Selling your Own Home - Options

The primary reason for making a decision to list and sell your own home For Sale by Owner (FSBO) is to save money – period!  The savings associated with a successful FSBO home sale campaign is significant.  Last year (2005) in the United States alone there was $90 billion dollars in real estate commissions paid to real estate agents and real estate brokers.  On the other end of the spectrum is a Madison, Wisconsin based FSBO listing service that claims to have facilitated the sale of 2,000 homes in 2005.  Based on their FSBO fee structure they generated $300,000 in revenue.  Had those FSBO home sales been commissioned at the conventional real estate rate (6%) the commission paid to real estate agents or brokers would have been in the range of $17.3 million dollars!  That represents a savings to the homeowners of $17 million dollars.  Ultimately and more importantly it represents $17 million in potential lost homeowner’s equity.  Did FSBO work for these homeowners – you bet it did!

The question is - can you successfully sell your own home.  The realty is that FSBO is not for everyone.  Real Estate agents are professionals; they have an existing, well developed, listing service (MLS) that exposes your home to literally thousands of real estate agents, many of which may have buyers looking exactly for your home.  That said, the one thing real estate agents do best, in my opinion, is convince the homeowner, their client, to lower their asking price to attract more buyers.  The real estate agent essentially loses 6% of the lowered value; let’s use $10,000 as an example.  The cost to the homeowner is $10,000; the loss to the real estate agent is $600 in commissions.  The average home sale value in the United States last year was approximately $266,600 (NATIONAL ASSOCIATION OF REALTORS®) - based on the typical 6% real estate commission fee the average homeowner pays @ $16,000 in real estate commissions - based on those potential substantial savings its tough not to consider a professional FSBO campaign.

There is another alternative to a full engagement of a real estate brokerage or undertaking an FSBO home sale yourself.  Today’s homeowner can choose to engage into a Flat Rate MLS agreement.  By entering into this arrangement you agree to pay a real estate selling agent the regular 3% fee if they sell your home.  You do however; reserve the right to sell your home yourself without incurring any real estate commissions.  You agree to pay the listing agent a “flat fee” to list your home and expose it to the Realtors® MLS.  Flat Fee MLS services range from $250 (local MLS listing) to $750 (national MLS listing).   This option is sometimes referred to as an FSBO Hybrid because it combines both FSBO and conventional Real Estate services (MLS).  MLS in the USA is very fragmented; alternatively, Canada offers a true coast-to-coast “national” listing service.  Combined with a professional FSBO campaign the Flat Rate MLS option may offer a homeowner the best of both worlds.

Ultimately the decision is yours; you can go full real estate agent/brokerage service and pay real estate commissions fees as negotiated, engage in an exclusive FSBO real estate option and potentially save thousands of dollars in home equity or go the FSBO Hybrid option and pay some real estate commission fees.  All options, arguably and inevitably, offer advantages and disadvantages.  If you feel you can successfully sell your own home, then the FSBO or FSBO Hybrid can be very compelling, wholly and 100% based on the significant savings that accompany these alternatives.

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