Selling by Owner 101

We are pleased to release this four year (2006-2009)  in house study of 109 successful FSBO’’s who were able to use our brokerage to gain access to the local MLS and “name their own commission” rates based on their own strategies.  The study was conducted in Rochester, NY  from 2006 to December 31,2009.

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According to the study’s findings, real estate commissions do not sell properties, nor do they determine how long a property will sit on the market or how much a seller will receive regarding the list price of the property.

Test 1: Two sample z-test

Q: Is there a difference between those who offer less than 3% in commissions and those who offer greater than or equal to 3% in commissions regarding the percent of the list price that the seller receives?

• Null Hypothesis: There is no difference between the two groups

• Alternate Hypothesis: There is a higher percent of original list price for those who offered less than 3%

Findings: Accept the null hypothesis – there is no difference between the two groups

Test 2: Two sample z-test

Q: Is there a difference between those who offer 3% in commissions and those who offer greater than or equal to 3% in commissions regarding days on the market?

• Null Hypothesis: There is no difference between the two groups

• Alternate Hypothesis: Those who offer greater than or equal to 3% in commissions have less days on the market

Findings: Accept the null hypothesis – there is no difference between the two groups

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Results: 109 properties sold in the Rochester, NY  and the surrounding communities, at an average selling price of $161,111.  These properties sold at 97% of list price with an average of 68 days on the market and even though the average seller made an offer of compensation of $3559.00 to the buyers agents, they only paid $2070.00.  Because 41% of sellers paid no commissions at all, the total commissions saved by the entire group was 78.5% less than they would have normally paid if they had listed with full service traditional real estate.  This entire group, on average, paid 1.28% of the selling price of their home in commissions.

The total pay out for 109 properties in commissions to buyers agents was $225,633 as compared to $1,049,489 if they utilized traditional real estate at 6% on $17,561,085 worth of property.  The total savings was $823,856 ($7558 per property.)

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Click on picture to enlarge