04/13/2025
Let’s Face it…“For Sale by Owner” Simply Doesn’t Work
It can be very tempting, especially in today’s real estate market, for a homeowner to try and sell their home – without the help of a knowledgeable real estate agent. However, sellers who try to sell on their own will cost themselves far more money than if they hired an agent from the very start.
For sale by owners (FSBO’s) have unknowingly elected to compete against one of the most powerful marketing engines ever created: the Multiple Listing Service (MLS). Thousands of area Realtors, with buyers in hand, scan your area’s MLS every day, looking to match their buyers with the right house.
FSBO’s destroy their own buyer pool because local agents aren’t able to find FSBO properties in the local MLS. When buyer's agents do find a FSBO, they’ll usually take their buyers elsewhere because earning a commission is improbable, and a FSBO doesn’t have anyone qualified to represent them, which increases the possibility transactional legal issues.
A FSBO’s perception of realtor fees is almost always disproportionate to the value they feel they’re going to get. Their main driver is agent commission avoidance. FSBO’s do not understand what realtor fees are for, and how they are distributed in a real estate transaction.
Traditionally a seller pays 6% out of their sales proceeds. 3% goes to the buyer’s agent and the other 3% is paid to the listing (seller’s) agent. Selling a home is actually a partnership which requires two agents specializing in opposite, but equally important marketing and negotiation activities.
Besides terribly ineffective marketing, “For Sale by Owner” sellers fail to realize that the 6% commission they’re trying to avoid will end up costing tens of thousands of dollars in the end. Here’s why:
• Some or all of the standard 6% agent commission can be added into the sales price, potentially costing the seller nothing. A 6% commission of a $300,000 house is $18,000. If the local market indicates that $309,000 to $318,000 is a fair ask, then at least half of the commission will be avoided.
• According to the National Association of Realtors (NAR), FSBO homes sold for 23.5% less in 2024 than if they were listed with an agent. This means that the 6% agent fee they’re trying to avoid will end up costing them 4x as much if they market their home independently.
• Just as noteworthy, closing costs including Realtor commissions are tax deductible. If a seller’s tax advisor analyzes their finances, then it may cost very little, or even nothing to hire an experienced agent to run the gamut.
• Due to the lack of buyer traffic, FSBO’s begin to realize after a few days or weeks that they won't be able to get this done without an agent on their side. In fact, according to the National Association of Realtors, 89% of FSBO’s fail to sell without an agent. You can extrapolate that only 11% of FSBO transactions actually sell – and when they do, its generally for tens of thousands less.
Let’s close this on a positive note: If you had an 89% chance of failing to sell your home, and an 11% chance to sell your home but lose tens of thousands of dollars in the process, which choice would you make?
I hope you’d choose to start interviewing talented Real Estate Agents.
I am always here to offer assistance and advice,
Craig W. Covert
313.461.4224
[email protected]
