By Robert Freedman, Senior Editor, REALTOR® Magazine
Sales might be down for many of you but so is the competition from FSBOs. An analysis of buyer and seller data that NAR collects annually shows a fairly dramatic drop in for-sale-by-owner transactions over the last two decades.
In 1991, 19 percent of sellers, or almost one in five, sold their home as a FSBO, and 77 percent retained the help of an agent. In 2010, fewer than 10 percent sold as a FSBO and 88 percent, or almost nine in 10 sellers, worked with an agent. That’s a 14 percent increase in favor of agents over that 19-year period.
You might expect FSBOs to go down since the tough market began several years ago, but the trendlines have been heading south for far longer than the downturn, suggesting other factors at work.
One shift we’re seeing is that FSBOs are increasingly private transactions. In 2003, the first year NAR started looking at the question, a little more than a third of FSBOs, or 36 percent, knew who their buyers were upfront. By last year, that number had increased to 50 percent. That’s a 38 percent shift. That suggests FSBOs are increasingly hesitant to go it alone unless they have their buyer lined up before they take the plunge.
On prices, the data suggests deals involving agents fetch quite a bit more: $199,300 typically versus $140,000. That kind of differential has long been the case. But as with any statistic about pricing, deeper analyses are needed to know whether that differential is caused by agents’ ability to more accurately price listings or whether FSBOs tend to congregate at lower price points or in lower-cost markets. It could be a combination of these factors.
The data comes from NAR’s 2010 Profile of Home Buyers and Sellers, which NAR released in November 2010. Since release of the report, NAR Research has been going back into the data to examine bits and pieces of it. This latest look at FSBOs is one of those targeted examinations of the data. A short summary of the FSBO findings, with some tables, is posted at the NAR Research page on Facebook.