Nearly one in four homeowners currently choose to sell their homes without a real estate agent. The reason is obvious: real estate commissions.
Because real estate commissions can be as high as six percent of the selling price, the average homeowner looses most of their equity when listing with an agent. Suppose you're selling a $200,000 home on which you owe $150,000. You expect to receive $50,000 in equity.
| 200,000 | - selling price |
| -150,000 | - left on mortgage |
| 50,000 | - equity |
If you list your home with an agent who charges six percent commission, that amount is taken off of your selling price, not your equity. You'll pay $12,000 in commission.
| 200,000 | - selling price |
| x 0.06 | - % commission |
| 12,000 | - commission cost |
Your net has just dropped to $38,000 and you haven't even paid your closing costs!
| 50,000 | - initial equity |
| - 12,000 | - realtor'sŪ commission |
| 38,000 | - net equity |
Your just paid your realtorŪ 24% of your equity.
| 12,000 | - realtor'sŪ commission |
| ũ 50,000 | - initial equity |
| 0.24 | - realtor'sŪ percentage of your equity |
You can also figure your exact equity by using the equity calculator.
Over the years, the real estate industry has had a large impact on the home sales market within this area. With this monopoly, they have been able to drive up commissions to a very high level. In the past, the real estate industry very effectively limited access to the home selling market through the MLS. This allowed them to drive commissions up to a very high level. With the emergence of the internet as a ubiquitous medium, though, this real estate monopoly is quickly deteriorating as the public increasingly turns to FSBO sales.
Many people are realizing that selling their own home to save the commission is a realistic and sensible option. Adding up all the financial costs of selling on your own (i.e. signage, advertising, etc.) is typically less than $1,000, a small fraction of the typical real estate agent's commission fee.
Use CascadeByOwner.com to quickly, effectively, and easily
sell your home at a fraction of what it would cost to hire a real estate agent.
If you would like to further research FSBO, there are a number of sources of
information for selling your home on your own.
Modified from the original by permission of FSBONM.com.