For Sale By Owner in Portland, A Good Idea?

Let’s face it: We live in a do-it-yourself world. Self-checkout at the grocery store, online services like Uber and Airbnb that turn everyday citizens into taxi drivers and hotel managers, and phone apps that make it easier to ask Google than a real person.

Are we getting more advanced, or just more disconnected? I’m just a real estate agent, so I won’t get into that philosophical argument — I want to talk about the way this trend has affected home buying and selling in Portland. Namely, what’s up with FSBOs (for sale by owner homes)?

Forces influencing the Portland real estate market today make it more tempting than ever for sellers to forgo a listing agent and list their home For Sale By Owner. FSBO means that the property is not listed on the MLS – or is listed on the MLS for a fee but without any real estate agent’s representation – and the seller does all the legwork of selling the home, from marketing to arranging showings to negotiating with buyers. The advantage to sellers is that they don’t factor in the listing agent’s commission in the price of their home. Are they actually saving money? Read on to find out!

Portland Real Estate Market – Ripe for For Sale By Owner?

Right now, we know that it’s definitely a seller’s market in Portland. Although mortgage rates are starting to creep back up from their recent record lows, this is not expected to have an effect on buyer enthusiasm (this year). Portland remains a number one destination for people moving in from all parts of the country. Homes are still relatively affordable here compared to other major metro areas on the west coast, and the Portland economy remains strong and upward-moving. See my full 2017 Portland real estate market prediction here. As a result, inventory is low, and home prices rose 13% in 2016. It’s definitely a good time to list a home on the Portland real estate market, especially since experts are predicting that prices won’t go up quite so much this year.

With technology making it easier than ever to communicate with potential buyers, sign documents digitally, upload photos and look up answers to questions that come up in the process, one would expect more sellers to go FSBO over the past five years. However, according to the National Association of Realtors, the opposite is actually true.

NAR Releases FSBO Trends

Every year, the National Association of Realtors releases a report that looks at all the data around home buyers and sellers, including what services real estate agents are performing. In the 2016 NAR Profile of Home Buyers and Sellers, the NAR reported that “agent” sales accounted for 92% of all real estate transactions nationwide.
The other eight percent?
You guessed it – for sale by owner.

FSBOS vs Real Estate Agent Listed

So, how did they do?
50% of FSBO sellers in 2016 already knew the buyer. they sold their home to a friend, relative, or neighbor and 71% sold for the asking price or more. But did they sell the home for the right price? Only 40% of for sale by owner transactions used an appraisal to determine or verify market price. The other 60% used their own personal methods or online estimators (which are often wildly inaccurate).
50% of FSBO sellers in 2016 did not know the buyer. They only got the asking price 40% of the time. That’s not good.

What about those who sold their home with a listing agent? Sixty-two percent got 95-100% of the asking price, and listing agents were more likely to have buyers bid against each other, so 11% sold for more than the asking price. Bottom line, across the country real estate agents performed better. To give you an idea of my personal experience, in 2016 in Portland, we averaged 102% of our starting price.

An interesting piece of the NAR data, at least from a real estate agent’s perspective, is that FSBO representation rates have actually gone down significantly since 1981, when the NAR first began compiling the data. Back then, 15% of home sellers declined to use a listing agent and now only 8% decline. I believe this is proof that real estate agents provide a lot of value in a digital world. Digital reach, or the online marketing of a home, is now a primary area of concern for a real estate agent to complete a successful home sale. In fact, my team has focused on this and spends a lot of extra funds to promote our listings online (not just appear online, but featured listings pushing our homes to the front of the pile). In fact, we generate over 100,000 targeted online views per listing. This does not come cheap or easy. Despite this, we charge less than most.

Other Considerations for Buying or Selling a FSBO

We’ve already established that there’s no real advantage to going FSBO when it comes to the final sale price of your home (and a real potential disadvantage). One other data item from the NAR report is clear: those who start out listing their home as a FSBO and then end up using an agent do lose money in the end. The first few days, the first time, your home is on the market is crucial, you can’t afford to not do it 100% right.

From marketing your home to getting buyers in the door, to negotiating the best deal for you in the end, a real estate agent is simply the best way to get the job done. It’s what we do.

Considering buying a home that’s being listed by the owner? It’s nothing to worry about — if you have a good buyer’s agent on your side. Having at least one real estate agent involved in the process will ensure that your offer is solid, all the t’s are crossed and i’s are dotted. You will be surprised at how many details we cover, and no matter how much you read or research, you simply can’t substitute for good old experience.

Have more questions about buying a FSBO in Portland? Ready to list your home with a real estate agent? Call your Portland Real Estate Agent Team today!