Thursday, January 11, 2007

Breaking it Down: REALTOR vs. FSBO

Often, sellers contemplating selling their home consider attempting to sell on their own in a "for sale by owner" transaction. Their thinking is simple, they can sell the home on their own without sacrificing any commissions. However, FSBO sellers frequently find out that their plan to save money actually costs them money in the end. This occurs for several reasons.

For one, FSBO properties often attract "bargain hunter" buyers. That is, often the bargain hunter buyer makes an offer on the FSBO property thinking that the property can be obtained at a bargain price since the seller is not paying any commissions. Secondly, and probably most importantly, FSBO sellers lack the marketing capability of a REALTOR. The usual methodology of FSBO sellers is the cliche red sign in the yard and ad in the paper. However, the seller is missing out on the marketing tools of the REALTOR or broker, most importantly having the property listed in the local multi-list service (MLS). In the long run, the increased buyer activity that a REALTOR creates through effective marketing will often bring about a sale price over and above (commissions included) what the seller would have commanded in a FSBO sale.

Below are some statistics complied by NAR regarding FSBO sellers:

The typical FSBO home sold for $187,200 compared to $247,000 for agent-assisted home sales.
FSBO Methods Used to Market Home:
Yard Sign . . . 51%
Friends/neighbors . . . 53%
Newspaper ad . . . 31%
Open House . . . 29%
Listing on the Internet . . . 22%

Most Difficult Tasks for FSBO Sellers:
Getting the right price . . . 11%
Understanding paperwork . . . 16%
Preparing/fixing up home for sale . . . 18%
Attracting potential buyers . . . 9%
Having enough time to devote to all aspects of the sale . . . 9%

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