Hiring An Agent To Sell Your House May Cost You NOTHING

Dated: 10/19/2017

Views: 24

Hiring an Agent to Sell Your House May Cost You NOTHING!

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:

  • Greater exposure to more buyers

  • The skills of a professional negotiator

  • A layer of protection from possible legal liabilities

  • Professional guidance in navigating any pitfalls that may arise

  • A level of safety while showing the home

There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny?

A study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data 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.” (emphasis added)

Why would FSBOs net less money on their own than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.

  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.

  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.

  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.

  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

Blog author image

Derrick Houston

Derrick has been in real estate for ten years. Before embarking on a career in real estate, Derrick served his country honorably for nine years in the United States Navy supervising young aviation ele....

Latest Blog Posts

House Buying Power At Near Historic Levels

We keep hearing that home affordability is approaching crisis levels. While this may be true in a few metros across the country, housing affordability is not a challenge in the clear majority of the

Read More

Rising Interest Rates Have Not Dampened Demand

Since the beginning of the year, mortgage interest rates have risen over a half of a percentage point (from 3.95% to 4.52%), according to Freddie Mac. Even a small rise in

Read More

How Long Do Most Families Live In A House

The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of their data points, which has changed dramatically, is the median tenure

Read More

The Number One Reason To List Your House For Sale NOW

If you are debating whether or not to list your house for sale this year, here is the #1 reason not to wait!Buyer Demand Continues to Outpace the Supply of Homes for SaleThe National

Read More