to FSBO sales using the Automated Valuation Model (AVM). (The study was in California but similar results are expected across the nation).
FSBOs selling for less money than sellers working with a real estate agent may be due to a number of factors and some of them Could be:
Attracting the wrong buyers
FSBO sales might attract more strategic buyers. This means people who specifically target sellers who are not represented by any agents and deliberately give typically lower-priced bids in hopes to save the same commission the seller hopes to save.
Making listings more attractive
Experienced Agents/Brokers are experts at “staging” homes for sale. Hence, imposing positive influences on the sales price for MLS sales.
Marketing database and Resources
Experienced Listing Agents have a wider variety of tools and resources for marketing. Properties are exposed to a larger buyer “pool.” All these create buzz and attention for a possible bidding war which can ultimately drive prices higher.
Value of time
The dollar today may be worth less a few months or years from now. Considering the time spent in selling a home what a FSBO seller think they can potentially save in dollars they actually lose in time. Additionally, if a seller doesn’t know how the legally protect themselves, as an agent is trained, the possibility of future legal implications always exists.
Perhaps there are some things that are better left to experts. One of them is selling a home.
Don’t get me wrong. Sellers can sell their homes themselves, but they often aren’t successful, and when they’re statistics show they sell net less money. Whats more important, not paying a commission or walking away from a sale with more $? There is an added value in listing with an agent for sellers and buyers will certainly see value in working with an agent rather than directly with a seller. At the end of the day the difference between a FSBO and selling with an agent can cost a seller a lot more than a 6% commission to full-service brokers.