For Sale By Owner -- FSBO

Sellers make more money when they use a real estate professional.

The median for-sale-by-owner (FSBO) selling price in 2004 was 15.4 percent less than the median agent-assisted transaction price. It appears that sellers wanting to save money by not using an agent are losing money in lower sales prices. The median price of FSBO sales in 2004 was $163,800 compared with $189,000 for agent-assisted sales.

The vast majority of home sellers in today’s market rely on the expertise of a real estate professional to assist them when they sell their home, and there’s been a sustained decline in the percentage of people selling on their own.

Even with the housing market setting four consecutive record years for home sales from 2001 though 2004, the level of FSBOs has shown a sustained decline – holding at 14 percent of the market in both 2003 and 2004, according to The 2004 National Association of REALTOR®s® Profile of Home Buyers and Sellers. The trend is clear.

Thirty-two percent of people who bought directly from sellers knew them in advance of the transaction, meaning that about one-third of FSBO transactions are not placed on the open market.

Several factors appear to account for the decline in for-sale-by-owners: the increasing complexity of the transaction process, with more disclosures and legal requirement than ever before; the amount of time required to market and show property; and security concerns about the motivation of strangers dealing directly with owners and walking through their homes.

In 1997, 18 percent of owners sold on their own. That was a record year for home sales and reflected a historically high level of FSBOs, but it was the last time that trend was seen.

Since FSBOs don’t use a real estate professional, they have to do their own marketing to attract potential buyers.

The biggest problem areas for FSBOs are in getting the right price, preparing a home for sale, and understanding and completing paperwork.

But FSBOs have no access to fundamental marketing services, such as Multiple Listing Service (MLS) and cannot list their homes there. They also have no access to other marketing avenues such and REALTOR®.com, Virtual Office Web sites and the Internet Data Exchange.

Real estate professionals are experts in marketing who can sell a home for more money in less time.

Real estate professionals assist both sellers and buyers with a variety of the details surrounding a real estate transaction. Real estate pros can help a seller set a realistic price and ensure the proper paperwork and various disclosures and inspections are handled correctly.

In addition, real estate professionals are experts in attracting qualified buyers. A broker or Broker Associate also can show a home more objectively than can a seller who may be emotionally attached to the home, and who might become unnerved by prospective buyers’ critical comments. The real estate pro also checks the financial capability and bona fides of buyers before allowing them onto a seller’s property.

Updated 3/9/05