I’m no math whiz…….

……..but, oddly enough, I’ve always enjoyed math. Except for geometry. There’s nothing fun about geometry. Give me algebra and calculus any day.

I was homeschooled and my mother was always flabbergasted at how I could make the exact careless mistake each and every time I attempted to solve an equation. But I had fun doing it. ha! Lucky for me -and maybe, you, too – no higher math knowledge is needed for this topic: Is it more profitable to list a home For Sale By Owner or hire a Realtor and pay his/her commission?

Let’s dig in!

In the past month, I have spoken with many homeowners selling their home without a Realtor. I have asked each one the same question. “What made you decide to sell your home without an agent?” And except for two cases, the reply has been, “I’m going to save money doing it myself.”

I get it! Upon first look, that answer seems very plausible. After all, when I am contracted to list a home on a seller’s behalf, I do expect to be paid for my time, marketing knowledge, education, tools and resources, branded videos, role as acting coordinator between buyer’s agents, inspectors, title agents, and so on. A homeowner would rather keep 100% of his profits rather than 94%.

But let’s take a second look.

According to the National Association of Realtors, in the year 2021, FSBO homes sold for a median of $260,000, whereas the median for agent-assisted homes sold was $318,000. Now is where we pull out some grade school math to determine if it’s truly more profitable to list your home yourself or with an agent. To keep things simple, we will assume that there is no outstanding loan on these median homes and the seller gets to pocket the entire agreed-upon price. FSBO is keeping 100% remember so he walks away from the closing table with $260,000 in his pocket. (We are ignoring the fact that often, FSBO still pays a small commission to the buyer’s agent, but I digress.) Agent-assisted got his $318,000 but now has to pay his agent the contracted 6%. He writes a check for $19,080. That’s no small bananas! Let’s see how much he walks away with. 318,000 minus 19,090 is…….well, lookey-here! Agent-assistant median guy is walking away with $298,910 in his pocket! Poor Mr. FSBO thought he was getting the better end of the deal but he actually lost $38,910.

Ouch.

The moral of this story is…..if you’re considering selling your home, don’t be like poor Mr. FSBO. Call me today to set up your complimentary listing consultation. Rachel Lane (865) 307-4805.