FSBO Market Trends
Bargain Homes has noted an increase in listings of For Sale By Owner or “FSBO” properties, which we consider a predictable trend whenever housing prices lean toward a buyer’s market. Major “For Sale Sign” supplier Hillman Group also sees “signs” that the FSBO market is expanding, because their For Sale By Owner yard signs are selling at a brisk pace.
And although some experts argue that seller’s markets encourage more FSBO listings – because marketing is easy enough to do it yourself when the buyers are eager – we observe that in buyer’s markets sellers do whatever they can to shave costs and bolster deteriorating profits.
While it is possible to cut some of the incidental expenses involved in selling a home, there are very few places where it is both feasible and practical. For example, cutting out the lawyer can invite more expensive problems and even complicated court battles. And canceling plans to pay for minor repairs and cosmetic improvements can result in a lower selling price, because those expenses usually pay for themselves or add additional value at closing. So the first and foremost place that homeowners try to save money is on the outstanding big-ticket item at the top of the checklist, namely, real estate brokerage commissions.
Commissions for listing and selling property don’t usually fluctuate with the ups and downs of the real estate market, as they might do in other industries. Realtors work just as hard, if not harder, in a bear market, and they generally expect the same compensation from their clients, regardless of what the markets and interest rates are doing. And with an increasing proliferation of professional businesses that sell products and services to assist FSBO homeowners, more and more people venture into the do-it-yourself domain to save some cash.
Plenty of them give up and throw in the towel, hiring a listing agent to take the reins after an unsuccessful attempt to sell. According to recent data from the National Association of Realtors (NAR), less than 15 percent of all home sales are completed without the help of a real estate professional. And about six out of every hundred FSBO sales take place between family members, friends, or other close associates known to the seller.
But many of the experts surveyed by Bargain Network expect to see that statistic grow, and more houses list as FSBO, especially over the short term. Maybe that explains why the same NAR that reported low numbers of sold FSBO homes still went ahead and published a special guide for its members, about strategies for working with FSBO sellers.
Following a heated bull market, real estate prices across the board are now slipping quickly, and the competition is getting fierce. As the economy tightens and the Internet and other high-tech solutions help FSBO sellers do market research, list and advertise their properties on high exposure sites like Bargain Homes, and conduct business in a more professional manner, more consumers will experiment with For Sale By Owner.
ABC news recently ran a story about an innovative couple in Colorado who offered air travel, a rare bottle of vintage wine, and other perks to encourage someone to buy their condo. Sellers are beginning to pull out the stops – and apparently the corks and suitcases as well – to close sales in a buyer’s market.
And the clever couple in Colorado are not alone, except perhaps in their use of gimmicks. Recent data lists Denver as the fastest growing market for do-it-yourself sellers, and figures show that FSBO listings there are up more than 160 percent from last year. But the prices of homes in Denver are crumbling, which supports our theory that lower prices – indicating a buyer’s market – bring out the FSBO sellers.
Other cities where the FSBO market is heating up are Dallas and Houston. Dallas showed more than a 100 percent jump over the past year, as the two largest Texas cities barely edged out Ohio’s big metropolitan areas of Cincinnati and Cleveland for high ratios of FSBO homes. As the housing market cooled off over the past year, FSBO listings went in the other direction in major markets including New York, Chicago, and Atlanta.
Bargain Homes believes there are plenty of bargains in the FSBO marketplace, and consumers interested in listing or buying FSBO real estate are encouraged to take advantage of all the Bargain Network resources.
FSBO is not just a passing craze, but a fact of modern real estate life.