Handing over cash for house in front of beautiful new home.
Handing over cash for house in front of beautiful new home.

When it comes time to sell your house you may wonder should you sell your house yourself? By selling your house yourself you’ll save having to pay a listing agent and possibly no agent at all. That could be a lot of money.

Sounds like an easy answer, huh. Not so fast.

Opportunity Cost

There’s a thing in economics called opportunity cost. Opportunity cost is the potential loss or gain you get from choosing one alternative over another. By doing one activity you’re giving up doing something else that you could be doing. You’re giving up an opportunity.

Specifically, the most highly valued opportunity or alternative forfeited when a choice is made therefore every time you make a choice you incur an opportunity cost.

Economists use it to figure out what activity is the most profitable. So what does the concept of opportunity cost mean to a home seller? It can help you decide should you sell your house yourself?

The average home price in America is $260,000. The average real estate commission is six percent of that, which would be $15,600. That sounds like a lot of money and to most people it is. To others it might not be. It’s all relative and depends on what one’s time is actually worth.

How To Decide If You Should

Selling your house yourself and not having to pay a real estate agent saves you money. If you only make $75,000 a year, it may be more profitable for you to sell your house yourself. $75,000 a year works out to $6,250 a month before taxes. If you own an average priced house selling your house yourself would be like earning a little more than 2 months of work. That’s substantial.

 But say you make, like, three million dollars a year. That’s $250,000 a month. It might be more profitable for you to pay somebody to sell your house because you can use that time to make more money doing other things that are more profitable.

Of course, if you make 3 million dollars a year you may own a more expensive than average home but for comparison sake we’ll use that average number, $260,000. To get the point across.

What if you own your own business? And you make millions. Again, it would probably be more profitable for you to hire someone to sell your house for you because your time is worth more money than you would save.

When deciding if you should sell your house yourself you incur opportunity cost. Your giving up one thing to do another.

It all comes down to how much money you put in your pocket. For most of us average people? That’s selling your house yourself and saving thousands of dollars in real estate commissions.

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