This is an interesting post created by a real estate agent. Time permitting, we will be addressing each statement. Stay tuned.
People give several reasons for trying to do a For Sale By Owner (FSBO) on their property. The reasons are really as varied as the people doing it. In most cases, however, all those "reasons" boil down to one thing, the commission to an agent. It's all over the Internet as well. Tons of posts on how to Sell it Yourself and SAVE the Commission. Simply type in FSBO tips, or FSBO how to and see the list. Here's the real truth and why it's a Big FSBO Lie; Whether you sell it yourself or you list with an agent, you will rarely, if ever, save the commission.
Wow, I bet you're saying, "harsh words, Roger." Especially if you are, or are considering, selling FSBO. This article is not about whether it's a good idea to sell a home yourself or not. If you are planning on trying, you need to do it for the right reasons. If it's because you think you can save the commission, read on.
First, determine where you read that you can save the commission by selling it yourself. Most FSBO articles are written by one of two groups of people.
The first group is the FSBO websites and magazines. Of course they are going to be saying that. They make money off of you, as a FSBO (by the way, there went some of that 'savings'). Tack on their Premium Flat-Fee Listing Service that many offer and you've lost some more of that savings.
The second group of people that promote this are real estate investors that have the "We Buy Houses" systems in place. Real estate investors buy property at a discount and resell. Their primary source of properties? You guessed it, FSBO's. Now, if you need to sell fast and are in a position to do so, this may be an excellent option (more on this in a later article), but don't pretend that you're saving the commission, here. Any money that would have been paid as a commission is going into the investor's pocket, not yours.
Second, you have to determine your marketing costs to advertise your property effectively.
Selling a house is just not as easy as buying one of those nice red and white "For Sale By Owner" yard signs and waiting on the phone to ring. You have to do some serious marketing in order to give yourself the best chance of getting a qualified buyer in the door. All that marketing, and marketing dollars, are usually spent by the agent. That's part of the commission cost. If you don't hire an agent, then you have to foot that bill. At a minimum, you can expect to spend approximately $1000 to $2000 dollars on advertising a property. Nudge a little more off that savings, again.
Third, you have to determine the value of YOUR time.
Almost no one considers this aspect of FSBO. It is going to take a lot of your personal time to sell your home. Answering phone calls, showing the home, updating information on the Web, qualifying buyers are just a small sampling of what you will be responsible for when selling on your own. If you spend just 60 hours total working on selling your home, at $50 an hour, you've racked up a $3000 charge to yourself. It will probably be a lot more than 60 hours, too. You may be fine with that, but you're going to EARN that $3K, not save it!
Fourth, you have to know who really pays the commission.
What? you say. The seller pays the commission, everybody knows that! Do they now? Sure, the commission comes out of the seller's proceeds (ie, the sales price), but where does that money come from? The buyer. Without a buyer, there is no sale. Without a sale, there is no commission. Simple comparison: If I'm pumping gas and I give you $10 to pay the cashier, who actually paid the cashier? (Credit to John Locke for the analogy)
Buyers looking at FSBO's know this and if you have any chance of selling to them, you're going
HomesByOwner of Durham Region
Toll Free - 866.964.FSBO (3726)
Sell Your Home. Keep The Commission.
