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A Cautionary FSBO Tale on the South Shore
In our FSBO article last summer (remember summer?), I cited a nationwide study showing that when comparing sales of similar homes, the FSBO home sold for 5.5% less than the broker-sold home. (Re-read For Sale by Owner: Fact and Fiction here).
Translation?
When selling on their own, FSBO owners on average lost more in sale dollars than the broker fee they thought they were saving.
In other words, the average homeowner who chooses to go it alone pays for the privilege of not having a real estate agent.
Recently, we represented a young couple who received an accepted offer on a south shore home after months of searching. The house was small and needed work.
To save on the broker fee, the sellers decided to sell without an agent, listing the home for $280,000. Our first-time homebuyers offered $270,000 on the advice of their agent. The sellers countered at $275,000, and the buyers quickly accepted.
Four weeks later, the appraisal came back at $330,000, a whopping $55,000 OVER the contract price. Adding insult to injury, the sellers had to pay the buyers’ 2.5% broker fee, which FSBO sellers rarely take into consideration. Not surprisingly, the buyers kept the appraisal information to themselves.
The sellers will never know that by “saving” on their broker fee, they likely lost $40,000 or more in net sale proceeds.
While ignorance may be bliss, it had devastating consequences in this case, as the sellers were retired seniors who appeared to be no position to make such a costly mistake.
Do you have a FSBO story? Share it in the comments below.
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This article is intended for general informational purposes only and should not be construed as legal, tax or other professional advice. Prior to acting on any information in this article, you should seek legal, tax or other relevant professional counsel.