Real Estate Agents make money from selling your house. The typical commission is somewhere between 5% and 7% depending on what part of the country you're in and what type of agreement you negotiate with the realtor. Remember, they're offering a service in a competition-based industry, so don't forget that you are in the driver's seat. There's no shortage of realtors in the country, although there may be a shortage of good realtors in many areas.

Some home owners don't want to pay a commission for a professional agent to sell their house, so they decide to list it as a for sale by owner listing. All that means is the owner is selling the house directly and circumventing the "normal" route of using an agent to represent them in their sale. Typically, this is an attempt to save some money, which at 5% can add up very quickly when you're talking about home prices.

In Michigan, about 13% of homes are sold via the "pure" for sale by owner method. This means that the actual legal owner of the dwelling is selling it without help from any outside agency, taking on the advertising, showing, and closing by themselves. If we expand the definition of for sale by owner to include flat rate sellers, the percentage jumps up to around 22%. Flat rate sellers differ from commission-based sellers in that they simple get a pre-negotiated fee upon the successful sale of the house. They are, in effect, so similar to for sale by owner that most other statistical measures besides the National Association of Realtors lumps them in with the pure FSBO sales. In fact, many flat rate brokers will list their properties as for sale by owner, as it carries a certain savings or discount connotation to buyers.

If you do decide to go down the road of privately listing and selling your house, make sure to explore the advertising options available via the internet. There are several very large listing services available online that have a fairly high success rate. Some report sales success of over 65%, and even if not true, the audience you can reach is massive compared to a few FSBO signs around town with a posting or two on the billboard at work.

This leads nicely to the downside of FSBO transactions, in that everyone wants to save some money. When a buyer sees a house that is listed privately, they know the owner is getting a 5%-7% premium on the sale price, and they will likely want a cut of that as well. Right or wrong, it's how the human mind works and it's something that FSBO sellers need to take into account.