The Home Seller For Sale By Owner: FSBO (Fizz-Bow). One of the most sought after real estate clients. Why? Because their homes are for sale and real estate agents can send these people any number of applications without stepping on another agent’s toes. These are the home sellers who have taken a risk to potentially save thousands of dollars in listing fees. They’ve done a little homework and decided to try to save some of the equity that has grown in their homes.
As a real estate agent, I love selling homes for sale by owner. Does it sound a little strange for a real estate agent to say that they love sellers selling homes for sale by owner? Maybe, but when the numbers come out and it becomes clear that only 14% of all homes that are for sale by owner are actually being sold as true for sale by owner, you’ll understand why. Because that leaves 86% of these home sellers as potential listing clients for real estate agents (like me) to try to snatch them away from! And the number of true FSBOs has actually dropped from a high of 19% in 1991 to just over 14% in 2004.
Now, as with a lot of stats, it depends on what numbers you’re looking at. The large national For Sale By Owner (FSBO) companies have one set of numbers and the National Association of Realtors (NAR) has another set of numbers about homes that are actually sold by owners. Personally, I stick with the numbers provided by the NAR (which are the numbers quoted above). They have been collecting and providing these numbers for much longer than the national FSBO companies. The bottom line is that actual homeowner sales successes are declining.
One of the main problems I see with the For Sale by Owner segment of the real estate market is that they have a tendency to fall in love with the idea of selling their home on their own, but fail to create a good back. upgrade plan that can be quickly implemented in the event that they are unsuccessful with their For Sale by Owner adventure. And many of these people are members of the traditional and conventional real estate community! Many of them regard traditional real estate companies and agents as nothing more than charlatans and snake oil salesmen! Which may be great in a red hot real estate market, but not so good in a changing real estate environment.
Just a year or two ago, a home seller could put up a “For Sale” sign in his front yard in the morning and sell his house for dinner. And many times at or above its selling price! It’s not like that. The housing market has had a great run, but is now showing signs of exhaustion. For Sale By Owner signs now stay in the front yard for weeks and months instead of hours and days. But even in this changing market, I still recommend that home sellers at least try to sell like a real owner for sale. I recommend trying it out for a set period of time, say four to six weeks, and if the house doesn’t sell, abandon it and move on.
And many times it is that movement that gets the real FSBO into financial trouble. First, they don’t have a good backup plan that can kick in quickly when they finally give up on the FSBO dream. Second, they often end up going from one extreme to the other by listing with a reputable traditional real estate company and paying a 4% to 6% listing fee. (Just for the record, the national average listing fee is currently 5.1%.) Or they can fall for the smoke and hype of one of the large national homeowner listing assistance companies and still end up paying a huge flat fee, and a Multiple Listing Service (MLS) listing fee on top of it’s. So what’s a poor and uninformed FSBO to do? Why, overcome them, of course!
But before our FSBO hero can outsmart them, he first needs to know how they work. So let’s take a look at the truth behind another type of for sale sign; Let’s take a look at the Truth Behind the For Sale By Owner Sign.
The real FSBO is a home seller who doesn’t pay a penny in sales/listing commissions and doesn’t use any type of conventional real estate company or real estate agent to sell their home. These people are totally alone! They do the yard sign, they price your house, they take all calls and deal with prospective buyers, they hold open houses, they write and pay for each and every print ad, they qualify buyers. and they prepare all of the paperwork and documents needed to close the deal. These brave souls are the sellers who fall into the magical 14% of successful, true homeowners for sale whose homes actually sell.
But what about the other 86%? Well, they usually end up falling into the Almost For Sale By Owners category: the AFSBOs as I’ve called them (pronounced Affs-Bows). Instead, they choose to list their property with one of the many new and emerging real estate service companies that are challenging conventional brokerage firms by offering an a la carte menu of real estate services.
Some of the biggest names in the For Sale By Owner real estate assistance business offer many of these services a la carte. These large national landlord-selling assistance companies are playing the same game that the large, traditional, brand-name real estate companies have been playing for decades. They are relying on that so-called “big, trusted, familiar name” to sell their services. And it’s working! One of these large national FSBO assistance companies is opening a new franchise office every 48 hours! They hope to reach 1,800 franchises by 2008.
The current president of this national FSBO assistance company is quoted as saying on the company’s headquarters website: “The winds started turning away from the traditional way of compensating REALTORS® years ago. It’s like a hurricane wind now and according to all signs, it will continue to grow in strength”. Sounds great to me! Just what is needed is a gale force wind of change blowing over the stagnant waters of today’s real estate industry. But FSBOs can still find a better, more cost-effective way (without sacrificing service and knowledge) to navigate the value of their homes into safer waters.
If you’ve decided to go the route of a true owner for sale, that’s great! By now you know the exercise. And you can find enough information in books and on the web to help you in your quest for the dream FSBO. But if your backup plan (and as you now know, everyone should have a backup plan) is to go the nontraditional route like AFSBO, you first need to get over the notion of wanting or thinking you need a “big, familiar name” to sell your House. The idea of no longer needing that “big, familiar name” applies to AFSBOs as well as traditional and conventional home sellers. And AFSBOs should never forget the fact that these large national FSBO assistance companies know very well that 86% of their sellers will end up not as true For Sale By Owners, but as flat rate/discounted commission listings! And the flat fees charged by these large homeowner sales assistance companies can be huge! Some fees range from $2,500 to $4,400!
Before you sign on the dotted line with any real estate company, whether for sale by owner or traditional, get the facts. Know the real cost. Read the fine print. And be careful about selling services. It’s the extra services that can put a FSBO in the listing commission poor house before they know what has affected them. Have these companies put it in writing. Because, if it is not in writing. It’s not going to happen!
But like a bug caught in a spider’s web, most home sellers who sign up with these large national FSBO assistance companies, out of ignorance or convenience, will continue to the next level and end up paying more than they should. to sell your house.
I know this might sound subversive, but hey, you’ve worked hard to buy your current home and the equity you have in it is real money! Why give it away? What you need to do now is work a little harder to educate yourself on the changing real estate industry and all that it currently has to offer. And the more you educate yourself, the more value in your home you can keep from falling into the hands of overpriced real estate companies, whether traditional or FSBO assisted. A little knowledge is not always a dangerous thing, it can often be a money saver!
“There is nothing as costly as ignorance.”
-Horace Mann — The father of American education