Tag: FSBO

Study: FSBOs Don’t Save Real Estate Commission

For sale by owner? Forgetaboutit. Okay, really, it has been proven that not only all of the previously discussed items about properties for sale by owner aka FSBOs (it wasn’t too long ago, that we shared this post about why working with an experienced Real Estate Agent is better than trying to sell by owner) but FSBOs end up not gaining anything and sometimes costing the seller more!

Study: FSBOs Don’t Save Real Estate Commission | Keeping Current Matters

One of the main reasons why For Sale By Owners (FSBOs) don’t use a real estate agent is because they believe they will save the commission an agent charges for getting their house on the market and selling it. A new study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

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Why Working With a Realtor is Better Than Selling For Sale by Owner

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Sellers usually have goals in mind when selling their home, which consist of: selling the property for the highest price/market value, in the shortest amount of time/within a certain time frame and hope that process is as stress free as possible. Statistically speaking, in Listing with a Real Estate Agent, homes sell for more money, are on the market for less time and there is less stress on the seller. Hiring an experienced and professional Agent in your Agent affords you the knowledge, know-how and team needed to help you in your home sale.

Looking to buy or sell a property in the Chicago suburbs, city or anywhere in the United States? Contact us today. We have local market expertise with national real estate connections and we can help you, or help you find a real estate professional throughout the United States.

 

For Sale by Owner?

The value of good Real Estate Agents is immeasurable. Working with a top-award winning Agent, with over 30 years of experience,  I can attest to how important it is to work with a knowledgeable Realtor. Judy is a very smart professional – and she knows the local market…and over thousands of clients knew that, too.

If you are in a different market, outside our coverage area (the southwest and west suburbs), and are wondering what it means to be for sale by owner (FSBO), please read below. If you are in the Chicago area, we’d be happy to help you buy or sell. Contact The Glockler Group today.

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If you are at all considering FSBO, here are some questions to ask yourself:

–  do you truly understand all of the necessary paperwork, disclosures, and requirements as a seller? Who is going to order title?

– do you have connections to the local media (print and digital) and are you prepared to pay the fee that can be at least a few hundred dollars, to start, to advertise?

– gone is the time that you can put an ad only in a paper and expect calls. do you have access to premium listing options on websites and other buyer lead generators?

– are you an experienced real estate negotiator?

– do you know what is legally required of you as a seller?

– are you comfortable having these discussions in your home face to face with the other party and take emotion/your ties to your home out of the equation?

– do you have the time to track and monitor showings, including cancelations, last minute request, obtain feedback and more?

– are you ready to negotiate and be in contact with these people regularly?:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney
  • The home inspection companies which work for the buyer and will almost always find some problems with the house.
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the COs permits mentioned above
  • The buyer’s buyer in case there are challenges on the house your buyer is selling
  • Your bank in the case of a short sale

(source KCM)