For Sale By Owner Homes / Mortgage Blog

FSBO vs. Realtor
By Mark Camphaug


Should you, as a homeowner, looking to sell your home, consider selling the property yourself or take the conventional route and engage a Realtor? That is the preverbal $64,000 question – or if you use the national average sale price of existing homes of $268,000 – the $16,000 question. Based on pure value, this is a question that really should at least merit consideration.

Obviously For Sale by Owner (FSBO) is not for everyone. I really don’t know why that statement has to be made – NOTHING (with the exception of air and water) is for everyone. Now back to the point at hand.

Why should you consider FSBO:

First and foremost – you save money – simple statement to make. How do you save money? You don’t pay the typical 6% real estate commission associated with a real estate brokered listing and sale. This isn’t just any money - it is your tax free (usually) home equity. Money that you have ultimately earned either through appreciation, home improvement, sweat equity or savvy real estate investment. Anyway you slice it, it’s YOUR money. It is often said buying a home is the single most important and largest purchase of an individual’s life. Does it not stand to reason that selling a home represents the single most important “Sale” of an individual’s life? The National Association of Realtors will tell you that FSBO homes sell for 16% less then Realtor sales. The problem with their calculations is they use a flawed formula to support their argument - they use a MEDIAN price as opposed to an AVERAGE price. The median is a “middle number” in a series of numbers - the average is a sum of all numbers divided by the total number – which is what as a homeowner cares about.

Another consideration is that an FSBO can take all or part of the real estate commission savings and deduct it from the price of their home to expedite a sale. This works great in a “soft” market or if you simply have to sell your home in a limited amount of time. Consider this example (I have used this unlikely scenario purely to make my point). You own a 1300 Sq ft - 2 bedroom/2 bathroom condo. Your adjacent neighbor has the exact same unit with the same level of finish and has listed it with a Realtor for $485,000. Calculate the 6% real estate commission in to the equation and best case your neighbor walks away with $455,900 – that leaves you with $29,100 to negotiate. If I’m a buyer and I see the exact same condo next door for $30K less I can tell you which one I am buying!!! To be honest, I’m going to buy it if I can save ANYTHING! This works very well if you bought in a strong real estate market and the market has now softened to the point that you actually paid more then you can sell it for. Selling FSBO may allow you to at least keep your head above water – remember we are talking 6% of the value of your property.

Another reason individuals consider FSBO is a bad experience with Realtors. Realtors are just like every other field – there are “good” Realtors and “bad” Realtors. Like many industries they have a self governed “Board” that they can be brought before and face punishment. That said Realtors also carry E&O and litigation insurance to protect both themselves and their clients.

Do you need a Realtor in a hot real estate market? I would say – no! If the homes on your street or neighborhood are selling within 2 -4 weeks of listing do you really think there is some hot shot realtor responsible for it – the market is responsible. It could be related to all sorts of things, including local economy, zoning, school system, new amenities, or a number of other factors but rarely, if ever, is it due to a Realtor. List your home FSBO – it will sell just as quickly and in the same price range

FSBO also offers a significant level of control, you control when and if showings or Open Houses occur. Personally I’m not sold on the value of Open Houses for FSBO’s – I know the value for Realtors and it is more often self serving then for the homeowners benefit. Realtors use an Open House to “troll” for leads. Chances are slim they will buy the house where they are conducting an Open House – but they are buying a house – and chances are they don’t have an agent if they are out at Open Houses.

Another advantage of selling FSBO is the simple fact that you know your house better then a Realtor. Buyers that are interested will ask very specific questions like what type of perennials are in garden or what the neighbors like. In fairness this can go the other way too; some homeowners do more harm then good – they cannot help themselves. I personally attest to this with listings at FreeFSBO.com that just seem to go on and on. It is important not to overwhelm a potential buyer to the point that they never want to risk exposing themselves to that situation (the homeowner) again.

Why you shouldn’t consider FSBO:

There are over 2 million licensed Realtors nationwide. Most are highly trained and experienced professionals. Can a single FSBO compete with this – maybe (14% of all existing home sales are FSBO).

Realtors may have clients that are looking for a property just like yours. That said, they will normally approach you if they do – they will ask if you are willing to cooperate and likely request that it be formalized and have you sign a document agreeing to pay their commission. Beware if they ask you to sign a listing agreement that is longer then 48 hours they may just be trying to grab your listing and the “buyer” may be fictitious – do not pay over 3%.

You simply may not have the time required to undertake an FSBO – for every four people that say they are coming to look at the property one will likely show up – get used to that fact. Don’t get your feelings hurt if someone doesn’t like your taste or property – that is just reality. If a potential buyer calls and wants to see your home at a moments notice you may have to drop what you are doing and rush home to show them your home. If you’re not prepared to deal with that then maybe FSBO isn’t for you.

You do not possess any sales or marketing skills. I know it’s not easy to admit, but if you are an introvert – forget it. Most successful Realtors are extroverts and spend countless hours attending social functions, clubs, associations, golf courses (sorry had to throw that in) to generate leads and contacts. They have usually taken countless sales training courses and most importantly, they know how to close a deal.

Multiple Listing Service (MLS) – this in my opinion is the single most important advantage that Realtors have over FSBO. The MLS is made up over approximately 500 individually owned and operated MLS organizations. It is essentially a nationwide repository of existing properties available for sale. It provides both realtors and buyers alike an opportunity to locate properties using a number of search criteria including, but not limited to, geographic location, size, price, bedrooms, bathrooms etc. There are two factors to consider here – one - you can buy a Flat Rate MLS at either a national or county level and take advantage of the marketing exposure that MLS provides – it will cost you in the range of $299 - $599 and an agreement to pay 2 - 3% to a selling agent if a Realtor sells your home. You do however maintain the right to sell your property yourself without paying a commission fee. As far as “quality” of exposure goes, I truly believe that an online FSBO listing is superior (in appearance and functionality) to an MLS or realtor listing. That said, no FSBO website enjoys the level of traffic and potential buyers offered by Realtor.com.

In conclusion, obviously undertaking a successful For Sale by Owner is not for everyone – we can all agree on that statement. Is it worth a try – definitely!

Mark Camphaug is currently President of FreeFSBO.com and it’s parent Martcam LLC. FreeFSBO.com (http://www.FreeFSBO.com) is a For Sale by Owner (FSBO) website that offers a free online listing and free real estate lawn sign to prospective FSBO home sellers. In addition to spending the last 6 years as Vice President of one of the world’s largest and most successful Interactive Marketing Agencies where he specialized in all aspects of internet marketing, including SEO, PPC, Email and Affiliate marketing Camphaug spent 12 years in the competitive new home industry, duties included sales, marketing and client relationship management.

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