In Today’s Market, We Need to Redefine For Sale By Owner (FSBO)
The Do-It-Yourself (DIY) economy is booming. That’s evident from the growing number of first-time entrepreneurs, the continuing transition from traditional employment to “gig” work—and the fact that the DIY TV channel is now almost 20 years old.
While most DIY projects occur in your house, selling your own home isn’t typically thought of as a DIY project. However, it is, and For Sale By Owner (FSBO) sales are a growing segment of the real estate market, even though the data says those types of sales are somehow declining.
How could that be?
Right now, the residential real estate market is incredibly tight. Demand for homes now far exceeds supply, and those market conditions will continue to exist for years to come. Whenever demand outpaces supply, selling whatever is in demand becomes a whole lot easier. That’s why a growing number of sellers are using self-service and discount listing options. In the current market, many buyers can sell their homes simply by posting a property on their own Facebook page.
Yet the National Association of Realtors has data showing the number of FSBO sales have steadily decreased over the last decade. The reason the data shows that is because brokers from discount and self-service brokerages are claiming credit for a sale within the MLS system, despite the fact that their portion of the sale is often limited to the paperwork associated with the transaction.
If real estate were baseball, that would be the equivalent of a pinch-runner claiming credit for the hit. Yes, when needed, the pinch-runner plays an important role. However, the hitter did most of the work, and without the hitter there wouldn’t be a use for the pinch-runner.
It’s inaccurate to call organizing and executing the paperwork involved with a real estate transaction a “sale.” A sale is the result of someone marketing the property to potential buyers. Even if the sale happens because of something as simple as a Facebook post by the owner, that’s still a sale—and the credit should go to the person doing the salesmanship.
Why does this matter?
There are a couple of reasons.
On a macro level, it’s clear that the housing market is, to a certain extent, the economy. An implosion in the auto industry would be bad, particularly for those make their living building or selling cars, but it wouldn’t push the world economy to the brink. Having an accurate understanding of how the housing market functions is important to anticipating how it will behave. If FSBO sales are actually increasing, the way we account for that in the data needs to accurately reflect that.
At the customer level, the real estate profession doesn’t exactly have a stellar reputation. In fact, more people trust lawyers than realtors. One reason for that is that the process of selling a home is long on documents with fine print and confusing technical terms, and short on clarity. Saying an agent sold a home after all he or she did was help complete the paperwork is one small example of trust eroding by calling a process something that it isn’t.
A hot market is one reason why more people are selling their homes themselves, even if the data says otherwise. But a hot market isn’t the only reason. Technology has disrupted and democratized a lot of the old ways of doing things, including how owners sell their homes.
That trend will only continue.
Here at Worth Clark Realty, our FSBO program gives credit where credit is due. We understand that the “Sale” part in For Sale By Owner is the crucial word, and sellers shouldn’t have to pay large commissions just because an agent completed the paperwork. Participating in our FSBO program can save DIY sellers thousands in commissions, putting more money in their bank account.
President & CEO
Worth Clark Realty