LRG Boston Real Estate Blog

Britt Foss of Luxury Residential Group Says: “NOT NECESSARILY” and here is why.

Selling real estate can be a tricky business. Sellers sometimes decide that they want to go it alone when selling their property. This is an attractive move because houses priced to sell at market include the 5% commission that is paid to the seller’s and buyer’s agents whom broker the deal. For sale by owner (FSBO) transactions do not use brokers or agents and therefore do not pay that 5% commission. Seller’s price their home to sell at market in the hopes of making a 5% bonus. It rarely works out this way. As a matter of fact often FSBOs end in the seller being frustrated at unqualified buyers wasting their time and offensively low offers. To examine why this occurs we need to look at the four main types of buyer.

The first type of buyer is the investor. The investor love s the FSBO market. Investors are looking for the best return on their dollar and remove emotion from the equation. Sellers involved in a FSBO transaction are not real estate professionals by trade. The investor always builds in the 5% commission to their already discounted offer price. The result is that the seller and buyer are light years apart. The investor is counting on the seller to act in a rash manner and will not move much of the offer price. The seller becomes frustrated and the deal falls apart. If the deal does come together in the end the property sells below market even taking the unpaid 5% commission out of the equation. In other words, the seller spends a lot of time and effort for poor results.

Now let’s look at the local buyer who is looking to move into something bigger. Perhaps the family has grown or the buyer’s income has increased and they are looking for an upward move. These local buyers know their area and have a lot of time to look around on their own. Typically in this scenario there is no pressure to move. Local buyers also have a lot of time to find a great deal or vulnerable FSBO. Like investors savvy local buyers know where the FSBOs are. They are not as worried about inventory because time is not an issue. They can wait for that perfect home to come to market. They will also add the 5% commissions not being paid onto their already discounted offer price. The scenario involving the Local Buyer is just like the investor. Seller’s end up light years away from the buyer’s initial offer become frustrated and the deals often fall apart. Because the local buyer has a lot of time they will wait out the seller. Ultimately the property sells below market and the seller gives up the 5% they were looking to make without using an agent.

Many buyers are from out of town and must move because of job relocation or other circumstances. These buyers rarely will enter into the FSBO market because the smaller FSBO inventory and time constraints. Also, the buyer often does not know the local market as well. Relos almost always work through a buyer’s agent. As a result deals are closed in a timely and efficient manner.

First time home buyers almost always work through a buyer’s agent. The process of buying your first home can be daunting. People feel it is the best course of action to hire a buyer’s agent to guide them through the process. The buyer’s agent will introduce them to properties in their price range that are appealing to their tastes. Unfortunately FSBO transactions rarely see first time home buyers.

In conclusion trying to sell your home without using a real estate professional eliminates more than half of the buyers out there at any one time. It is the types of buyers who determine what kind of offers a FSBO will receive. Usually the offers are very low and the buyers unqualified. There are exceptions to the rule in every case. If you are a frustrated seller perhaps it is time to hire a broker to market your property!

If you are a “For Sale By Owner” or “FSBO” and having a hard time selling your property, please call Britt Foss of Luxury Residential Group to give you an evaluation at no cost to you. His number is 617-513-3171.

Tags: FSBO

This entry was posted on Friday, September 24th, 2010 at 1:11 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.