Saving 2.7% of $0
Contrary to popular perception, not all “For Sale by Owner” homes (“FBO’s”) are created equal.
Perhaps the biggest misconception is that FSBO sellers are trying to avoid paying any commission.
The vast majority are only trying to save half a commission — specifically, the portion payable to the agent representing the Seller (called the “list-side commission”).
That still leaves the portion — called the “payout commission” — offered to the Realtor representing the Buyer.
In fact, I count at least four types of FSBO sellers:
Type #1 (“Classic”): no list-side commission, but full payout commission (in the Twin Cities housing market, most commonly 2.7%). Seller pays a nominal fee to be listed on local MLS.
Type #2 (“Classic-lite”): same, except only offering a discounted payout commission.
Type #3 (“Pure FSBO”): offering neither list-side nor payout commission; listed on local MLS.
Type #4 (“Sign-in-the-yard” FSBO): not paying for anything except maybe a sign (homemade?); not on local MLS.
Some FSBO sellers will pay for professional staging, photography, and marketing materials, but most are strictly DIY.
All of which is why the above classifications are usually “differences without a distinction”: empirically, something like 90%-plus of FSBO sellers fail to sell . . . and end up hiring a Realtor.
P.S.: Instead of skimping on the payout commission, truly sophisticated FSBO sellers would be smart to offer a turbo-charged payout commission.
That would entice Buyers’ agents, who know that — with no listing agent to split the workload — they’re going to do (at least) twice the work compared to a regular deal.
See also, “(More) FSBO Mistakes“; “Faux FSBO’s”; “Why Real Estate Pro’s (Usually) Skip FSBO’s“; “FSBO Mistake #1 (and #2, #3, etc.)”; “FSBO Mistake #4“; “Classic FSBO Mistakes”; and “FSBO Mistake #37.”