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How Much Can You Save Selling By Owner?

Since many people want to sell their property on their own to save money, it makes sense that people would naturally want to know how much potential savings can be realized. For Sale By Owners (FSBO) often assume they will automatically save 6% of the final sales price of their home, because that is the typical fee charged by professional real estate agents. But is this realistic?

The short answer is "possibly". If a FSBO were able to spend nothing on marketing or advertising and successfully sell their home then essentially they would have saved the 4-6% otherwise spent on an agent. However, most sellers will usually spend at least a little money on advertising and marketing. Other times a seller will spend 3% paying a buyer's agent who brings the eventual buyer of the property. The latter is quite common, in fact.

One other thing to consider is final sales price. If the Jones and the Smiths live in identical homes in the same neighborhood and the Jones sell with an agent while the Smiths sell by owner, we can't just assume that the Smiths came out ahead because they didn't use an agent. Suppose the agent sold the Jones home for $215,000 while the Smith home only sold for $200,000. After calculating in a cost of $12,000 (6%) for the agent, the Jones still come out ahead of the Smiths by $3,000 in this example.

However, if the situation were reversed and the Smith home sold for $215,000 compared to $200,000 for the Jones home, the Smiths would come out ahead by a whopping $32,000!

The point that I am trying to make here is that you must look at the big picture when selling your home. One of the best things a for sale by owner seller can do for themselves is to get an accurate idea of the market value of their home, before they start quoting asking prices! Knowing the market value will help a seller avoid selling for too little as well as pricing too high, thus getting no attention from buyers, no matter how much advertising is done.

Price your home correctly (inline with market prices), advertise wisely and don't get caught up with unqualified buyers. These three things are key to maximizing your savings while selling your home on your own.

Posted 6/4/2006