Home sellers who choose to work without an agent are twice as likely as agent-assisted sellers to be unhappy with the results of their sale, according to a new study from Clever Real Estate.
Those who opt to do it themselves – for sale by owner, also known as FSBO – forgo an agent to save money and a variety of other reasons. But the study’s findings suggest a majority of FSBO sellers would have an easier and more lucrative sale if they worked with a real estate agent.
In hindsight, more than half of FSBO sellers wish they’d worked with an agent to sell their home.
FSBO savings vs. profit loss
As the internet makes listing a home without an agent easier than ever, Americans are more tempted to sell by owner.
The No. 1 reason homeowners consider listing FSBO is to save money. The average real estate agent charges a commission rate of just under 3% of the final home sale price. That means commission on a median-priced home is more than $12,000.
However, those savings come at a steep cost. Sellers who worked with an agent earned an average profit of $207,500, while FSBO sellers earned an average profit of $128,500, according to Clever. The $79,000 profit gap far outpaces any potential savings FSBO sellers might realize by forgoing an agent. Many FSBO sellers save little on commission while losing more on their home sale price.
Why FSBO sellers avoid agents
Many FSBO sellers, however, may not care about leaving money on the table. They are simply averse to working with a real estate agent. Twenty-four percent of respondents said they had a bad experience with their last agent, while 23% said they simply don’t trust agents.
Although the No. 1 reason FSBO sellers avoid using an agent is to save money, 58% said they’d accept at least $15,000 below asking price to avoid using an agent. Around 44% said they’d accept at least $20,000 below asking price, and 29% said they’d accept at least $25,000 below asking.
With the average commission on the median-priced home costing around $12,000, FSBO sellers are willing to sacrifice money to avoid working with an agent.
FSBO sellers have regrets
Regrets are common among FSBO and agent-assisted sellers, but the nature of those regrets differs radically.
About 1 in 4 FSBO sellers wish they received more offers, making it the most common regret. In fact, unrepresented sellers were almost twice as likely as represented sellers to say they didn’t receive multiple offers.
In addition, 24% of FSBO sellers regret that the buyer got the better end of the deal, 23% regret that they didn’t time the sale of their home with their next home purchase, and 22% regret that they listed their home when the market was bad.
Agent benefits
Agents say FSBO sellers underrate their services. In Philadelphia, a booming real estate market in which the median home price has nearly doubled since early 2017, agent Brett Rosenthal has worked with several FSBO sellers who gave up trying to sell their homes themselves.
“In my experience working with FSBO sellers, the biggest struggle was getting potential buyers to the home,” Rosenthal says. “The FSBO sellers either didn’t get any buyers to the home or got very few. The ones I worked with that did get a sale from selling FSBO got lower prices than they expected or would have gotten if the property was listed with an agent.”
The failed FSBO sellers Rosenthal worked with discovered that, even in a hot market, it’s tough to sell your home if no one knows it’s available.
“The ones that decided to use me did so because their home simply wasn’t selling,” he explains. “They took a stab at doing it themselves because it’s easy to post the home on Zillow, but they didn’t realize they wouldn’t get as many potential buyers.”
Rosenthal’s experience suggests many FSBO sellers are so fixated on potential gain that they don’t consider services they’re forgoing by not working with an agent.
“Agents bring so much value to a transaction that FSBO sellers miss out on,” Rosenthal points out. “The first thing they bring is pricing knowledge. The problem with most FSBO sales is that the seller prices the home too high or too low, which ultimately affects the value they will get.”
The simple law of supply and demand contributes to other agent benefits.
“Agents who work the local area usually have a large set of potential buyers, so the buyer pool becomes much higher, which in turn, brings [more competition] and higher prices,” Rosenthal says.
Rosenthal also said agents use extensive marketing to sell homes and connect sellers with reputable service providers, such as professional photographers, who make listings as enticing as possible to potential buyers.
In the end, would-be FSBO sellers have a point. A full-commission real estate agent is expensive, but the numbers suggest a good agent is often worth the price.
This article was produced by Media Decision and syndicated by Wealth of Geeks.