Agents Sell Homes for More Than FSBO. Here's Why

Some sellers are reluctant to bring on a real estate agent to assist with the sale of their home.

After all, the logic goes, I’ve sold some things pretty successfully in my day. I know what I’m doing. Besides, if I don’t hire an agent, then I won’t have to deal with that realtor’s commission fee, and I’ll pocket more money!

We understand this impulse! Really! But it’s important to realize that bringing on an agent for the sale of your home will reap plenty of benefits. And you don’t just have to take our word for it; we have science on our side!

In fact, according to a recent study from Collateral Analytics, brought to our attention by Inman, home sellers will net roughly the same proceeds whether they sell through a real estate agent or try FSBO (for sale by owner) – because agents tend to sell properties for significantly more than comparable FSBO listings, enough to completely offset the typical commission fee! So, worst case, the agent is free! But, we think we can do better...

Breaking Down The Study: FSBO Listings Sell For Nearly 6% Less

The research study, entitled “Saving Real Estate Commissions at Any Cost,” looked at more than 200,000 FSBO sales and one million MLS sales; rather than limiting the parameters to just one marketplace, the researchers broadened their scope to include sales that took place across hundreds of markets over the course of 2016 and 2017.

Their process? Researchers compared sales of MLS listings and sales of FSBO listings (not listed on the MLS) to automated valuations of those same properties (i.e., values assigned to the homes using mathematical modeling and database research).

They discovered that, on average, FSBO listings sold for about 5.5% less than comparable properties sold through the MLS; final sale prices for FSBO listings also fell below their automated valuations, while MLS listings tended to net a little more than the experts’ projected values.

As the authors behind the study concluded (emphasis ours):

“It appears that many [FSBO sellers] are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale… They are avoiding commissions at any [home sale] price, even one that exceeds the commission rate.

The Benefits of Bringing on a Real Estate Agent

Their findings are remarkable – and confirm a belief that we’ve long held here at Real Group. Namely? That agents are essential!

In addition to selling for more, it has also been well-documented that homes listed by an agent sell faster, and more frequently, than those sold via FSBO.

But why is bringing on an agent – and allowing them to take their commission on a successful sale – so much more effective than going it alone? It all comes down to a few advantages that real estate pros alone can offer to sellers:

Access to the MLS

For one thing, there’s that MLS we keep referring to. The “Multiple Listing Service” is a database used by real estate professionals to keep track of what’s on (or off) the market at any given time, and it’s a powerful tool.

We’ve seen homes listed on the MLS go within 24 or 48 hours – even while they stay listed on Zillow or a comparable listing site for weeks at a time, putting buyers and sellers alike at a disadvantage. In addition to being the first stop for agents assisting their clients, the MLS is also syndicated across multiple broker websites, which exposes the property to “a much larger buyer population” than a FSBO could reach, as Inman points out.

A Unique Skillset

There are a lot of moving parts involved in buying and selling real estate, and pulling off a transaction successfully requires a specific set of skills and a deep knowledge base.

In addition to knowing the minutiae of the many laws, rules, and codes on the books when it comes to realty, your agent will come equipped with an exhaustive knowledge of your marketplace, as well as the broader housing and economic conditions that will ultimately affect your sale.

What’s more, agents offer some specialized skills that the everyday homeowner may lack; for instance, a broker will know what it takes to market a home successfully (including staging, photography, and digital advertising), and can conduct all of the negotiations necessary to sell your home the right way, at the right price.

Access to Brokers (and Other Professionals)

One thing to remember? Brokers interact with one another all day, every day, sometimes as collaborators, sometimes as competitors. Connections like this can be critical when it comes time to sell a home – and the average homeowner trying FSBO may not have the necessary network in place, one that includes not only broker-to-broker relationships, but connections with other real estate professionals, as well (such as mortgage brokers, insurance agents, contractors, lawyers, and so on).

More specifically, as the Inman piece points out, many brokers will be more likely to pursue MLS sales on behalf of their clients because they offer compensation to brokers for bringing their buyers to the sale, whereas many FSBO listings do not. There’s no telling what this increase in interest may do for your pocketbook at the end of the sale!  

For more on this study, we encourage you to peruse the full findings from Collateral Analytics, which are available here.

Getting it Done

Overwhelmed by all the moving parts? Homes that go under contract, but get hung up in the process may ultimately not sell "by owner". Even if they're only delayed, that time incurs carrying costs on the seller, may impact the seller's pending purchase (next home!), or cause that homeowner to pay two mortgages simultaneously. 

Remember that 6% we talked about? Its the "average" agent that beats the homeowner by 6%. Historically, the Real Group Real Estate Team beats the market by 2.5 - 3.5%. That's just frosting on your cake. 

Ready to Sell?

Ready to start the process of selling your home? Looking for guidance on your next steps? Have any more questions or concerns about bringing on a broker or giving FSBO a shot? You’ve come to the right place!

The Real Group team knows exactly what it takes to sell your Chicago home, and we’d be happy to get you started down the path to success – and the most lucrative sale possible!

Drop us a line today to see what our team can do for you!

Agents Sell Homes for More Than FSBO. Here's Why

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