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For Sale By Owner: The Myths And Lies About Selling Your Own Home

Dennis Rodkin posted a story in Crain’s last week about the rise in for sale by owner (FSBO) listings on the forsalebyowner.com Web site: For Realtors, an unwelcome trend. Later in the week he also appeared (well, his voice was heard) on NPR discussing the same topic. The bottom line is really nothing new. Some sellers want to avoid paying a real estate commission because their equity in their home is so painfully low and they don’t think they need a realtor if the market is strong enough for many homes to be selling very quickly.
Of course, we really can’t draw any conclusions about the overall trend in for sale by owner activity by looking at one Web site, which may be experiencing it’s own unique growth spurt. Although Dennis said the NAR declined to provide him with any sort of historical trend data such data is readily available from the NAR’s annual profiles of home buyers and sellers and it actually shows a decline in the percentage of for sale by owner activity over the last few years. Basically, when the going gets tough the FSBOs go to realtors, which is exactly what you would expect. And, as Dennis Rodkin’s article suggested, when it looks like it’s easy to sell places why would you pay a high commission to a real estate agent?
For sale by owner market share
Of course real estate agents hate to miss out on a fat commission so they have a variety of tactics for trying to turn the FSBO seller around. Like Justin Zintak in Dennis Rodkin’s story the FSBO seller is likely to get numerous calls from real estate agents predicting their utter and complete failure with all sorts of lame arguments like you find on John Dietz’ Web page: Why Selling Your Home For Sale by Owner Can Cost You Money. No, I’ve never heard of John Dietz, who is a real estate coach, but his Web page came up high in the search results and the drivel he writes is a good example of what realtors say about FSBO sales. Who falls for this stuff? Let’s look at some of these claims and others in more detail.

Only A Realtor Can Attract A Great Buyer For Your Home

This claim by John Dietz seems to be predicated on the assumption that a for sale by owner home will not be on the MLS. That’s a pretty bad assumption. Anyone who tries to sell their own home without being on the MLS is definitely in for a rough go of it. But you can sell your home yourself and still be on the MLS. You just need to find someone to put it there for you – usually for like $500. Well worth it. Then you have access to all the same buyers that a listing agent would have.

Realtors Get A Higher Percentage Of The Asking Price Than FSBOs

John throws around some statistics that just aren’t true and would be meaningless even if they were true. The 2013 NAR profile of home buyers and sellers actually shows that FSBO homes sold for 98% of asking price and agent listed homes sold for 97% of asking price. That’s just the facts. But even if FSBO homes sold for 80% of asking price that wouldn’t mean anything because they might just be listed higher.

It Will Take You Longer To Sell Your Home Yourself

This is another case of made up statistics except John actually never makes a statement of fact in this regard. He simply says “let’s say it takes your home 6 months to sell” and “a realtor will probably sell your home in 30 days”. Well, the NAR data shows just the opposite result. Agent assisted sales took 6 weeks on average to sell and FSBO sales only took 2 weeks – 3 weeks if the seller did not know the buyer.

Realtors Can Get A Higher Price For Your Home

This is the most common bogus and embarrassing claim made by real estate agents and surprisingly John did not bring this one up. The claim is actually rooted in a simple fact, supported by that NAR survey: the average FSBO home sold for only $184,000 while the average agent assisted home sale clocked in at $230,000. So there are actually agents that run around telling people that a real estate agent can get you 25% more for your house. Uhhhhh….for extra credit who sees the fallacy in this interpretation? You know, that same survey shows that people who sell through agents also have a 16% higher income. I guess real estate agents can help you earn more money also.
Unfortunately, real estate agents that make illogical and incorrect arguments about selling a home yourself just help reinforce the negative impression that people have of real estate agents. None of these arguments are reasons for using a realtor instead of going the for sale by owner route. So next time I’m going to cover the truth about selling your own home. For some people it might actually make sense but for a lot of people it doesn’t – even without making all the lame arguments I just eviscerated above.
#realestate #fsbo
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