So, you’ve decided to sell and you’ve given some thought to going for sale by owner (or FSBO, pronounced fizzbo, for short). You’ve built some equity into you home and you’re willing to ninja-fight to the last man standing to protect each and every last dollar you can squeeze out of the current real estate market. That’s fine, I honestly can’t fault you for considering it – this is America after all!
One caution I’ll advise to you is that current trends are not going to be in your favor. Back in the so-called Boom Years of Real Estate, namely 2003 to 2006, as many as 14 percent of home sales were FSBO’d, of which 9-10 percent were to unknown buyers (a.k.a arms-length transactions) and the remaining rough five percent were to friends, family, and/or neighbors.
Fast-forward to 2010 and we now find that only 9% of homes sales are of the FSBO variety – 5 percent still being sold to friends, family, and/or neighbors, while roughly 5% were arms length transactions – a 50% reduction, in percentage terms, compared to arms length sales back in the day. Some interesting bullet point facts about FSBO sales as presented by Meredith Dunn of NAR Research…
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According to data from the latest Profile of Home Buyers and Sellers, For-Sale-By-Owner (FSBO) sellers decreased in 2010, continuing a trend in declines downward. Fourteen percent of sales were FSBOs in 2003 and 2004, compared to just nine percent in 2010. In this tough market, a larger proportion of sellers are turning to agents to help them sell their homes.
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FSBOs are more popular in rural areas and center cities. Typically FSBO sellers have lower median incomes and are more often singles. FSBOs are also more common for mobile home sales.
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FSBO sellers most often struggle with pricing and preparing homes for sale. Of those who used FSBOs to sell to someone they knew, a greater share would use a real estate agent when selling their current home.
When sales were easier to come by, I can see why going FSBO would be appealing, but the numbers show that, with a changed market after the bust in sales that started in 2006, the do-it-all-by-myself approach seems to be less and less effective.
We could have a month-long series about the wisdom of FSBO sales - the ins and the outs, the advantages and disadvantages - but I’ll simply let the above chart speak for itself….