Death of the FSBO by Joe Edge

FBSO Tombstone | Sherman and Hemstreet

Death of the FSBO by Joe Edge

According to the National Association of Realtors, in 2016 less than 10% of all real estate transactions were handled without a Realtor.  This trend has been growing over the years as fewer and fewer people are trying to sell their property without the help of a licensed professional.  The ever-changing complexities in real estate are the main factor for the reduction in For Sale By Owner (FSBO) sales. 

As any one who has ever sold real estate knows, these transactions can be very complicated.  Specific methodologies exist to save sellers money not only with the price negotiation but during the due diligence period.  In my experience, more money is lost during the due diligence period than most people realize.  Having a good strategy in place from the beginning of any real estate transaction can help protect the seller and save them tons of money. Surveys and studies on this topic show that one of the main reasons why sellers continue to list with experienced agents is the experience required during the “under contract” period.  Most inexperienced sellers do not have the market knowledge and expertise to navigate a difficult due diligence period.  The result is that they get pushed around by more experienced agents and their net proceeds at closing is greatly reduced.

Additionally, experienced agents know that value is completely market driven.  But a seller can’t maximize their value if their property is not exposed to the entire market. Sellers who decide to go it alone obtain poor exposure to a very small pool of buyers.  Since it doesn’t cost buyers any money to have a Realtor representing them, buyers and their agents often overlook FSBO homes and focus on those listed with the multiple listing service.  This results in only a handful of buyers looking for FSBO properties.  Lower offer prices, poorly written contracts, earnest money troubles, disorganization, and longer times on the market are all qualities of FSBO properties.

Timing is also very important to real estate transactions.  The amount of time a property spends on the market has a direct correlation to its price.  The longer a property is on the market, it creates a greater expectation from buyers that the price be discounted. Additionally, statistics show that FSBO sellers end up hiring a Realtor in the end, largely because of frustration and a lack of qualified buyers.

FSBO’s lack the resources and networks needed to market property effectively.  Digital marketing has drastically changed how customers are finding properties.  FSBO’s lack these resources which significantly affect their ability to get their property in front of qualified buyers.  As marketing trends continue to change at such a fast pace, it makes it even more important to have an experience professional involved.

Many people don’t think of rentals as being “by owner”.  But the fact is, it is even more difficult to handle a “rental by owner” than a sale.  The dynamics of rental property, both residential and commercial, demand a high level of expertise and professionalism. When you add it all up, and take into account the constantly changing markets improving technologies, I believe the days of the “For Sale By Owner” and “For Rent By Owner” are steadily coming to an end.  Realtors provide a service that is vital to the real estate market and property owners should use a professional to help them navigate the process.