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Forget my Single Digit Commission – Take a 28% Hit Instead!


Forget my Single Digit Commission – Take a 28% Hit Instead!

Recently a REALTOR® emailed NAR Research, asking about the advertising site “ForSaleByOwner” states that with a FSBO, “Sellers save big by not paying a hefty 6% commission. They go on to state: “According to the National Association of Realtors (NAR), for sale by owner sellers not only sell faster, but they usually get closer to their asking price.”

We thanked the REALTOR® for alerting us to the website’s statements. This advertisement is an example of the old phrase, “We gave them the facts, just not all the facts.” Here are more facts to take into consideration:

  • In 2010 for an arms-length sale (this means you didn’t sell it to your sister or business partner), the median sale price through a Realtor® was $200,000 for new and existing homes combined, according to NAR’s Profile of Home Buyers and Sellers 2010. The comparable FSBO price was $ 155,700. Avoiding the commission results in a sales price that is 28 percent lower—not a very smart idea.
  • “ForSaleByOwner” is correct that FSBO’s sell faster—but they neglect to mention that the faster sale is caused by significant under-pricing of the property, something a Realtor® knows to avoid.  Of course it sold faster…it was priced 28% less.  Every buyer is looking for deal.
  • And of course FSBO’s do actually sell closer to asking price—because the asking price is set significantly below market.  If it’s a deal, jump on it!

The information on the website is extremely misleading – and wrong! Their final comment may be their worst: “Despite what an agent might tell you, selling your home isn’t difficult with there to help you along the way.”  Remember the recent article where the founder of used a REALTOR to sell his home?!

In fact, many FSBO properties are eventually listed with REALTORS® (about 90% of all FSBO properties are listed with a REALTOR within 90 days) in order to get them sold. Unfortunately, by that time, the properties are “shopworn” and stale. Typically a REALTOR® can get a better price than a FSBO, but the price is generally less than what could have been obtained if the seller had initially listed with a REALTOR®.

On October 7, 2011, in Economist Commentaries, by Jed Smith, Managing Director, Quantitative Research


By: on October 13th, 2011 Category: Uncategorized