Recently a REALTOR® emailed NAR Research, asking about the advertising site ForSaleByOwner.com. “ForSaleByOwner” states that with a FSBO, “Sellers save big by not paying a hefty 6% commission. They go on to state: “According to the National Association of Realtors (NAR), for sale by owner sellers not only sell faster, but they usually get closer to their asking price.”
We thanked the REALTOR® for alerting us to the website’s statements. This advertisement is an example of the old phrase, “We gave them the facts, just not all the facts.” Here are more facts to take into consideration:
- In 2010 for an arms-length sale, the median sale price through a Realtor® was $200,000 for new and existing homes combined, according to NAR’s 2010 Profile of Home Buyers and Sellers. The comparable FSBO price was $155,700. Avoiding the commission results in a sales price that is $44,300 lower than the $200,000 price that a Realtor® can help to obtain — a difference of 28 percent from the FSBO price.
- “ForSaleByOwner” is correct that FSBO’s sell faster—but they neglect to mention that the faster sale is caused by significant under-pricing of the property, something a Realtor® knows to avoid.
- And of course FSBO’s do actually sell closer to asking price—because the asking price is set significantly below market.
If any of your clients mention the website to you, please let them know that the information on the website is extremely misleading – and wrong! Their final comment may be their worst: “Despite what an agent might tell you, selling your home isn’t difficult with ForSaleByOwner.com there to help you along the way.”
In fact, many FSBO properties are eventually listed with REALTORS® in order to get them sold. Unfortunately, by that time, the properties are “shopworn” and stale. Typically a REALTOR® can get a better price than a FSBO, but the price is generally less than what could have been obtained if the seller had initially listed with a REALTOR®.
The Profile of Home Buyers and Sellers is a survey of new and existing home sales transactions. Issued annually, the Profile provides answers to virtually all of the questions that a worried buyer could ask on such topics as the home search process, financing, buyer and seller characteristics, and the overall market.