Challenges Facing FSBO Buyers and Sellers

For Sale By Owner websites and advertisements make selling your own home sound easy but there are some very real FSBO Challenges to consider. Understanding how FSBO listings work plus the advantages and disadvantages of selling FSBO versus listing with a real estate agent assures you select the right choice for your individual situation.

The most often cited advantage of listing a house for sale by owner is saving the real estate commission, but a closer look at how real estate commissions work deserves attention. A typical real estate commission is usually .06% to .07% of the selling price of the home. To keep things simple let's use .06% for this example on a $200,000 home. The total commission would be $12,000 but it is often shared by as many as four people. It works like this; when you list your home the listing agent and broker would be responsible for .03% of the commission (Approximately $3,000 or .015% each) while the selling agent and broker would be responsible for the other .03% or .015% each.

FSBO Challenges

One of the challenges of listing your home for sale is enticing other real estate agents to show your home to their clients. To successfully do this you will need to provide an incentive by paying a similar real estate commission such as the typical .03% for the selling agent and broker. In our example above that means your total savings is now only .03% or $6,000. From that amount you must deduct the MLS listing fees, signs, advertising, lost wages for showing the home and much more.

To calculate if listing your home FSBO really makes sense, calculate the true cost of doing it yourself. Remember, it takes an average of six months to sell a home so when calculating the cost of advertising and other expenses use a six month average estimate of: Selling agent commission, MLS Listing fee, Signs, Posters, Flyers, Internet Advertisement with photographs, Newspaper Classified Advertisements, Missed Wages to Show Home, Market Research, Legal Fees to Create & Review Contracts, Escrow Company and Other Miscellaneous Costs.

Now compare the total savings against the time and money you will pay a traditional real estate agent and broker for listing and selling your home to decide if facing the FSBO challenges is the right choice.

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