For Sale by Owner: Cost v. Savings

One common reason homeowners decide to sell their home as a For-Sale-By-Owner is to avoid paying real estate agent commissions. Homeowners believe that they can sell their home without the assistance of a REALTOR® and save a significant amount of money. But at what cost?

A recent study by Collateral Analytics, Saving Real Estate Commissions at Any Price, compared for-sale-by-owner home sales with those through traditional methods using real estate agents in the last year. The findings show that for-sale-by-owner homes sell for significantly lower prices.

The National Association of REALTORS® summarizes the findings:

The authors found that the differential in selling prices for FSBOs when compared to MLS sales is “remarkably close to average commission rates.” A FSBO sale, on average, nets nearly a 6 percent lower price than an MLS sale for a similar property.

“Assuming that both buyers and sellers pay the commission, one might have expected something less than this average,” the researchers note. “It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale. They are avoiding commissions at any price, even one that exceeds a commission rate.”

Read more: Study: FSBOs Net ‘Significantly’ Lower Profits

What does this mean for Colorado home sellers?

This study shows that real estate agents bring value above the cost of commission for home sellers.

Selling your home in a fast-paced market requires local knowledge, real estate expertise, and careful consideration. Selling your home as a for-sale-by-owner involves greater risk for mistakes during the real estate transaction, increased stress during the home sale, and lower home sale prices. Using an experienced real estate agent will save you time, stress, and money.

If you are preparing to sell your Colorado home, contact a Colorado real estate agent. A REALTOR® can provide valuable assistance during the home buying and selling process.