Reality: A recent academic study showed 0% difference in the sales price of FSBO homes and realtor-assisted homes. The study looked at a very large number (15,606) of single family homes sold in Madison, Wisconsin over multiple years. The key to the study’s success was that the economists properly adjusted for differences in the location, square footage and other factors between various homes — this is the exact same thing that professional appraisers do daily.
And yet, the National Association of Realtors (NAR) maintains that FSBOs sell for less?! As economist John Wake recently observed, the NAR is doing a numbers trick to scare people away from FSBOs. Basically, the NAR’s data set used only a fraction of the number of homes compared to the above-referenced Wisconsin study, and the NAR also failed to properly account for key differences in home sales (such as location and square footage). If appraisers failed to account for these differences, they would be fired. But when the NAR does it and posts their results on Twitter, they are applauded by their base. Go figure.
It is obvious that lots of FSBO sales are simply in a different league than realtor-assisted sales. For example, family-to-family sales (i.e., father selling a home to his daughter) are more likely to use a lawyer (no commission) than an agent. Indeed, as a FSBO lawyer in California, every year approximately 10%-15% of my FSBO transactions are these family-to-family sales, and the sales price is almost always a huge discount (i.e., 20%-40%). Another significant percentage of FSBOs (again, approximately 10%-15%) are landlord-tenant sales. For these transactions, the sale price is usually discounted somewhere in the range of 7% (because the buyer has already been paying rent (so there is good will), and the seller doesn’t need to do any listing, showing, or repairs (also, the seller views the sale as lower risk because the buyer already knows the home intimately).
Economist John Wake also observed, the NAR failed to properly account for “mobile homes, manufactured homes, condos and single-family homes in rural areas”. Take it all together and it is plain that a large percentage of FSBOs are in a different league than realtor-assisted sales.
In my law practice, I see FSBOs matching comparable sales routinely – it is standard practice for FSBOs to match comparable sales (often higher in a strong market). That means that if you do the FSBO right, you can expect a full-price offer on your home or higher in a strong market.
Greg Glaser, Attorney at Law
I help home buyers & sellers throughout California
(925) 642-6651 — [email protected]
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