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Wednesday, November 8, 2017

Percentage of Sellers Trying ‘For Sale By Owner’ Continues at Record Low

Last week the National Association of Realtors (NAR) released its 2017 Profile of Home Buyers and Sellers, and one of the more interesting data points was the record low percentage of sellers who try to sell without employing a real estate agent — 8%.

This is the third year that the percentage of FSBO sales have been at their lowest point in the history of NAR conducting this survey. It’s no coincidence that those three years match the time span of the current seller’s market. If you pause to think about it, it’s easy to understand why.

A few folks cling to the notion that it’s so easy to sell a home in this market that they can simply plant a sign in their yard and everything will take care of itself – all without having to pay an agent’s commission. Most sellers, however, have come to the realization that when it’s this easy to get a home under contract, you need an agent on your side more than ever.
“Homeowners understand the value, and seek the expertise and guidance Realtors bring to the table when it’s time to sell their home,” says William Brown, NAR’s president. “Despite incredibly favorable market conditions for sellers, where finding interested buyers was not a problem, nearly all turned to a Realtor to help assist them through the intricacies of listing their home on the market, accepting offers, negotiating the sales price, and closing the deal.”
Also, according to NAR, 88% of sellers surveyed indicated they were satisfied with their agent and the selling process, and 85% said they are likely to use their agent again or recommend him or her to others. 
There are several practical reasons I can think of for not trying to sell your home without professional representation. The first is that, according to NAR, almost 90% of buyers are represented by agents, and you, as seller, will (1) likely have to offer a 2.8% “co-op” commission to those agents, and (2) as the only party to the transaction without representation, you’ll be out-negotiated by any buyer who employs an agent.
Also, imagine that you’ve priced your house right and get several competing offers. How will you manage those offers and negotiate with the agents representing those offers? Agents not only have the software and contract documents you’ll need but the experience in using them and negotiating multiple offers.
Let’s talk about the money. Most FSBO’s, I’ve found, have convinced themselves to go FSBO because they believe they’ll save 6% on commissions paid to their listing agent (who then splits it with the buyer’s agent). As I alluded to above, 2.8% of that 6% is going to the buyer’s agent, so you’re really talking about saving 3.2%.  However, many agents, including those at Golden Real Estate, charge less than 6%. I can’t tell you what other agents charge, because anti-trust laws prohibit us from discussing the topic with each other. Under certain circumstances agents are charging far less than 6%. Those circumstances would include when we don’t have to share our commission with a buyer’s agent and when we get to earn a 2.8% commission on our seller’s purchase of their replacement home. In such circumstances, I’ve charged as little as 4%, which left me only 1.2% after paying 2.8% to the buyer’s agent.  Is that small savings worth it?
Even if you pay the industry average of about 5.6% commission, your listing agent is likely getting only half that commission. For his share of that commission, you get entry into the MLS system with syndication to Zillow and numerous other listing websites, marketing, photos, videos, a showing service, negotiation and closing assistance, relieving you of the responsibility and headaches of managing showings, publishing advertising and printing brochures, shooting video tours with drone footage, holding open houses, etc. 
Call me at 303-525-1851 for a no-obligation meeting in your home where I can answer all your questions about selling your home and the value you’ll get from us.

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