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It’s 2024. The stock market is still marching to new highs. We have a President-elect, removing the Executive Branch uncertainty of the next four years. As you drive down our streets, there are tons of FOR SALE signs everywhere, so everyone must be selling. From these data points, it is easy to see why some conclude it is a golden time to sell a home as a For Sale by Owner (FSBO).
Of course, the number one reason to do a FSBO is to save money by not paying real estate commissions. It is the age-old story of ‘not seeing the forest for the trees.’ The second most cited reason is that the homeowner believes the state of the market is such that it will be quick and easy to sell without having to cede control of the process to any outsiders (agents). The other common scenario for a FSBO sale is when the seller already knows (or has found) the buyer, making much of the agent’s work seemingly less relevant.
As an agent, I am empathetic to the thought process of a typical FSBO seller, but must point out that much of the reasoning is flawed. Consider this. According to the National Association of Realtors (NAR), only 7% of home sales in 2023 were FSBO. Further, according to studies, about 90% of For Sale by Owner sellers eventually hire a real estate agent to sell their home. There must be a reason for this!
One more fun fact: Infamously, the owner of ForSaleByOwner.com had to hire a real estate broker after he tried for 6 months (and failed) to sell his own condo.
DECONSTRUCTING THE ARGUMENTS IN FAVOR OF A FSBO
1. I already found a buyer for my home, so I don’t need to list the home, and therefore I don’t need a Realtor.
This one really gets me. The #1 way to get the highest selling price for a home is to expose it to as many potential buyers as possible. If the seller has found the buyer (or worse yet, the buyer has found the seller) there is zero market exposure. Without competition, the buyer gains significant leverage. Real estate agents create exposure and opportunity for a seller.
Imagine you owned a Tom Brady signed NFL football and your best friend offered to buy it for $900. You’d be a fool not to find out from an expert what the ball is really worth on the open market before you seal any deal. That football is worth significantly more. In most real estate cases where there is only one off-market buyer, the deal will happen well below market value, so the FSBO seller has already set themselves up for a poor result.
Beyond price, in real estate there are complex steps and legal obligations for buyers and sellers before a closing can take place. Rarely does either the buyer or seller have the knowledge and stamina required to make it to a completed sale. Emotion often gets in the way, too.
2. The market is hot so my home will sell quickly and I don’t need the help of an agent.
Wrong. Sticking a FSBO sign in the yard is just the beginning of potentially dozens of mistakes that can occur without professional help.
The FSBO sign literally advertises that you are an amateur. Buyers (and their agents) will therefore start off with significant leverage, knowing to reduce their offer price accordingly. Further, they know you don’t have professional representation that regularly deals with the sales process, which is lengthy and filled with caveats. If they are smart, they will be two moves ahead on how to take advantage on other negotiation points as well.
Also, home sellers rarely have enough data points to understand if a market is hot, cool or balanced. Sure, they may read some stats online or have heard a story in the media, but that does not translate into expertise and usable information when pricing their home and negotiating.
Most importantly, FSBOs don’t anticipate the significant amount of time and work ahead of them.
Expertise is critical to both complete a home sale and to get the most money. Here are some important points:
● Pricing is a special talent. There is zero room for emotion. This takes most sellers out of the game even before it starts. Further, an agent has different perspective than an appraiser who only deals with the value of a home, not the art of finding the right list price for a home.
● Strong marketing is pivotal. To draw showings, each home must be marketed to a particular audience. Everything from photos to descriptive language, to how, where and when to advertise makes up strong marketing.
● Photography and videography are paramount. Did you know that different camera lenses can change the appearance of room size in a photo? A good agent does.
● Proper showings are the next step to selling a home. And, the first step is to be able to accommodate a showing request. Turning down even one request can be turning away your clandestine buyer. Then, when they arrive at your doorstep, the home must be show-ready. Even more important is that the agent (or FSBO) needs to flawlessly perform their script. Yes, a showing should be much like putting on a Broadway performance.
● Remember, once you get an offer, it’s time to put on your business hat. Emotions must get checked at the door! No house is perfect and buyers are going to try to leverage found issues to their financial advantage. The key is for the seller to anticipate and be ready to compromise on the issues that go beyond esthetics. Rarely can a FSBO be impartial enough for this task. Thus, an agent is best.
3. If I don’t hire an agent, I won’t have to pay commission(s).
First, you get what you pay for. Realtors have years of experience in how to create successful transactions for buyers and sellers. If you don’t hire someone, you are likely to do a far worse job yourself. You might even fail outright.
Would you pay a professional to fix your transmission or do it yourself? The FBSO question just has higher stakes. If you think you can do a good portion of the Realtor tasks and live with some risk you do it wrong (like missing something critical on the purchase contract), then you can do it yourself. But, for most people, even asking this question shows how ignorant they are to the complexities of today’s residential real estate transaction.
Most people are at least aware enough to make a smart choice. In 2023, less than 1 in 14 home sellers went the FSBO route and sold their homes at a median price that was 11% less than those who sold with a real estate agent. Further, 38% of FSBOs end up doing at least one downward price adjustment. Maybe FSBOs who actually close feel accomplished, but ultimately, they likely ended up with less net proceeds than if they had hired a professional!
Add to the mix that since August 2024, the argument FSBOs have for saving on commissions has literally been cut in half. The old equation was signing a listing agreement where the listing agent shared half the commission with the agent who brought a buyer. Now, commissions are no longer advertised between brokerages in the MLS, so any seller who chooses to work with me would be committing to a commission that is half what it used to be.
I found this user comment online on Reddit and thought it summed things up quite succinctly: “As a FSBO, you can always hire a specialist like an attorney to handle the part you aren’t comfortable with (like reviewing said purchase contract). There’s also hiring someone to take photos, handling showings, inspections, dealing with your and the buyer’s emotions, association applications and more). At the end of the day, you will put in a lot of extra work and stress to save maybe a few thousand dollars. If that’s worth it to you, then you should do it. If not, find an agent.”
Ultimately, a successful real estate deal should be measured in net proceeds, not on how much a seller saved by doing it themselves.
Real Estate Update
As of 11/6/24, there were 147 properties for sale in Pinecrest, 11 homes pending sale and 13.3 months of inventory (buyer’s market). If you’re ready to move, contact me to get the best local expertise, truthful guidance and realistic expectations. It’s easy to get started at miamihal.com/getstarted.
I invite you to view past episodes of my The MiamiHal Real Estate Show at miamihal.com/the-miamihal-real-estate-show to hear from experts and get the latest real estate news.
Hal Feldman (MiamiHal) is a Realtor with RE/MAX Advance Realty. You can contact him with your story ideas or real estate questions at www.MiamiHal.com, Hal@MiamiHal.com or www.facebook.com/MiamiHal
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