For-sale-by-owners tend to sell their homes for lower prices than homes sold through traditional agents via the MLS, and in many cases below the average differential represented by the prevailing commission rate, according to a new study by Collateral Analytics.
The study examined the price differences between homes sold through traditional agents versus those sold by FSBOs from 2016 to the first half of 2017.
Some homeowners may be tempted to try to avoid commission costs to a broker and try to sell the home on their own. But that can backfire and turn into a much lower sales price, the study found.
Even successful FSBO sellers achieve prices “significantly below” those from similar properties sold more traditionally via REALTORS®, the study found.
The authors found that the differential in selling prices for FSBOs when compared to MLS sales is “remarkably close to average commission rates.” A FSBO sale, on average, nets nearly a 6 percent lower price than an MLS sale for a similar property.
“Assuming that both buyers and sellers pay the commission, one might have expected something less than this average,” the researchers note. “It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale. They are avoiding commissions at any price, even one that exceeds a commission rate.”
Source: “Saving Real Estate Commissions at Any Price,” Collateral Analytics Research (Aug. 16, 2017)
Article source National Association of REALTORS®
You may now be asking yourself if FSBO sell for less shouldn’t I be looking for one as a buyer? This is true however finding and successfully executing the entire transaction on your own is a lot of work and risk. Also if you are looking for FSBO properties the likelihood of finding what you are looking for considering that FSBO’s make up a very small percentage of the market is unlikely. Yes if a FSBO is underpriced you may get a seemingly good deal but is it worth is when considering the risk and that the buyer does not pay the commission? If that is not enough what if the Seller is asking too much, without the guidance of a professional Realtor® how would you make sure your getting the best deal?
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