Over the last year, the market has been shifting towards the buyers, and it is important to understand what is at stake with one of your most important assets. Even in the height of the market in NYC, 37% percent of For Sale By Owner ads on StreetEasy expired without a sale, versus 7% of broker ads. Let’s delve a little deeper on the story is behind this statistic.
WORKING WITH BUYERS:
When it comes to the question of a client or friend listing a home for sale by owner, the question I always ask “is it more important what you net, or what you pay the broker?” Ultimately, the perception around a for sale by owner listing is that they are looking to cut corners, so direct buyers think that they can get a better deal. In fact, the 6% commission the seller is trying to save, is the minimum discount the buyer expects to get from a for sale by owner listing, hence the owner goes through all that work and still stands to net even less because there are fewer serious buyers who are looking at the property. Why is this?
There are four types of buyers:
- Serious and in a hurry
- Serious and not in a hurry
- Investors
- “Looky-Lous”
The first two types of buyers are typically represented by an agent; however, if the seller is not specifically advertising their listing to the brokerage community, then they are likely attracting the last two types of buyers. The investors are looking to get a deal and the “Looky-Lous” are there to shop around. Both give the for sale by owner a false sense of security initially, but when the offers don’t come in, or the offers that do come in are not realistic to the market value, they can easily become discouraged. This is why 90% of For Sale By Owners (FSBOs) end up listing with an agent.
PROCESS OF SELLING:
Additionally, when one lists as a FSBO, he/she will have hundreds of agents calling them, but very few will actually have a buyer that is right for their property. They will end up wasting a lot of time showing to agents who just want the listing. Also, those that do have clients are less likely to engage a for sale by owner listing because they are perceived as less serious and more difficult to transact with.
LIKELIHOOD OF SELLING:
Nationwide, 93% of real estate transactions are agent-assisted and only 7% as for sale by owner. We also know that roughly half of all FSBO listings are “closely held”, which refers to transactions between two parties that had a pre-existing affiliation before the sale. In other words, they are selling to someone the already know. That means that the for sale by owner listing has a 3.5% chance of selling on its own, and the difficulties that owner will face are plentiful.
Pricing in he market over the last year has been tricky to navigate; we have been seeing adjustments from 2017. Creating buyer motivation and urgency around a listing is important, and it is a full time job. Pricing, positioning, and marketing are best handled by the experts. Additionally, the agent will pay for everything related to the marketing and handle negotiations based on current market knowledge.
VALUE THE AGENT PROVIDES:
In summary, here are the 5 reasons to hire an agent:
1.) Market Knowledge
2.) Market Reach and Positioning
3.) Time to handle the Transaction
4.) Negotiation
5.) Handling the Nuances of the Paperwork
PERCEPTION IS REALITY:
Putting a home on the market “for sale by owner” versus “for sale by an agent” is analogous to buying a piece of fine jewelry on eBay versus going to Tiffany’s. Don’t put your home on eBay, when it deserves to be seen in Tiffany’s. You only get one shot to list the property correctly, and buyers can see the listing history on all of the websites. Friends don’t let friends list for sale by owner 🙂
