For Sale By Owners Homes Sell for 25% Less, 2023 Report
The National Association of Realtors, NAR, puts out an annual in-depth research report on what actually causes homes to sell across the U.S., down to a percentage point. This annual report also includes information on for sale by owner homes, how many there were in the last year and how they performed versus Realtor listed homes. In 2022, a full 10% of homeowners sold their property FSBO, or for sale by owner. This was a pretty big increase from the 2021 report and most believe it is due to the ever increasing low inventory, a wildly strong sellers market, which led more homeowners to try FSBO than in previous years. Also, desperate homebuyers tried contacting more homeowners direct, that didn’t even have their home on the market, to attempt to grab a sale prior to the home going on the market. Until the 2022 report, the rates of FSBO homes hitting the market had been dropping. Now that the real estate market has turned and is rapidly cooling off, most expect that when the next NAR report comes out, the rate of FSBO home sellers will have dropped again. See our 2023 U.S. and Portland, Oregon metro real estate forecast here.
How Many Try Selling FSBO Each Year?
|Percent of Home Sales|
that were FSBO
|Percent of Home Sales|
that were FSBO
How Much Less Do For Sale By Owner, FSBO, Homes Sell For?
In 2022, the median selling price of a FSBO home was $260,000 when they did not know the buyer. When the FSBO seller did already know the buyer, the median sales price was even lower, $225,000. However, we won’t use the lower number because many of those discounted sales are due to one family member or friend selling to another. But it is fair to use the for sale by owner sales price number of $260,000, when the seller did not already know the buyer, and compare that with the price of homes sold by a Realtor who listed the property on the public market. The difference? A whopping $120,000. The median price home sold by a Realtor was $345,000 across the country, in comparison with FSBO median price of $260,000, a difference of 25%!
FSBO Owner Homes Sold for 25% Less
The number one reason a home seller choose to FSBO their home was to avoid real estate agent commissions. The average real estate agent commission is now about 5%, see our annual report here. So homeowners choose to save on average 5% of their sales price, and lost 20% of their home value (25% reduced price to save 5% commission) in the process.
Why Do FSBO Homes Sell for So Much Less?
There’s a combination of reasons. We’ll start with real estate marketing. While a homeowner choosing FSBO might know they need to list their home on Zillow or perhaps another site or three, they don’t realize that while Zillow is the number home home search portal, the site still only represents about 30% of home buyer traffic online. The homeowner might not also have their own personal Zillow rep. at the company (we do) and may not know how to optimize their listing so it shows toward the top of Zillow results, or prominently on their map (we know how to increase Zillow views by 30% or better per listing). Even if the homeowner manages to list on the majority of home search portals buyers are using, they are often missing out on listing on the major MLS systems within the state, which broadcast out their listing to all of the licensed Realtors within that state, associated with the MLS, who then can see what commission they are being offered to bring a buyer, and can see showing instructions, etc. Whenever we list a home for sale, we do so on more than one MLS system to have the greatest reach to a motivated audience. The homeowner may also not hire the best professional photographer in town, may not realize how drastically pro. 3D tours, floorplans, and drone media impacts the home sale process. We conduct extensive research and modify our sellers package every year, to make sure our clients’ homes sell faster and for more.
The second main reason why for sale by owner homes sell for so much less, is real estate market expertise. I write monthly reports on the Portland metro real estate market and numerous annual reports on various aspects within the broader market. I read daily inventory reports, weekly buyer traffic reports, and know what types of homes and remodeling causes homes to sell for more per sq. ft., in addition to neighborhood specifics.
We Sell for 4% Total, And Our Homes Sell for More
Stephen FitzMaurice has been licensed since 2003. His small team has closed on over 2,000 home sales in that time. We pay more to market our homes on the right channels and back all of our marketing and pricing decisions with dynamic marketing, extensive research, and professional experience. Give us a call today at 503-714-1111 to schedule a no obligation appointment.December 19, 2022