In early 2018 the Quad City Area Realtor Association published an insert in the Quad City Times titled “How Working with a Realtor Benefits You”
While FSBOs are gaining traction everywhere in the US, the QCA appears to be a bit of an anomaly in terms of their numbers and success rates.
What we did not find on insert was any sourcing information on the insert about where the QCARA derived the data which they published.
Why is it important to know where and when their ‘data’ came from? The QCA Real Estate market is markedly different for their strong FSBO representation. We have had countless comments from people coming in from out of state or moving out of the area telling us that there is nothing like QCFSBO in those areas. And that isn’t even counting the several smaller additional FSBO sites the QCA supports. Can some randomly collected data accurately advise the QCA FSBO seller? Particularly since we do not know if that data is even pertinent to the QCA market with it’s exceptionally robust FSBO presence.
According to an article by the NAR (National Association of Realtors) the FSBOs are at an all time low, only 8%. But we argue that this is incorrect and not just for the QCA. However, since this is a rather lengthy reply on its own it will be a separate article. Click here if you’d like to read it.
Here are the five claims made by the QCARA in their QC Times insert, followed by our rebuttal. We invite you to draw your own conclusions.
Scare tactic: Do you really want to answer a knock on your front door from complete strangers and invite them into your house for a look? (Source QCARA)
[Don’t miss the scary burglar icon to highlight the potential peril]
Their Claim: A REALTOR will meet with and pre-screen a potential buyer prior to showing your home. The agent will also ensure that buyer is preapproved for the price-range in which they’re looking. (Source QCARA)
The not so terrifying Reality: Pre-screening these ‘complete strangers’ is a convenient way for the real estate agent to know that they are not wasting their time showing an unqualified buyer several properties. Pre-screening is unlikely to entail much more than getting their current address, phone numbers, and sending them to get pre-qualified by a lender. These are not background checks. Please note that while getting a buyer pre-qualified is a useful tool for the buyer, seller and real estate agent, it is not the same as a pre-approval and does not guarantee a buyers ability to purchase the property. Pre-qualifying is done by almost all lenders for free; a pre-approval usually costs between $300-400, is valid only for 2-3 months, and is generally done once the buyer has made an offer on a property.
Real estate agents aren’t doing anything you can’t do yourself. You can insist on showing your property only to pre-qualified buyers, yourself, just ask to see their letter of pre-qualification from the bank. Here’s some helpful information about simple safeguarding measures you can take when you’re showing your FSBO home.
23% Higher Price
Scare Tactic: Average home price sold by the owner $174,900 (Source QCARA)
Their Claim: Average home price sold by a Realtor $215,000 (Source QCARA)
Reality Check: This statement was a little confusing. Did they mean that real estate agents got an average of 23% more for a similar property? Or did they mean that the average person listing a FSBO property tends to be in the$ 174,900 range. According to the QCARA
“…homes listed by an agent will sell for an average of 23% more than if the owner sold it.”
So, to ask all of you past and present FSBOs reading this, do you really see yourself so ignorant and incapable that you would price your property 23% less than what an agent would sell it for? On average that is, of course.
We did find an article mentioning those exact numbers written in 2017 using data from 2012. Of course we cannot claim that the numbers in the QCARA insert were from that 2012 data, but it was interesting to note all the same. That article had some other numbers that match the ones given by the QCARA in their insert. Unfortunately there too lacking any source information other than mentioning the NAR at some point.
We do actually keep track of some of our clients who go and list with a real estate company and we are yet to see one who walked away with a significantly higher price than they left us with. In fact as a rule, the majority not only ends up doing what they should have while they were with us, lower their price to a more reasonable amount, but then in addition to lowering their asking price they end up paying up to 7% in commission. The fact is, when you sell FSBO you will on average walk away with more money in your account than if you had listed with a real estate agent.
Scare Tactic:Most FSBO do not realize the complicated legal issues that may arise when buying or selling a home, or how to handle them. (Source QCARA)
Their Claim: From inspections to warranties, & paperwork Realtors have a vast knowledgeof the legal issues that may arise when buying & selling a home. (Source QCARA)
Reality Check: To an extent this is true, but we’re going to build a big HOWEVER in here… real estate agents are not lawyers and do not handle legal issues. Without a doubt, many have knowledge and experience, but that’s why we always recommend that whether you’re selling or buying FSBO, you must have a lawyer. Real estate agents insist that you have to use a lawyer as well. While you may pay a lawyer $200-$400 more as a FSBO, it’s still not even a small fraction of the commission the Realtor would collect at closing. A law office (dealing with a fair amount of real estate closings and FSBOs) we spoke to said that the majority of their FSBO clients end up spending no more on their legal services than their real estate agent listed clients do.
Scare Tactic:Average days on market when sold by the owner: 88 . (Source QCARA)
Their Claim:Average Days on Market when sold by a Realtor: 53 . (Source QCARA)
Factors that affect the time on market, be it FSBO or with an Agent
Price of the property. The pool of able buyers decreases with cost of house.
Type and condition of property, some properties take longer to sell.
Location of the property.
What is of great interest here is how the QCARA claims to know that the average time on market for a FSBO home is 88 days. The number claimed is unlikely to be something the QCARA has come up with from local sources. The average QCA FSBO is not anywhere near patient enough to wait for 88 days. While some are more patient than others it still doesn’t make for an average.
Additionally, some FSBO sites have ‘stay until you sell ‘ deals where one really has no idea if a given property is even on the market still. Since the majority of the local FSBO marketing groups are not directly involved in the transaction we are often unaware that a property has received an offer until much later when clients return their sign and tell us that they were successful but decided to keep the advertisement running until it expired. A real estate agent would consider days on market from the time the property was listed, until an offer has been accepted. FSBO sites change the status on their listing if and when their client request that their advertising be changed to reflect the new status, but since it is an advertising there is no requirement to change it. There is absolutely NO WAY for the QCARA to know when a FSBO accepts an offer and therefore no way to come up with even a remotely accurate statistic about it.
So here are some stats we will share with you about QCFSBO, our source.
405 of QCFSBO listed properties that we know of received an offer as a result of being marketed with us in 2017. How do we know that? We track our clients and we talk with them. Our information is based on one on one contact. Out of those 405 only 75 needed more than one listing period. The rest sold within the first listing period (30-60 days).
The price range of the customers who sold ranges from $35,000 to over $530,000.
Not one of these 405 sellers paid a 7% commission. Many of them bought other FSBO homes themselves without again any real estate agent presence involved.
Less Stress on the Seller
Scare Tactic: 11% of FSBO found handling inspections, offers, contracts, and other documents stressful. . (Source QCARA)
Their Claim:100% of Realtors do the stressful work for you (Source QCARA)
Reality Check: What it all boils down to is this… how much is not paying that 7% commission worth to you? Is it worth doing showings and open houses? Is it worth the follow up calls, and arranging for inspections, and appraisals? Handling of documents is stressful? You bought that property, if you work, chances are that you deal with documents, contracts, etc on a daily basis.
On a modest $200,000 home that 7% commission manifests as $14,000. Fourteen thousand dollars! It doesn’t matter how much you still owe the bank on that house, if you pay a 7% commission, you pay $14,000 out of your proceeds. Think about what you could do with that money.
At the end of the day, is a little extra stress, doing your homework, showings, etc worth 7% of the sale price of the house to you?
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