For Sale By Owner in Portland, Oregon – A good idea?
According to the NAR (National Association of Realtors) 2017 Profile of Home Buyers and Sellers Report, For Sale By Owner (FSBO) home sellers are at an all-time low. From 2015 to 2017 only 8% of home sellers choose to sell for sale by owner. In city metros only 6% of sellers tried FSBO home sales.
Why For Sale By Owner?
According to the same NAR report, of the 8% of home sellers that tried FSBO, 69% of them did so because they already knew the buyer. This means less than 3% of home sellers nationally tried for sale by owner in order to advertise their home to the broader public home buying public – people they did not already know.
So the primary reason home sellers sell FSBO is because they already knew the buyer.
The second reason sellers go for sale by owner is to avoid paying some or all real estate agent commissions.
How did FSBO sellers do?
According to the NAR report, for sale by owner homes sold at a median dollar amount of $190,000 in 2017, while agent-assisted homes sold for a median of $250,000. There are a number of likely reasons for this. First, sellers may have more difficulty in pricing their home correctly. Also, based on these median price points, it seems clear that sellers of lower-priced properties are more willing to take on the risk of selling their home for sale by owner. This seems to hold true when we look at the types of home sold, as manufactured or mobile homes were sold in much greater frequency for sale by owner than in agent assisted sales.
For the most part, for sale by owner homes sold as quickly or even faster than real estate agent sales, but this should not be a surprise since 69% of for sale by owner sellers already knew the buyer and so their time on market averaged less than one week.
Why selling FSBO is a bad idea.
I think there are a number of reasons why for sale by owner sales are at an all-time low, here are my top four:
- Online real estate marketing is king. With 95% of home buyers looking for their next home online, you can’t afford to have a sub-par online presence. We average 100,000 online views per home we sell. Not only are we on all the large and small real estate websites, we pay extra to the top sites to feature our listings, keeping them from dropping low in the search results. Real estate agents can give you the best online exposure for your home sale and we push that envelop as far as we can.
- The majority of home buyers are using real estate agents. 90% of home buyers are using a buyer’s agent to help them in their home search. Trust me, buyer’s agents do not prefer for sale by owner properties. Real estate agents are much more likely to be positive about a home listed with another real estate agent. Buyer’s agents know that some home sellers are using for sale by owner methods because they don’t like real estate agents, they don’t want to pay commissions, or the homeowner may want an unrealistic price. Suffice it to say, buyer’s agents are cautious when their buyer is interested in a for sale by owner home. This is important as the available buyer pool is represented by an agent 90% of the time! This is a major factor and doesn’t touch on the fact that real estate agents network together. The Realty company we are with, eXp Realty, is 4th largest Realty company in the U.S. and provides exceptional networking opportunities to help us match potential buyers with sellers.
- It is possible to find reasonable commission rates. You don’t have to pay 6%. We charge 2% for our services and give 2.5% to the buyer’s agent for a max. of 4.5% commission. In our area 2.5% is offered to buyer’s agents more often than any other rate. We run a pay less and get more model, where we charge a reasonable commission rate and pay more to market our homes for our sellers resulting in better client satisfaction.
- It is safer to use an experienced real estate agent. Our team sells multiple homes in the greater Portland metro area every week. We run a top 1% listing team in the metro, even number one at times. This provides my small team of listing agents and myself with more experience than a typical homeowner could possibly get on their own. I understand some homeowners may have sold a dozen homes in their lifetime, but we can close on a dozen home sales in a week. I’m amazed by the number of different scenarios that can arise in a real estate transaction, but it is rare, very rare, after 14 years of selling homes that I come across anything new or anything I haven’t already dealt with many times over. Having an experienced advocate represent you in your home sale, both on the marketing side and on the negotiating side can save you thousands.