Who Really Saves The Real Estate Commission?

Yesterday’s blog on “For Sale By Owners” created some interesting discussion both here and at the Tallahassee Real Estate Blog. It seems that, oddly enough, my viewpoint was shared by most REALTORS®, yet some of our readership was mixed. I absolutely love when we get reader comments, because it helps steer the direction of this blog, as well as the direction of our customer service directives at our Tallahassee CENTURY 21.

Reader Asks “Where Is My House”

So the first comment is from longtime reader “WW’ who writes:

How do you measure FSBOs? If I’m smart enough to say, “Hm, all the $200K’s in my neighborhood are failing to sell,” and list my house FSBO at $110K, and it sells in a week…. which of your charts do I hit?

Not trying to be difficult, and I enjoy your posts, just pointing something out. – WW

My answer to this, as usual, is somewhat analytical. As I replied to WW yesterday, the answer to his question is that sold homes, regardless of the methodology, end up on my “sold” chart (graph). That is why we measure both the Tallahassee MLS as well as the Leon County Tax rolls for real estate sales in Tallahassee. WW’s home sale would show up as a new sold property … and that’s the point. Not many people are showing up as new solds. They need help!

Real Estate Brokers Opinion On FSBO

The next is a comment I received by a top real estate professional in New Orleans. He writes:

FSBO’s dont have a clue how tough it can be to sell a home. And, marketing the home is not the only difficulty. The majority of FSBOs dont have a clue about what forms and disclosures are needed to even complete a transaction. All that trouble just to save a little comission money! – CJ

As I told CJ, I agree with most of what he said. But I do not agree with his conclusion where he stated “just to save a little commission money!” The fact is, my clients are not so rich that they see it as a small amount of money. Nor do I. Our commissions are a large price to pay, but the fact is, the seller will pay it either way.

Who Really Saves The Real Estate Commission

Every FSBO seller I’ve ever talked to said they would pay my fee if I brought a buyer. This means they are only trying to save 1/2 of the fee, not all of it. Additionally, every buyer knows a FSBO is not paying a fee, so they expect to save the fee and offer less (the full fee less … not just 1/2!).

So the real question is….can both parties really “save” the money?

Not with any calculator that I have ever used. The chances of a FSBO selling their home without a REALTOR being involved (at least working for the buyer) is less than 10%. When a home is sold “For Sale by Owner,” the home seller usually nets significantly less than if a top real estate brokerage company had been hired to sell the home. So, the final result is a home seller who either does not sell the home, or one that does all the work themselves, opens themselves up to significant legal issues, and all for the benefit of netting less money.