We’ve known it for years, but now there’s research to back it up! In a new study released by Collateral Analytics and reported on by our friends at Inman News, FSBO’s really do need you. Many a shy prospector has been lulled into believing otherwise, but this new data should be enough to wake you up from your slumber and march right up to the nearest FBSO door you can find!
In their research, Collateral Analytics looked at a sampling of different geographic markets in 2016-17 and compared homes sold via the MLS by traditional agents and homes sold “For Sale by Owner.” Their findings? That FSBO’s are actually selling at a discount. And we’ve all heard them bragging that they “did it on their own — and ‘saved’ the commission.” Yet, the average FSBO sold for 5.5% less than MLS comparable properties.
This wasn’t a small study either. It encompassed more than 200,000 FSBO sales and one million MLS sales. That alone tells you something, right?
In fact, the study suggests that not only can agents command a higher selling price than a FSBO, but even when taking into account the commission that they’re always trying to “save,” its still a losing battle for them. Why? It’s not just the hard costs, but the soft costs too.
“Overall it is clear that FSBOs have a low probability of selling, and if they do they will likely net the same or less after closing issues, plus they are more likely to screw up on disclosures which may lead to lawsuits after the fact, when buyers discover material facts not disclosed,” added Norman Miller, who produced the study with Sklarz and is a real estate professor at the University of San Diego.
Agents can feel continue to feel confident in the role they play in getting the seller a premium price. With marketing, knowledge of staging and prep, MLS syndication and buyer broker offerings, agents have the leg up on FSBO’s when it comes to generating the best price. Not to mention the protections agents can give from the mishaps mentioned by Miller.
This begs the question, why would FSBO’s continue to pursue this path?
“It appears that many sellers [FSBO sellers] are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale,” the authors wrote. “They are avoiding commissions at any price, even one that exceeds the commission rate.”
Whatever the reason, now more than ever, agents need to sharpen their skills. Rather than shrinking back from opportunity, realize that private sellers need what you have. The way to truly be of service is to share this information with every motivated seller who needs the money and desires the least amount of hassle.