In order to avoid the commission costs to a broker, homeowners may feel motivated to sell their home themselves. While this may seem like the perfect loop-hole for sellers, it doesn’t always net them a high profit. A new study by Collateral Analytics looked at the price differences between that of For-Sale-By-Owner (“FSBO”) homes sold versus homes sold by a traditional agent via the MLS. Examining data from 2016 through the first half of 2017, and from a normal housing market, the study found that FSBOs sold for lower prices than what similar homes sold for. Even for the outliers, a productive FSBO sold at prices “significantly below” the comparable properties that were sold by traditional Realtors. As the researchers state, “Here we find an average difference of about 5.5.% lower prices achieved for FSBO sales compared to MLS sales for similar property.”
On average, a FSBO sale will net nearly a 6% lower price than an MLS sold property, and in some cases, even averaging below the average differential of the prior commission rate. The researcher’s state, “Assuming that both buyers and sellers pay the commission, one might have expected something less than this average. They are avoiding commissions at any price, even one that exceeds a commission rate.”
In essence, while neither losing nor saving any money, the seller ends doing the real estate agents job for free and loses all the agents knowledge and assistance in the process.
So, while many sellers are avoiding commissions by selling homes for far less than what they would have net with an agent-represented MLS sale, these sellers are also not receiving the knowledge and seamless transaction flow an experienced Realtor could provide. This commission-free loop-hole isn’t as monetary-friendly as some sellers are led to believe.
As you can see, Realtors are here to help you make a seamless, stressless, and profitable sale. The short-term loop-hole of selling your home yourself may seem like a great idea, but in the end, you will be losing out on profits that an experienced Realtor will help you gain.