by Dan Krell © 2010
It is often said that “if you want it done right, do it yourself.” Like most idioms, this saying probably originated in a simpler time when most people could actually do it all by themselves. In a society where most people don’t cook for themselves anymore, no one really expects that they would or could do everything on their own- except when it comes to real estate.
“Doing it right” does not usually top the home owner’s list for selling their home by owner. Even though half of “for sale by owner” (FSBO) sellers knew the home buyer, the National Association of Realtors® Profile of Homebuyers and Sellers 2010 (NAR; 2010) indicates that the top reason for selling by owner is not having to pay a broker commission.
The NAR has claimed that as the housing market declined the number of FSBOs have also declined, which might be due to market conditions. As market conditions changed, selling a home required more than just a sign in the yard; this can be observed by the many agents who have resorted to wide ranging and comprehensive sales tactics (do you remember when you could sell a home with just a sign in the yard?).
Characteristics of home owners who sell on their own have also changed dramatically from just a few years ago. Besides increasingly occurring in suburban areas, NAR’s 2010 edition of Profile of Homebuyers and Sellers describes the FSBO to be more likely single and have a below median income. This has changed from the 2008 edition where FSBOs were older and had a high income. One reason for the change may be due to changing financial conditions; home owners who are facing financial challenges may be looking to increase their net by cutting out real estate agent commissions. This could be supported by the data indicating that many FSBOs have had a high sense of urgency in their sale.
It’s not surprising that a majority of FSBO sellers claimed that the most difficult task in selling their home was getting the price right. Pricing the home correctly is important because it can not only affect your bottom line, but can determine if your home languishes on the market or sells. Even though real estate agents are typically better at pricing a home (which is supported by the 2003 National Association of Realtors® Profile of Buyers and Sellers statistic that FSBO sales net less for sellers compared to agent assisted home sales), FSBO sellers have caught up with the times and are now seeking assistance from flat fee brokers.
Another change is seen in how the internet is used. Slightly over one-quarter of FSBOs used the internet several years ago, while recent surveys indicate about 41% of FSBOs now advertise on the internet. This may be due to more FSBO sellers seeking flat fee broker services; consequently, the number of flat fee MLS brokers has dramatically increased in recent years too. Some of these flat fee brokers also offer a-la-carte services, which assist sellers in many aspects of the home sale.
As the housing market has changed, it appears the FSBO has changed too. In addition to changing characteristics, the average FSBO seller behavior has changed to include professional assistance they need to sell their home “on their own.”
Comments are welcome. This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 22, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.