FSBO Tips Charleston SC: How FSBOs Often Lose Money Selling FSBO
If you are thinking of selling your home, you may be debating whether or not you want to use a real estate agent. Here is some information and stats to help you make that decision easier. People decide to sell FSBO for a variety of reasons, and it usually comes down to the same two: 1) to save some money by not having to pay commission or 2) a dislike/distrust of real estate agents.
Over the next few posts I will look in depth at the pitfalls of selling FSBO. For this post, let’s look at how FSBOs typically net less money than selling through an agent.
The first reason can be a big misconception. In a traditional real estate transaction both buyer and seller will be represented by their own respective agent (i.e a buyer’s agent and the listing or seller’s agent). Each agent gets a percentage of the sales price, which is paid from the sellers proceeds. By selling FSBO you can eliminate one or both commissions and this is where people think they can save some money.
However, there are flaws in this thinking. First, if you do not offer a commission to an agent that brings a buyer, you are making it next to impossible to make the sale. If you do not offer a commission, which is also known as “Broker Protected”, then agents will avoid your home and not make their buyers aware of it. There goes a large chunk of your potential buying market (more on that in the next post). If you do not offer a full commission, they will still avoid you and your house will still be invisible to a majority of the buying public.
But let’s say you go the smart route and offer a full commission for an agent that brings a buyer. You are still saving the commission you would have paid if you had hired an agent to represent you, right? In theory that is correct. However, according to the statistics, you actually can end up losing money by selling FSBO.
Statistics show that homeowners actually net more money by selling with an agent. One interesting thing happens to FSBOs: buyers know that you are saving money by not using an agent, so they will think that means you should discount your price.
This can lead to low ball offers, and having both parties far apart at the start of negotiations. This may be too difficult to come to an agreement on price–the buyer will expect a discount.
Another reason for FSBOs netting less is that they may not know how to correctly price their home. This is where the expertise of an agent can benefit the homeowner. A good agent not only knows the prices recent homes have sold for, they can also determine where the market is heading and what is the best price to list at.
Here is a great example to illustrate this point. Back in 2011 Colby Sombratto decided to sell his New York City condo himself. After 6 months of no luck, he turned the listing over to a real estate agent. The agent informed Mr. Sombratto that he had priced the condo to low, and therefore, it wasn’t attracting the right buyers. A few months later, the condo went under contract after multiple offers for $150,000 more than what Mr. Sombratto had originally listed it for. And by the way, Colby Sombratto is the founder and former CEO of ForSaleByOwner.com.
More to come over the next few days about FSBO tips Charleston SC.
If you are thinking of selling FSBO, be sure to check out this video of FSBO Tips Charleston SC.
Get a free copy of my FSBO Help Kit by checking out my Charleston SC FSBO website.
You can also learn more about getting your home sold by visiting my website.