FSBOs Looking for Representation

Nationwide, "For Sale By Owner" (FSBO) homes sell for $36,000 less than agent-assisted sales and is seeing a tumbling market share. The desperate FSBO sales are now listed with deep discounts, which draw some bargain hunters. Because FSBOs often start out at a very low price, they do little to negotiate down from the already low "listed" price.

The 2008 National Association of REALTORS® Profile of Home Buyers and Sellers reveals that among recent home sellers surveyed in August 2008, the pure by-owner sales - those cases where the seller did not know the buyer - remain historically low at 7 percent. It had been closer to 10 percent during the housing boom years.

FSBOs have typically been more popular among lower income households trying to sell lower priced homes. So one may argue that price difference results between FSBO and agent-assisted sales is due to characteristics of lower-valued and smaller-sized FSBO homes. Indeed, the average home size in FSBO sales is smaller. The median home size in open market FSBO sales is 1,515 square feet, compared to the median of 1,850 square feet in agent-assisted sales.

However, when we compare median prices per square foot of home, the data show that it was $92 in FSBO sales, and $116 in agent-assisted sales, with a difference of $24 per square foot of home sold. Considering the median size of 1,515 square feet in FSBO sales, this translates into a price difference of $36,360 on a size-adjusted base. The FSBO homes, given the nature of the market, are being listed at deeply discounted prices. Because lower prices get buyers' attention, any subsequent price concession afterwards tend to therefore be small. FSBO owners have in essence mispriced their homes too low.

Consumers are smart. In more difficult times for housing and the economy, a greater number of people are seeking professional real estate advice. Consumers in the end are also greatly benefiting as a result of having sought out professional representation.

Steve Reese makes himself available for consultations with by-owner sellers. He will also provide a complimentary market study to illustrate where your home belongs in the marketplace. His experience earning the Certified Home Marketing Specialist designation will give you some valuable suggestions on staging and positioning your property to beat the competition.

Of course, Steve is only paid a fee when his listed properties sell, but he also sees the value in helping sellers with a variety of needs put the pieces together for their real estate goals.