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FSBO Myths

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There are many myths regarding For Sale by Owner properties.  I wanted to take a minute to dispell some of the myths and misconceptions.  Let me cover a couple that I hear often:
FSBO Homes Sell For Much Less Than Real Estate Agent Properties
False. This is one of the most ridiculous claims that real estate agents make. Homes sell for what they are worth period! Some real estate agents will go as far as to make the claim that agent listed properties sell on average for 40% higher than FSBOs. Keep in mind this is data compiled by the National Association of Realtors who gives no details on how they even got these numbers. On top of that, their numbers are misconstrued as million dollar plus homes greatly drive the average up. Most millionaires are not concerned with paying agent commissions thus a small number are sold FSBO. For example say you have ten FSBO homes that are worth $200,000 and that all sell. The average sale price is $200,000. Conversely, take nine $200,000 agent homes and one $1,000,000 agent home and all homes sell. The average sale price on them is $280,000 (9 * $200,000 = $1,800,000 + $1,000,000 = $2,800,000/10 = $280,000). Now if I take those numbers and tell you that agent listed properties on average sell for 40% more than less than FSBOs, it's probably misleading my customer.
It’s Free to Use an Agent to Buy a Home
False. Does the agent charge you any fee directly if you are the buyer? No, but you greatly reduce your negotiating power and may very well pay more for the property. For example: say you are looking at a house in which the seller's bottom line is $200,000. Your offer of $200,000 may get rejected because when you subtract a 3.5% buying agent commission from the $200,000 ($7,000) the seller only ends up getting $193,000 for their home. To meet their bottom line, your offer would have to increase to $207,255 (3.5% of $207,255 = $7254). You end up paying $7255 more for the property then you had to.
If you have any questions about these or any other myths about FSBO properties, please contact us and we will be glad to help answer any questions you may have.
John Gere
FSBO Fox Evansville
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