The National Association of REALTORS® reported that in 2016 the typical FSBO home sold for $190,000 compared to $249,000 for agent-assisted home sales. Here’s Why hiring a pro makes more $ense than “for sale by owner”…
Driving past this house with a “For Sale by Owner” sign made me think about what real estate professionals call “fizbos” (the phonetic for FSBO, the abbreviation of For Sale by Owner).
The sign is on one of the busier streets in Laconia so it’s got decent drive-by visibility. But there’s no street side parking and I couldn’t catch the phone number while cruising past at 30 miles per hour.
Before you note the number of grays in my photo and assume I’m slow on the uptake, myopic or both, let’s put this in context. Imagine sprinter Usain Bolt—the eight-time Olympic gold medalist and world record holder regarded as the fastest man alive—streaking past at his top speed of 27.8 miles per hour while trying to comprehend and memorize seven digits no taller than a playing card. Now picture him trying again while sprinting the opposite direction, on the far side of the street.
I’m as obsessed with selling houses as my dog is with vanquishing the mail carrier so I tried to find the property online, the same way 51% of buyers identify the homes they ultimately purchase.
I didn’t know the street number and I couldn’t find the home using Trulia or Zillow search maps. I also couldn’t find the property on ForSalebyOwner.com, Owners.com or Craigslist (real estate – by owner). When I tried HomesbyOwner.com, the site wouldn’t even load. So I gave up.
It was only after I drove by again and noted the street number that I found information online. While the property’s got some great things going for it, it’s been on the market 23% longer than the trend for Laconia and its price was recently reduced by about six percent.
Why fizzbo? According to the National Association of REALTORS® 2017 Profile of Home Buyers and Sellers, fizbos accounted for just eight percent of home sales in 2016. Home sellers typically try FSBO when seeking to maximize profit by avoiding the commission a brokerage would earn for successfully selling a client’s home. Commonly fizbos still pay commission to a buyer’s agent (unless the seller can procure their own buyer, one comfortable making one of life’s biggest purchases without the benefit of professional representation).
This DIY approach is arguably more common during seller’s markets, which Laconia and other Lakes Region towns are now experiencing (visit www.LakesRegionHomeSeller.com for details).
The fizbo seller assumes full responsibility for:
- properly pricing and effectively photographing and marketing the property
- staging the home’s interior and exterior for maximum appeal
- addressing every call and attending every showing (no matter how inconvenient the timing)
- taking time to deal with both legitimate prospects and “Lookie Lous” who have both nothing better to do and a compulsion to see the interior of a home they’re a) not truly interested in, b) not qualified/prepared to buy, or c) both
- deciding to accept, reject or counter offers, which often includes navigating contingencies and concessions (e.g. arranging and paying for negotiated repairs or lowering the sale price to address the cost)
- overcoming obstacles and buyer’s remorse
- coordinating the appraisal process (and praying the “price is right”)
- facilitating the home inspection (precarious for fizbos because they’re not insulated by representation)
- the proper completion of myriad legally binding contracts and documents
The FSBO seller will also be responsible for complying with closing complexities once an offer is accepted, as well as legal liability for any errors, misrepresentations or omissions.
Fizbo marketing methods and results—According to the Profile of Home Buyers and Sellers:
- 28% of FSBOs did not actively market their homes at all
- 35% used a yard sign (only 7% of buyers found homes this way)
- 5% bought newspaper ads (less than 1% of buyers found homes this way)
- 24% promoted to friends, relatives, or neighbors (6% of buyers found homes this way)
Aside from the very real risk of mistakes leading to legal liability, FSBO sellers face three distinct challenges:
Pricing—Homeowners can find it difficult to accurately and objectively determine market value because of sentimental value influence, lack of experience, and reliance on one-size-fits-all town tax assessments or free online assessment tools dependent on algorithms that often struggle with local and rural market trends (like a “Zestimate” or Homes.com value).
Marketing—Individuals are severely disadvantaged compared to real estate brokerages with dedicated marketing teams and budgets and years of experience successfully promoting homes in the local market (for example at Roche Realty Group we promote properties on approximately 80 national and international real estate websites and that’s just one small piece of the marketing pie).
Showing—Once again, experience is a factor. There’s a difference between showing a house and selling one. Also, buyers are often uncomfortable with a seller’s presence during a showing or open house, and they’re far less likely to share brutally honest but useful feedback directly with the home’s owner. Finally, buyers who sense weakness in the selling process may aggressively take advantage of the opportunity to drive better terms and pricing because they know a commission is not part the price.
None of these observation are intended as a knock against the fine people who try to sell homes by themselves. It’s simply a matter of experience and team support. To use another sports metaphor, prior to Game 3 of the 2001 World Series President George W. Bush threw what some considered the finest ceremonial first pitch ever.
In retrospect, he pitched way better than aspiring professional baseball player Michael “Air” Jordan, retired Hall of Famer pitcher Nolan Ryan, or even Justin Bieber. Heck, Bush had even co-owned the Texas Rangers.
Despite all that, neither the Diamondbacks nor the Yankees invited the President of the United States to stay and pitch the rest of the game because the stakes were too high and he lacked the team connection and experience needed to deliver the best result possible.
The National Association of REALTORS® reported that in 2016 the typical FSBO home sold for $190,000 compared to $249,000 for agent-assisted home sales. And leading real estate research firm Collateral Analytics studied 1.35 million 2016-17 home sales spanning 13 markets and 770 nationwide zip codes and found that fizbo sellers closed at prices 5.5 percent below those on similar properties sold by Realtors®. This suggests home sellers either net greater or roughly equivalent proceeds when they use a professional because agents tend to achieve superior sales prices that are high enough to offset commissions.
Please contact me if you’d like to have a winning pro team help you successfully sell your Lakes Region home.
Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.