July/August 2002 - For Sale by Realtor

...according to the recently released NAR study, “2002 Profile of Home Buyers and Sellers,” the latest in a biennial series of surveys evaluating marketing, demographic and other characteristics of home buyers and sellers and real estate professionals.

In 2001...
   80% used a REALTOR®
   13% were FSBO
         The number of FSBOs continues to decline...

The percentage of for-sale-by-owners (FSBOs) was 13 percent in 2001, down from 16 percent in 1999 and a cyclical peak of 18 percent in 1997. Earlier surveys during hot real estate markets showed as many as 20 percent of owners would try to sell their home without a professional.

The study separates FSBOs into two types – those in which the seller knew the buyer (these homes did not require marketing) and those in which the owners wanted to sell their homes without the assistance of a real estate professional. Because the first type were able to sell their homes without marketing, they don't qualify as true FSBOs because the home was never offered for sale on the open market.

What is not included in the survey (and would be valuable to know) is how many homeowners tried to sell their homes themselves before hiring a Realtor®, and what reason(s) made them decide to desert the FSBO course route.

FSBOs go FSBO to avoid a commission or because they sold to someone they knew.

Thirty-one percent of FSBO homes were sold to a friend, neighbor, or relative while in another seven percent of cases the eventual buyer of the home approached the seller directly.

However, almost half (46 percent) of home sellers opt for a FSBO transaction because they did not want to pay a commission. As this is the #1 reason cited, the following fact becomes even more interesting...

Homes sold by REALTOR® sold for a higher price
27% higher!

The median selling price of a home sold directly by an owner was $137,400, while the median selling price of a home sold by an agent was $175,000.

FSBOs rely on yard signs, word of mouth and newspaper ads to sell their property

     However...79% of Home Buyers reported a REALTOR® as their #1 source of information

Roughly two out of five “active”FSBO sellers (that is,FSBO sellers who did not sell their previous home to a friend, family member) used yard signs. Second choice was word of mouth through friends/neighbors or relatives. And 30 percent of active FSBO sellers used newspaper advertisements.

Homebuyers, on the other hand may use several information
sources in their search, but almost half first learn about their
home from a REALTOR®.

FSBOs use the internet less

Interestingly, while use of the Internet is growing among homebuyers, it declined slightly for FSBO sellers. FSBO use of the Internet to sell a home fell from 12 percent in 1999 to eight percent in 2001.

Conversely, agents usage of the internet to market homes increased 35 percent (from 39 percent to 53 percent) and now ranks third (instead of fifth) in selling methods used.

Next time...
   22% will use a REALTOR®
   43% are still undecided

Despite any success in selling their previous homes, not all FSBO sellers were sure if they would use the same method to sell their current home, or use a real estate professional in a future transaction. Just 35 percent (of the total 13 percent of FSBO sellers) were positive they would sell their current home without the assistance of an agent.

However, a larger part of FSBO sellers appears still to be weighing the pros and cons after their first experience of selling their homes themselves. More than two out of five FSBOs are not sure whether they want to go through the FSBO experience again, or if they will use a real estate agent next time they sell a home. Twenty-two percent indicate that they will use a real estate professional in their future transactions.

Among the biggest concerns FSBOs had in the selling process during 2001 were understanding and preparing paperwork,
setting the price properly, attracting potential buyers and helping them obtain financing.

Additional factors would include the investment of time required on the part of the owner, the length of time it took to sell the home and security in admitting unscreened strangers into their home.