Making the Decision to Buy FSBO (FSBO vs. Realtor)

The motivation to buy a home directly from a homeowner rather than using the services of a Realtor is the same as the seller’s motivation not to use a Realtor, money. To effectively compete, a seller will price a home at, or slightly below the market value of the home. The seller is aware that he/she has anywhere from three to seven percent "negotiating room" because a commission will not be paid on the transaction. Therefore it’s in the sellers best interest to sell FSBO because he/she can sell faster (because the home should be more competitively priced than those listed or sold by Realtors) and ultimately net more from the sale. Sound confusing? It’s really not.

Take the example of a $200,000 home. Assume the Realtor commission for the sale is six percent or $12,000. In this scenario, the seller will only net $188,000 from the sale. If the seller sells on his own, then the price can be significantly lowered by several thousands of dollars, say to $195,000 and the seller benefits by $7,000 (the difference between the $195,000 sales price and the $188,000 net proceeds with a Realtor). The buyer benefits by $5,000 because the purchase price was $5,000 less. It’s a win-win situation for both buyer and seller. Both benefited financially and more than likely, the home was on the market for a shorter period of time.