According to an article by the NAR (National Association of Realtors) the FSBO’s are at an all time low. But we argue that this is incorrect and it would seem we are not alone in this opinion. Here is link to a Forbes article which hazards that the actual amount of FSBO sellers has actually gone up to around 20%.
Here is what has changed for the FSBO Market.
A profusion of FSBO sites have sprung up all over the USA from Fee based to Free. Over 87% of people according to one source have Internet access and most everybody feels comfortable enough making online transactions, even though selling FSBO is not an online transaction, it is online marketing. With Americans being by and large a DIY sort of people, there is no way that there would be so many online FSBO marketing sites if there weren’t a high demand. According to RedFin in a 2016 article, One in Five Homes sells without a full time agent.
For the average homeseller, online FSBO advertising is turning the MLS into a something of an antediluvian artifact. The MLS still provides the real estate agents with valuable information like what commission split they are looking at on a particular property, but as far as the seller and the buyers are concerned, Internet based advertising has replaced it quite effectively. Although an informal sort of the MLS dates back as far as the late 1800’s (per wikipedia), a published iteration of the MLS was conceived as a bi-weekly printed magazine allowing real estate agents back in the day to keep tabs on the local real estate inventory. When personal computers came along, real estate offices acquired computers and linked them to their area MLS mainframe computer to make accessing real estate information quicker and more efficient. There are hundreds of MLS services throughout North America with the largest being in California. The MLS was the mainstay for the real estate community for a good many years. Real estate agents had an unquestioned monopoly to the real estate market, they knew what was out there, who had listed what, what kind of commission split would be involved for them, and how long a property had been on the market. The average buyer was at their mercy, having no access of their own to the real estate market, with the exception of some monthly printed magazines available at grocery and convenience stores, and the Sunday edition of whatever local newspaper was available in their town.
The steadfast, and oh so stubborn, For Sale By Owners only had their sign in the yard and expensive, limiting newspaper advertisements to get their information out there. There was no other effective way for them to market their property to avoid steep real estate commissions. Many FSBO’s weren’t only trying to avoid the commission, but many had had previous bad experience with real estate agents and wanted to avoid dealing with them again.
When FSBO sites started to spring up real estate agents began to have serious competition. All of a sudden there was an organized place where For Sale by Owners could market their home and buyers no longer had to wait for their agent to provide information to them, it was now at their fingertips. Buyers went shopping, and real estate agents not only had each other as competition, but the FSBOs as well.
In previous decades FSBOs had been treated as an amusing sort of annoyance, generating income for real estate marketing gurus who would make money giving workshops and lessons on ‘how to deal with the FSBO’, ‘how to overcome objection etc’. With FSBOs having access to increasingly well known websites , convincing them that they really needed the agents and their MLS, became a whole lot harder. The real estate agents were reduced to tout what had been the ace up their sleeve for decades. ‘But we have the MLS!’ And with real estate companies posting their listings on their own websites it was one more nudge into obsolescence for the MLS as far as the buyers and sellers were concerned.
There are some extremely exclusive listings which are not shown to the general public and the sale of which isn’t broadcast via agency websites, Realtor.com etc, or openly on the MLS even. However, those are very rare and really do not have an impact on the average seller or buyer.
So, this begs the question. How does the NAR come to the conclusion that the FSBO market is declining when in fact there are more FSBO sites than ever before? It’s a matter of how they handle certain paperwork now.
When a real estate agent brings a buyer to a FSBO they now insist that the transaction can only occur if the seller signs what is known as a ‘One day Listing Contract’. This document locks the seller into an agreed upon commission if they sell to that particular buyer. Furthermore the document will inform the seller that the listing will be put on the MLS as a listing by the buyer’s agent, and often require a sign placed in their yard as well. We leave it up to you to wonder why they would want a sign with ‘Sale Pending’ over their name in the yard. The end result is a quantitative bump up in stats for the real estate agency. In earlier years the one day listing contract wasn’t used quite as diligently but the stats showing how successful the FSBO’s were was worrisome and precipitated diligent and conscientious use of the document on every sale facilitated by a buyer’s agent with a FSBO. The other thing the NAR does is to add anything to a rather wide reaching pool of ‘agent assisted sales’ even if the FSBO merely paid to have his listing added to the MLS. This blurs the lines and allows the NAR to project a much lower FSBO statistic than it in reality is.
The FSBO phenomenon is even stronger in the QCA and has helped thousands of Sellers and Buyers part mutually satisfied from the closing table….no expensive middleman required.
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