The FSBO World

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I have been tracking For Sale By Owner (FSBO) properties for nearly 10 years.  I have become quite the expert at finding FSBO’s in publications throughout North America.  I have helped thousands of real estate agents, brokers and real estate investors work with FSBO properties to make thousands of dollars. 

I find two stats quite interesting… the first, according to NAR, 84% of FSBO’s will eventually list their property with an agent.  The second stat is that for those few FSBO’s who do sell on their own, they sell for 12-24% below the value of the equivelant listed property, so investors can find great bargains working with FSBO’s.

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8 Responses to “The FSBO World”

  1. Gib Gibson Says:

    I have seen stats like this – **those few FSBO’s who do sell on their own, they sell for 12-24% below the value of the equivelant listed property, so investors can find great bargains working with FSBO’s.** – and am forced to wonder exactly how a stat like that is figured. The perfect stat would have been “12-24% less than what it would have sold for if sold by a realtor” but we can’t have that(how could you have a true “clinical” trial like that?). So, we have “equivelant” but who determines that? How? Has anyone done a study where properties were appraised and then some sold FSBO and some sold MLS and compare the 2 sold prices as a percentage of their appraised values? Or perhaps “identical” homes (in the same subdivision, same square footage, same floor plan). Also, do the “sold” FSBO figures tell whether they were sold with a buyer’s agent involved? Many are sold that way (3% commission). I find myself unable to quote this stat because I believe that it is probably inaccurate at best and perhaps “bogus”. What do you think? Do you know who figured this stat – I’d like to contact them. Gib The “Noble” (No-Bull) Realtor

  2. fsbochamps Says:

    The stats I use come from reports found on Realtor.org. The report titled: “The Facts about FSBO’s” written in 2006 actually states: “Homes sold with the help of a real estate professional in 2006 sold on average for 32 percent more than FSBO sales. The median FSBO selling price in 2006 was $187,200, compared with $247,000 for agent-assisted transactions.”

    I know that stats should not be taken at face value and many factors should be considered when analyzing statistics like where the stat came from and when it was published. I believe two points can be derived from this statistic: first, if FSBO properties are being sold for less than listed properties on average then investors should be able to find good deals and second, an agent can show the propery owner that she will actually end up pocketing more money by working with a real estate agent than trying to sell on her own.

  3. aaron, of course Says:

    I think that, anecdotally, it certainlt seems true that FSBO properties sell for less on average than those listed with a realtor, but the really amazing stat is that 84% of FSBOs end up listing with a realtor. I’d also be curious if there’s a stat that shows how many of those FSBO sellers used a realtor when they bought.

    I work on the mortgage side. What are your thoughts on a mortgage pro using FSBO relationships to aquire buyers and sellers to refer to realtors?

    Blog on!

  4. Gib Gibson Says:

    Please read this….”We calculated profit as “average selling price-average purchase price”. On the resale side, both FSBO and Real Estate Sellers made a lot of money $76,800 FSBO vs $72,300 Real Estate Agents in gross profit. The most important finding here is that FSBO Sellers made 6% more gross profit on their homes than sellers who used a Real Estate Agent.”

    “This shows that people who sell their home on their own do, in fact, make more money than people who use a Real Estate Agent. This is gross profit and does not include Real Estate Agent fees. So, if you factor in the average of 6% Real Estate Agent fess that would reduce the profit for those who sold with a Real Estate Agent to 42% or $59,400. This data shows that FSBO’s actually made 29% more in total on the sale of their home than those who use Real Estate Agents.”

    Gross Profit: FSBO 59% …Agent 42%

    “Selling your home on your own and making more money has been a common myth for years. This data proves that FSBO’s actually make 29% more in total on the sale of their home than those who use Real Estate Agents.”

    Now it seems to me that the study that YOU mention tells us that realtors take listings that are of higher value (on average) than the average FSBO. That’s all you can say. THIS study seems to say that given whatever the value of the home might be… FSBOs fair better.
    What’s the truth! I mean it – the truth! Are there any figures that actually show that a realtor listed and sold home is likely to be sold for more money than a FSBO sold home?????
    If so can you lead me to it.
    Otherwise using the figures that YOU use – it would be a lie to imply to a FSBO/potential listing that they would get more money for their home by using a realtor. Now, I know that it seems like common sense that it would be true – but is there any PROOF? Otherwise I won’t say it – and YOU shouldn’t either. Realtors are held to a higher standard!

  5. fsbochamps Says:

    Hi Aaron. You ask a good question regarding how to make the most of FSBOs if you are a loan officer. I have a few ideas and have included the my thoughts in a new post called Loan Officers Profit by Working with FSBOs.

  6. Lorraine Says:

    On the discussion of FSBO I have found that many of them sell via the menu driven agent, that will put the listing into the MLS without providing additional service, and truthfully — if price right they do have success. So, when the NAR quotes data like 84% use an agent, I wonder how much of that number includes just insertion into the MLS. With no other assisstance from the agent?

  7. Gib Says:

    This all still leaves the question about the original (dubious) statistic. Yes, perhaps the average “sold price” of a FSBO is 12-24% below the average “sold price” of a realtor sold home. But that may be simply because the VALUE of the average FSBO sold home is 12-24% less than the average realtor sold home. The stat is meaningless unless the issue is addressed and it is “criminally” negligent to tell folks this stat without clarification – It may be a lie! – Can anyone clear this up? – if it’s really true (if the study that uses this stat had taken relative value into account then the figure IS valid and deserves to be told to all FSBOs). If it hadn’t – then realtors are just using smoke and mirrors to bamboozle FSBOs into listing with them —Don’t people already hold realtors in low enough esteem?
    Come on folks – who’s got the answer? the original writer? What say you – FSBOchamps?
    Gib

  8. Chris Says:

    Of the number of homes sold last year nationwide, howmany were done FSBO as compared to with a Realtor?

    I would also ask, how many homes were orginally listed FSBO and finally went with an agent?

    Show me an agent that is excited to show a FSBO? It is reasonable to assume that agents shy away from showing them to a client because they now are asking the buyer to pay them rather than the seller.

    Not to mention that agents look at FSBO as an insult and try not to sell them. (Oh yeah, if ya didn’t know that, now you do)

    I don’t go to your office and tell you I can do your job better. I would ask you for the same respect. If you have a qualified agent; Someone who you feel is good at what they do (you must if you signed an agency), then is it reasonable to assume they can do the whole process better than you?

    An agent is not there to sell your home for more. Instead they are there to sell your home quicker, and more efficiently than you can and to provide a service to you. You are buying a service.

    Do you pay into the Recovery Fund? Are you protected from issues with the title? Numerous questions like this should arise. If you don’t know what I am asking, then you obviously need an agent. It is too easy to think you can sell a home on your own. The truth is, it is no tlike selling a watch on Ebay.

    Would you (if you are not a trained mechanic) open the hood of your car and take it apart? No! If you are not trained, maybe let someone who is, do the work for you.

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