FSBO
A Closer Look at For Sale By Owner Properties
You've seen the signs displayed in front of homes of every
description, and whether you're a potential homebuyer or seller you've
probably wondered whether going the "For Sale By Owner" (FSBO) route is
right for you.
The fact is that there have always some sellers who've
chosen to attempt to sell their home without the services of a real
estate professional, although their numbers have been decreasing
substantially. The National Association of Realtors reports that 12
percent of sellers took the plunge in 2006, down from 13 percent in 2005
and way down from 20 percent two decades ago.
But that doesn't tell the whole story. Of that 12 percent,
fully 40 percent were private sales to buyers who were known to the
seller prior to the transaction; bringing actual FSBO sales on the open
market down to 7 percent.
How Do FSBOs Do what they Do?
Before digging deeper into what's behind the trends, it's useful
to take a look at how owners of FSBO properties attempt to connect with a
buyer. Over half rely on the traditional yard sign and on getting the
word out to their network of neighbors and friends. Fewer than half of
FSBO sellers run newspaper ads, hold an open house or list their
property on the Internet.
In the complicated and sometimes lengthy process of selling
their property, FSBO sellers have voiced their share of woes, including
the difficulties of setting and getting the right price, readying the
property for sale, dealing with the paperwork, attracting buyers,
completing the sale within a reasonable time — and simply finding enough
time to do it all.
But all that Work is Worth It, Isn't It?
Actually, for many FSBO sellers, the answer is no. After putting
in a lot of time and effort, it's far from guaranteed that sellers of
FSBO properties will come out ahead. In 2006, homes sold with the
assistance of a real estate professional realized 32 percent more than
homes sold by owner; an average selling price of $247,000 versus
$187,200.
Buyer? Seller? A Real Estate Professional Gives You the Edge
While the statistics don't explain the reason for the difference,
it's easy to see some of the advantages that using the services of a
real estate professional bring to both buyers and sellers. The FSBO
seller is a one-trick pony, a seller with a single product to sell. A
real estate professional is not only marketing your home to buyers but
to other agents who have their own network of potential buyers.
Buyers don't necessarily fare better by dealing on their own
with a FSBO seller; given that many FSBO sales are off-market, the lower
average selling price does not present an accurate picture of FSBO
sales on the open market.
In addition, both sellers and buyers are typically subject
to time constraints when it comes to completing their transaction;
hitting a dead end with an unqualified buyer or a seller unfamiliar with
the process is a recipe for frustration, delay and dispute.
And with a large inventory on hand and broad knowledge of
the area they serve, a real estate professional is positioned to show
buyers only properties within their price range that meet their specific
needs.
Realtors and the Internet: Transforming Buyers' & Sellers' Experience
The Internet has dramatically changed the way homes are bought and
sold, but not necessarily in the way predicted by technology pundits
just a few short years ago. In many ways, the Internet has transformed
the role of brokers and agents and how they work with newly empowered
buyers and sellers.
The use of the Internet in real estate searches has grown to
the point where over 80 percent of buyers use the Internet to search for
a home, yet 90 percent use a real estate professional to help with the
process, and almost 85 percent of all FSBO sellers eventually list with a
RealtorŪ, underscoring the complexity of the process of buying a home.
FSBOs Falter in Today's Market
Historically, the number of FSBOs decline when market conditions
are less than ideal. In a market characterized by softness in some areas
and inventory levels that are off their historic lows, the wisdom of
working with a real estate professional is clear.
Homes that remain on the market week after week are perceived
as distressed properties by potential buyers, who may become wary of
making even a below-market offer. The increased costs to carry a
property over time further reduce any profit eventually realized by the
FSBO seller. In short, the longer a property is exposed to the market,
the lower the marketplace perceives its value, and the lower the price
and net profit received by the seller.
Questions for Sellers and Buyers of FSBOs
As a seller of a FSBO, why would you choose to go it alone
and attempt to handle the sale of your home, perhaps the largest, most
complicated and most emotionally charged financial transaction of your
life, particularly when working with a real estate professional has
historically realized a significantly higher sale price?
As a potential buyer of a FSBO, why would you choose to
invest your time and resources working with a seller with an inventory
of just a single property, hoping that it is the perfect home for you,
that the property is exactly as represented by the seller, and that the
seller has the skill, knowledge and emotional detachment to see the
transaction through to a successful conclusion?
We believe that it makes sense for sellers and buyers to
work with a knowledgeable real estate professional. If you're a seller,
you benefit by working with someone who can expertly market your home to
a large pool of interested, qualified buyers, and can successfully
guide you through what can at times be a complex and emotional process.
If you're a potential buyer, you're working with a trained
professional with access to the tools and inventory to help you find
just the home you're looking for and help ease the process for you, all
the way through to closing.
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