Most of you probably don’t even know what I’m talking about when I used to phrase “FSBO”.  The definition of a F.S.B.O. is someone who intends on selling their home by themselves, or a “For Sale By Owner”.  I’d like to take some time today and talk about the advantages (or more importantly, the disadvantages) of selling your home without a Realtor.

On the surface, it seems like selling your home without a Realtor would save you the costs of commission that the Realtor charges, which can be +/- 6%.  What most people don’t know?  When you list with a Realtor, you can expect 5-7% higher, on average, compared to selling the home without a Realtor (stats pulled from N.A.R. – the National Association of Realtors).  The reason? The very first thing a potential buyer will do to a FSBO is knock +/- 6% off their initial offer, because the buyer knows that the seller is saving that money since there is no commission being paid.  Another big reason is because the buyer has no idea how the seller arrived at his/her asking price.  When a Realtor lists a home, they use all of the tools in their arsenal to price the home correctly, including active, closed, pending, and expired comparables.  This is a huge advantage, especially in today’s volatile market, that FSBO’s simply do not have.

Probably the most significant reason, in my opinion, that it takes FSBO’s longer to sell is the fact that there is no commission offered  to the Realtors working with buyers (or Buyers Agents).  A lot of FSBO’s look at the commission being the “problem”.  To be honest with you, it’s more like the “solution” to the problem.  If Realtors cannot get paid for bringing a contract to a FSBO, they are more likely to bring a contract to a seller who has already agreed to pay a commission to the buyers agent.  It’s simple really:  Realtors are in this business not for fun, but to make money and provide a lifestyle for their families.  Spending time with a buyer who ends up buying a FSBO will not earn that Realtor any commission dollars, and would most likely deter that Realtor from showing the FSBO’s home.

Finally, the kicker.  A lot of Realtors sign up their buyers into a “Business Relationship Agreement”, which is basically a contract between the Realtor and the buyer that ties them to each other.  In this agreement, there are a few sections that state something like “If the buyer should buy a home NOT listed with a Broker, buyer will pay Realtor “x” % of the sales price”.  What does this mean?  Basically, if any buyer is working with a Realtor and chooses to buy a FSBO home, the BUYER then must pay the commission to the agent.  This is a huge deterrent for buyers to look at FSBO’s if they’re currently working with an agent.  Since the FSBO will not pay the Realtor’s commission, the buyer now has to.  It’s safe to say that instead of doing that, the buyer will continue looking at homes listed with Brokers, to save themselves the commission dollars.

If you’re a FSBO, I would seriously consider putting your home on the market with a Realtor ASAP. You will have maximized the advertising, buyer pool, and effort that can be put into selling your home.  Every single buyer that a Realtor brings to your home will have already been pre-qualified by a lending institution, as opposed to most FSBO’s buyers that are not working with Realtors.  I’d love to get into more details, but my word-count limit is up!  Please do not hesitate to call, text, or email me with any questions you might have regarding selling your home.  Advice is always free!