Posted in Economist Commentaries, Home Sales Statistics, Sellers, by Amanda Riggs
Some homeowners opt to sell their residence without a real estate agent to get around paying a commission and make more of the profit. Forty-eight percent of people who sell without a real estate agent think that if they sell themselves, they’ll end up doing a little extra work in exchange for not paying a commission or closing fee. According to the research, however, what they actually get is a lot of time spent hustling to make the sale and a final selling price that is less than what the market can bear.
Do you have a lot of extra time to market your home and do all the work to meet and greet properly? Are you versed in local trends on the housing market and know the latest regulations for closing a sale? Do you have a list of potential buyers ready to view your home? Eighty-nine percent of all homes sold in 2015 were sold with the assistance of an experienced real estate professional, according to the 2015 Home Buyers and Sellers Profile. Most leave it to the professionals, yet there is still a small group of people who prefer to do it themselves. Eight percent of home sellers chose to list themselves, known as For-Sale-By-Owners (FSBO) home sales. That number has steadily declined since 2004 where only 82 percent of all home sales were agent-assisted and 14 percent of homes were listed FSBO. FSBO sales are currently at an all-time low since data collection began in 1981.
Let’s break it down further. Thirty-eight percent of all FSBOs—that’s only three percent of the total home sales in 2015—were homes sold to people where the buyer knew the seller selling to a friend, neighbor, or family member. However, 62 percent of FSBO home sales—five percent of total homes sold—were sold by the owner to someone they didn’t know. According to the 2015 Home Buyers and Sellers Profile report, sellers cited creating yard sings, listing their homes online on multiple websites, spreading the news through word of mouth, putting out classified ads, displaying on social media, hosting an open house, and registering with the Multiple Listing Service (MLS) database. That’s a lot of work just on marketing and finding potential buyers.
The time it takes to sell a home on the market was roughly the same for FSBOs and for agent-assisted homes, the median time listed was four weeks for both groups. A third of all homes were sold in less than two weeks last year. Most FSBO homes sales were located in a resort area (16 percent), rural area (15 percent), or a small town (13 percent). Seventy-five percent of FSBO sales were detached single-family homes. Ten percent were mobile or manufactured homes. FSBOs typically had lower incomes than those who worked with an agent. The median income of FSBOs was $84,000 and for those who sold through an agent was $105,600. Those who sell themselves have the perception that they have less money to pay for assistance when selling their home and opt to go it alone.
As it turns out, FSBO make less money on their home sales than buyers who work with a real estate agent. According to the report, the median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number plunges to the median selling price of $151,900. For homes sold with the assistance of an agent, the median selling price was $249,000 ̶ almost $40,000 more for the typical home sale. According to NAR’s 2015 Member Profile, sixty-nine percent of all real estate agents get paid by a percentage commission split between two agents representing the buyer and seller.
Talk to an agent and find out what they suggest for the commission and then do the math yourself. The closing price for the agent-assisted seller is likely going to be way above an FSBO. In reality, homes sold by the owner make less money overall. Based on these closing numbers, why not save yourself time and make more money by working with a real estate agent that is excited to sell your home?
Source: Economist Outlook