The single inducement for selling your Chicago home yourself is responsible for most FSBOs (“For Sale by Owner” offerings, pronounced “Fizz-BOW”). It’s some bottom line arithmetic that seems at least worth considering—the attractive notion of avoiding paying commission dollars to a real estate brokerage. Real estate commissions in Illinois are negotiated—usually 5%-6%. For a home that closes at $300,000, the idea is for a thrifty FSBO seller to pocket $15,000 to 18,000.
Actually, no—at least for most sellers.
Since 87% of buyers choose to hire a licensed Chicago Realtor® to represent their interests, that agent can be expected to require FSBO owners to agree to compensate them for their services. Since that one agent can wind up doing the work normally handled by two, that commission could be at least the customary split of 50%—in which case the FSBO owner actually “saves” only $7,500-$9,000.
Even so, there remains a hefty sum. So why do FSBOs account for only 7% of home sales? That top-heavy result is easier to understand when you consider the recent finding that “nine out of ten FSBOs end up hiring an agent themselves.” That’s pretty close to the latest NAR finding that 91% of all sellers were assisted by a real estate agent.
The bottom line reason is the bottom line itself: in 2017, even for the small number of FSBOs that did sell, the typical FSBO home closed for $200,000—contrasted with the $265,500 for agent-assisted homes. Many of those hoped-for “savings” of $7,500-$9,000 would have been costly indeed!
If you plan on selling your own Chicago home any time soon, before you decide on your best course of action, I hope you will give me an opportunity to put together a marketing plan. It will detail the latest comparable research pointing to how we might expect your property to perform. Of course, there’ll be no obligation!