Idaho Homes for Sale by Owner

If you’re looking to sell or buy a home, you might have come across a couple of different terms that are foreign to you. For instance, FSBO refers to ‘For Sale By Owner’, which essentially just means that the homeowners are selling the property themselves rather than getting the help of a real estate agent. Some people choose this route to avoid paying the agent commission, or for other reasons, but other costs can come up during the home selling process. Let us explain. 

For starters, according to the National Association of Realtors, FSBO’s make up about 10 percent of all the homes for sale at any given point in the country, and that percentage is higher, around 13 percent in rural areas, as opposed to suburban areas, at only 6 percent. As we mentioned earlier, a main draw of selling your home yourself might be the allure of more money in your pocket, but despite not having to pay an agent, most FSBO homes actually sell for 5.5 percent less than those listed with an agent. So, while you might not be paying an agent to help you sell your home, you might still lose money anyway. Another thing mentioned by the National Association of Realtors is the fact that many FSBO’s, approximately 50 percent, know their buyer before selling their home. This might partially explain why the statistic is higher for smaller, rural communities rather than in bigger cities and suburban areas. 

When it comes to the commission rates for agents, the typical rate is just over 5%, and that percentage is generally split between the buyer’s agent and the listing agent; the seller of the home is usually who pays the commission. What does this mean exactly? Well, as an example, if you sell your home for $250,000, you will have to pay just over $13,000 in fees, and as the price of the home goes up, so does the cost you would owe in fees. While that might sound like a scary number, it’s important to remember that according to the NAR, homes sold by their owners still do sell for around five and half percent less, so not having to pay that commission will not necessarily save the seller any money in the long run. Another consideration, even if you do sell your home yourself it is beneficial, and common courtesy, to offer to pay the commission of the buyer’s agent anyway. There are a few reasons for this, one, if they don’t, the agent might not be as inclined to show their home, and two, they probably just don’t fully understand the ins and outs of the whole legal process, so having a buyer’s agent is still a benefit. 

Now, despite the number of homes being sold by owners going up marginally in recent years, from 7 to 10 percent between 2020 and 2021, that number has been steadily decreasing for many years. Starting in 1981 when the National Association of Realtors began keeping track of this information, about 15 percent of all homes sold were sold by owner. Overall, over 85 percent of home sellers enlist the help of an agent when selling their home. So, it is by far the most popular method of selling a home. That said, around 1 percent of people do try to sell their homes themselves first, before deciding to use an agent, and on the opposite side of that, about 1 percent of people list with an agent first before later deciding to sell it themselves. 

You might be asking yourself, if there are all these positives to listing with an agent, and so few cons, why are people still deciding to sell their homes themselves? Well, several factors can play into whether somebody lists with an agent or not. For example, as we mentioned above FSBO is much more popular in rural communities. Around 13 percent of rural homeowners opt for this method, whereas those in large urban areas only sell without an agent about 6 percent of the time. There are other factors as well. According to the National Association of Realtors, older Americans, between the ages of 76 and 96, are the most likely to sell their home themselves, around 13 percent of that age demographic chooses to do so. And about 65 percent of married couples also opt to sell their homes themselves. The main reason that most of these demographics have when asked why they decided to sell their homes themselves is to save money. However, other less popular reasons include already knowing a potential buyer, having previous negative experiences with an agent, or simply wanting to save time. 

Since prices seem to be the biggest determining factor in listing with an agent or not, let’s look at those differences. According to the NAR, in 2021 the average FSBO home sold for around $225,000 whereas the average home sold with the help of a realtor sold for about $330,000 which is notably higher. That said, the NAR wants to note that this price difference might partially be due to more FSBO homes being sold in rural areas where homes are already selling for less money than in cities or suburbs. That said, when looking at two comparable houses in a rural area versus a city, the FSBO homes still sold by 5.5 percent less on average regardless of location. So overall, despite what some might think, selling your home yourself is actually less profitable in nearly all cases. 

All in all, the decision on whether to sell your home yourself, or get an agent is a difficult one. While there are pros and cons to both sides, it is important to take note of the impact that not having an agent could make on the overall sale price of your home. While selling yourself could be quicker if you have a buyer already lined up, it might also be significantly slower and harder if you don’t and could sit on the market long enough to require a price reduction. Overall, the professional expertise of an agent will benefit most people in their home-selling process.

 

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