Going FSBO isn’t exactly free

But how much cheaper is it than the $39K if you go with a realtor?

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From the Summer 2016 issue of the magazine.

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The hot real estate markets in some of Canada’s largest cities are prompting more than a few sellers to stake For-Sale-By-Owner signs on their front lawns. You’ll save thousands, provided you don’t mind doing all the heavy lifting on your own—which includes holding open houses. But you’ll still need to pay: For instance, you can’t avoid the buyer’s agent fee and you’ll require more due diligence from your lawyer. Here’s a breakdown of all the cost differences when selling a $750K home.

FSBO

 

2 comments on “Going FSBO isn’t exactly free

  1. I agree that selling your own home is not free (I write as someone who done this without the aid of outfits such as Comfree) The issue of who actually pays real estate fees (buyer or seller) is not as simple as it might seem. The relevant economic analysis is known as “tax ncidence” see for example, Wikipedi: https://en.m.wikipedia.org/wiki/Tax_incidence
    Here is a short quote ” The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.” In other words the person whor actually hands over the cash is not necessarily the person who in fact pays the bill.
    Suppose government puts a tax on an item that everyone must buy regardless of price (demand is prce-inelastic) . Even if the producer/supplier pays the tax to government, it will be passed on 100% to consumers. The other extreme case is when demand is such that consumers will pay only a fixed price (because there are direct substitutes or alternatives. ) in this case, even if consumers pay the tax, suppliers will have to lower their prices by the amount of the tax so suppliers not consumers ultimately feel the burden.
    Most markets are not of these extreme cases so a tax or fee is shared by seller and buyers – the shares depend on the price sensitivity of supply and demand.
    The upshot is that the buyer’s real estate fee is most likely shared by the buyer and the seller. The example provided in this article assumes the seller pays 100% of the buyer’s real estate fee – this is almost certainly incorrect.

    Reply

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