Why For Sale By Owner Transactions Net 14% Less Money

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What are the pros and cons of selling a home For Sale By Owner (FSBO)?

The National Association of Realtors has determined that 98% of all homes are listed and sold by a professional agent, meaning 2% are sold privately by the owner. Usually it's because, in those cases, the buyer and seller had an existing relationship.

The shocking fact is that the average FSBO sells for 14% less than it would with a real estate agent. Most qualified buyers want to work with a professional agent because that professional can both give them access to all the inventory and handle the entire transaction. And of course, the buyer doesn't pay anything or those services. Contrast that buyer with a private buyer who wants to forgo those professional services and go directly to a FSBO sale. This buyer is typically unqualified and wants to save money.

They basically fall into two categories:

1. The buyer who is a savvy investor who wants to buy a home at a deep discount
2. The buyer who cannot qualify for traditional financing terms, so they want the seller to do some kind of financing, or do some kind of creative rent-to-own deal

They typically realize that most homes listed on the MLS have a commission built in, and they want to negotiate that commission cost back into their own pocket at the seller's expense.

Even after a commission, you'll net more money with an agent.

So what are the advantages that an agent has in providing services to a seller? Agents are able to get sellers more money for their home in less time with less hassle for three reasons:

1. Agents can give a home exposure to thousands of buyers and agents out there.
2. Agents can pre-qualify buyers and negotiate the highest price
3. Once the transaction is done, agents can work within the relationships with banks and lenders to make sure you close successfully and on time.

So you can see that agents can offer a lot of advantages in bringing you value in a real estate transaction.

If you or someone you know is interested in buying or selling a home, I'd love to work with you. Give me a call and let's talk soon!