As the concept of FSBO has increased in popularity, it's become clear that the idea of selling a home on your own is for some people and not for others. This is something which we've explored in detail when comparing the advantages of selling a home with a broker and selling a home on your own. One clear statement has come from this comparison as both present a different approach.
It's not always how much you save in commission selling on your own, but the difference in how much you potentially missed out on if the sale was not correctly managed.
There will always be winners and losers - those who do well selling on their own will boast their savings, where people using a broker will see value gained in more areas than just the commission paid.
Success and failure:
No doubt there have been a lot of people who have found success selling on their own, but this is also met with an equal number of failures. When a home has been on the market for some time, a seller will start asking why their home isn't selling. There are many reason for this and sometimes a hard question to answer if you're selling solo.
Maybe you've made up your mind, maybe not. Either way we look at a real world comparison of how a real estate transaction can go either way if selling on your own is not handled correctly. This will be based on how home pricing and good negotiation tactics can change financial gains/losses of a comparable sale.
- Example (FSBO) - Home listing cost for FSBOs is around ~$1000. Your home is listed at the suggested price of $300,000 by the 3rd party website and was well negotiated at the time of sale for $290,000 - So a final closing cost of $289,000 which included the fees to list the home.
- Example (Broker) - Home was actually incorrectly under-valued and instead listed for $310,000 @ 5.0% commission by the broker based on a CMA and his own expertise with selling similar homes. There were never issues with negotiation and the home closed at $305,000 - After both brokers involved decided to cut their commissions to cover the difference and make the deal work (which happens more often than not). Commission ends up being ~1.6% less bringing the final costs at closing to $293,500. Both brokers walked away with around ~$5750 for their time and effort put in to close the deal.
In the example above we can see there is a difference of around ~$4,500 in favor of selling a home using a broker. This is because the 3rd party website suggested a lower recommend price and although negotiations were good, it ultimately resulted in a lower comparable return for the FSBO.
In this same situation if commissions were not cut by either broker and remained at 5%, there is still a small gain for the seller of ~$750. This again is simply based on the right price and slightly better negotiation tactics.
We provide as much information as possible for you to make your own informed decisions when comparing the advantages of selling a home with a broker and selling a home on your own so there is little left to think about once you've chosen a desired direction.
If you're thinking of selling on your own and concerned about using 3rd party pricing tools, we offer a free no obligation property evaluation to home owners. We don't hold prodigious towards those trying to FSBO route and believe everyone should have the right starting price to help them get the best result!