For Sale By Owner: Do You Really Save Money?

For Sale By Owner: Do You Really Save Money?

For Sale By Owner: Do You Really Save Money?

Listing your property as For Sale By Owner can sound easier than working with traditional realtors. So can you really save money and stress deciding to list your property as For Sale By Owner?

Closing Costs and Fees

There are closing costs associated when selling a home. There’s no secret in that. All you have to do is pull out your original settlement statement and you’ll see plenty of itemized closing costs. Some are relatively inexpensive while others not so much. A credit report won’t cost very much at all while title insurance can be a lot more. When selling, you obviously want to get the most that you can in your current market without pricing yourself out of the market. One of the ways sellers can net more out of the sale is to look at the various closing costs associated with a sale. One of the bigger ticket items is for real estate commissions.

Real Estate Commissions

Real estate commissions can vary based upon location but in general they can run anywhere from 5 to 6 percent of the sales price. When you look at a $300,000 home, a 6% commission turns out to be $18,000. Your real estate agent gets half of that and the other half goes to the buyer’s agent. When the seller and buyer agent is the same, all of the commission goes to the agent’s broker. When reviewing a ‘net sheet’ when thinking about selling, that commission will stand out. Some can think that eliminating that $18,000 commission is money in their pocket should they decide to forego the services of a real estate agent and sell on their own.

For Sale by Owner: How it Works

The industry refers to this practice as a “For Sale By Owner” or “FSBO” (fizz-bow) transaction. Can you save money by selling on your own? Probably  not. In fact, it might cost you more if you list your home as a For Sale by Owner (FSBO).

Why is that?  Real estate agents are marketing pros. They get your property in front of literally thousands of eyeballs. It’s certainly more than putting a “For Sale By Owner” sign in your front yard. For one, your property gets listed in the local Multiple Listing Service. The local MLS however is far from just your neighborhood. Most every property search engine gets its data from the MLS. This is something a For Sale By Owner (FSBO) seller can’t compete with. Yes, there are a few portals that allow individual sellers to list their homes but the eyeball count can’t compete with the MLS.

In addition, markets far outside your zip code have access to the MLS. When your home is listed in the MLS, other real estate agents can tap into it when looking for properties for their clients looking to move where you live. If you list a home for sale in San Francisco an agent in New York City can access the MLS and pull up your property. Again, this is something you can’t do on your own. This degree of exposure is where the commission comes into play. Instead, it’s likely you’ll have to drop your price to get noticed. And there goes not only your savings but lower net revenue.

Just as important, your real estate agent works for you and your interests. Your agent will thoroughly vet potential buyers and help review offers. Your agent will make sure the buyers have applied for a mortgage with a lender and have a preapproval letter in hand. Your agent will also negotiate closing costs for you and attempt to shift some of the settlement costs to the buyer’s side. There really aren’t any regulations that state which party is required to pay which closing costs. Closing costs are negotiable and this is also where your agent can save you money.


The bottom line is that real estate agents get paid to do their jobs just as you get paid to do yours. They buy and sell homes every single day and have negotiated hundreds of sales contracts over the years. They know how much you can get for your home and how long it might take to sell your home. Years of experience marketing properties is what they have. Take advantage of it. Don’t try all this on your own.