In this age of do-it-yourself everything, from ringing up groceries to preparing your own taxes, one would think more home sellers would prefer to go solo.
While there are still some for-sale-by-owner (FSBO) folks, their numbers are declining, according to data from the National Association of Realtors.
The number of homes sold without the help of a real estate professional dropped to a record low over the past year. Unrepresented sellers made up just 11 percent of the market, down from 13 percent in 2009, according to the 2010 NAR Profile of Home Buyers and Sellers.
This appears to be a local trend also as Realtors and buyers in the Washington metropolitan area report noticing fewer homes on the market without the representation of a Realtor. They attribute that to a number of factors, including today’s more complex transactions.
Though the Internet arms buyers with a wealth of information, Realtors say many would-be FSBO sellers find out fast that there’s more to a real estate transaction than they may think.
“Just putting a ’For Sale By Owner’ sign in the front yard will not get the property sold,” says Michelle Vessels, associate broker with Long & Foster in College Park, Md.
Many real estate experts have tales of clients who tried to go the FSBO route before eventually deciding to list with a Realtor.
With today’s complicated real estate transactions, Brenda Smalls, former president of the Washington, D.C. Association of Realtors and manager of Prudential Carruthers in the District, says the knowledge and experience of a Realtor is required to do everything from successfully negotiating a contract to maneuvering the short-sale and foreclosure process to keeping up with the frequent changes in mortgage lending.
Ms. Vessels agrees and adds, “Today’s market offers the purchaser many options to choose from.”
She says most sellers understand today’s challenging marketplace and want to sell with the least worries in the shortest period of time and net the most amount of money.
In addition, Ms. Smalls says, “FSBOs - or what we refer to as ’unrepresented sellers’ - typically do not have the [same] extensive market strategies, tools and resources as Realtors do to reach potential buyers.”
Among the top reasons people try to sell on their own is that they want to save the commission.
Margaret Woda, associate broker with Long & Foster in Crofton, Md., says, “Selling by owner does not guarantee the seller will put 5 [percent] to 6 percent more in his or her pocket in trade for doing all the work and taking on potentially costly liabilities. On the contrary, prospective FSBO buyers have their eyes on that 5 percent to 6 percent as well. It’s more likely the buyer will win this negotiation in a buyer’s market with a huge price reduction - probably even larger than the saved commission.”
One misconception among homeowners is that the Realtor takes home every dollar of the broker’s compensation, Ms. Vessels says.
“There are many fees that are associated with the sale of a home, which may or may not include sharing of broker’s compensation with cooperation brokerage firms, advertising licensing fees, IRS fees, signage, mailing and insurance, just to name a few,” she says.
“They do not consider that there is more potential liability for something to go wrong with the transaction based on their inexperience working with a buyer and the legalities of the contract sale process,” Ms. Smalls says.
Meanwhile, Ms. Woda adds, some FSBO sellers are the proverbial “know-it-alls,” meaning they read a book or did research on the Internet. There also are sellers who never met a real estate agent they Iiked and trusted.
“The same seller who doesn’t trust a real estate agent does not trust a surgeon they never met before to remove their appendix and a car mechanic to fix the brakes on his or her car,” she says.
“The Internet and print media cannot protect a consumer from all the things that could go wrong in this adversarial legal transaction,” Ms. Woda says.
She says that according to the NAR, the issues unrepresented sellers find most difficult are getting the price right, preparing the home for sale, selling within the planned amount of time, having enough time to devote to all aspects of the sale and understanding the paperwork.
Many FSBO sellers also think they can put their home on the market for a higher price. Ms. Vessels says that even if the buyer writes an offer on an overpriced home, unless it is a cash purchase, the home has to be appraised for that amount or the purchaser may not be able to obtain funding.
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