The very reason we exist is a result of For Sale By Owners (FSBO). It was winter of 1984 when our founder walked away from buying a For Sale By Owner (FSBO) after he realized the legal cost involved and time away from work necessary to meet with a lawyer during business hours. He wondered how many other buyers walk away from buying a FSBO if Realtor assisted homes are easier to get. A little research at the central library consisted of calling 100 FSBOs from the newspaper ads of 3-5 months before, showed that very few sellers were successful (at that time only 12% of FSBOs were able to sell without any Realtor help - most recent national survey shows that only 16% are successful). Either way these numbers are dismally low. It was then that he realized that there has to be a better way for real estate to be sold and our Concept was born as the "missing link" for FSBOs to achieve the Realtor advantages without the hefty commissions.
Ordinarily, FSBO is the cheapest way to sell most of the time (although there have been cases where FSBOs have spent far more than our fee, mainly on advertising and attorney costs). However, if one factors in the extremely low probabilities of selling as a FSBO the cost of selling is substantially higher. It is the time one loses trying as a FSBO (usually 8-9 weeks) that damages the home's chance of getting sold at its highest price plus the money a FSBO spends on marketing. It is the buyers' reluctance to enter negotiations with the seller directly and spend hundreds if not thousands of dollars in legal fees plus maneuver through the transaction on their own that dooms the FSBOs. One of the fallacies sellers have is that a buyer will use "their" lawyer to do the buyer contract, counters, amendments, etc. That is extremely rare and besides attorneys list their homes with Realtors at the same rate as any other profession (they know better). Over the years we have had hundreds of sellers who were trying completely on their own, then turn to our company and within a number of days to a few weeks get an accepted offer as a result of us being involved.
Every year, $100s of millions of dollars are wasted by sellers trying to sell as a FSBO before they turn their home over to a Realtor to eventually sell it. With our flat fees of about 1.5% we are absolutely the best avenue for anyone thinking FSBO. If sellers knew all the facts, they would never resort to sell a property as a FSBO not as long as companies like ours are around.
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Having recently converted from a by owner to a local outfit, I have to agree with what you're saying. We priced it under the market but you could sense the apathy on the buyers. My husband started his job in Pewaukee this week so the delay in getting sold is costing us. Fortunately, our agent is supposed to get an offer together today.
ReplyDeleteI think sometimes by owners price it under the market since they don't pay a commission. We bought our last home by owner in 2001 and was worth the trouble cause the appraisal came in almost $11,000 above.
ReplyDeleteWe have heard this situation from a number of appraisers. Some FSBOs underprice their home more than what they're saving in commissions. On the other hand we have talked sellers to price it higher than they thought especially in good markets of past. Pricing is tricky and thats where real estate experience comes in. Thanks for sharing.
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