The numbers are in for 2016—selling your home with a REALTOR® could get you $60,000 more on your home sale. From the recently released 35th anniversary edition of the Profile of Home Buyers and Sellers report, homes sold with an agent or broker received a median of $245,000 in 2016 compared to the median selling price of $185,000 for For-Sale-By-Owner (FSBO) home sales. That number drops even lower to $168,300 when the FSBO seller knew the buyer, that’s $76,700 less than what sellers are getting with the help of a REALTOR®.
The top reasons that sellers decided to sell their homes without the assistance of an agent was that they did not want to pay a commission or fee (39 percent), they sold to a relative, friend or neighbor (33 percent), or the buyers contacted the seller directly (14 percent). Of the FSBO sellers that did not know the buyer, 61 percent (up from 59 percent last year) simply did not want to pay a commission or fee. Not only are FSBO sellers losing money in the transaction, they end up doing all the work.
Do you have a lot of extra time to market your home and do all the work to meet and greet properly? Are you versed in local trends on the housing market and know the latest regulations for closing a sale? Do you have a list of potential buyers ready to view your home? Eighty-nine percent of all homes sold in 2016 were sold with the assistance of an experienced real estate professional, according to the 2016 report and consistent with the year prior. Most leave it to the professionals, yet there is still a small group of people who prefer to do it themselves.
Of all FSBO sellers, 33 percent used yard signs to market their homes, 21 percent open houses, 21 percent third party aggregators, 16 percent to friends, neighbors, and relatives, 13 percent listed on the Multiple Listing Service (MLS) website, and 41 percent said they did not actively market their homes.
The 2016 Profile of Home Buyers and Sellers report has the added value of reporting 35 years’ worth of reliable data on FSBOs. In 1981, the market share of FSBO sales was 15 percent and those that sold with the assistance of an agent was 85 percent. FSBO sales peaked in 1985 at 21 percent of all sales (in the same year 75 percent were agent-assisted sales). Since 1981, FSBO sales have steadily declined over the last three and a half decades, dropping below double digits by 2010 to just nine percent of all sales and hitting an all-time low in 2015 and 2016 at eight percent. Of that eight percent of all FSBOs, four percent of sellers knew the buyer—selling to a friend, neighbor, or family member—and four percent sold by the owner to someone they didn’t know.
This year, the demographics of FSBO and agent-assisted sellers were very similar, despite the large gap in between the final home sale price. Seventy-three percent of FSBO sellers were married couples with a median age of 59 years and a median income of $100,600. Seventy-six percent of agent-assisted sellers were also married couples, 53 years old, and had a median income of $101,300. Last year, FSBO sellers typically had lower incomes than those who worked with an agent.
Most FSBO homes sales were located in a suburban area (42 percent), rural area (27 percent), or small town (14 percent). Sixty-nine percent (down from 75 percent last year) of FSBO sales were detached single-family homes. Ten percent were mobile or manufactured homes, consistent with last year.
The time on market for agent-assisted homes was a median of four weeks to sell a home. When sellers knew the buyer, the median time on market was a mere one week, compared to two weeks for FSBO sellers that did not know the buyer. Forty-six percent of FSBO sellers noted that they needed to sell their home either somewhat or very urgently. FSBO sellers were also less likely to offer incentives to buyers at closing.
Posted in Economist Commentaries, by Amanda Riggs on November 17, 2016